President Álvaro Uribe: Colombia Needs “To Reelect Policies, Not People” AS/COA Online 09/24/08

During a September 24 AS/COA luncheon in his honor, Colombian President Álvaro Uribe emphasized the transformation achieved in his country under his administration. He vowed to work toward building confidence in the private sector to promote investment in Colombia as well as to maintain a prosperous, safe environment in which Colombians can secure good jobs. Uribe spelled out the three pillars of his administration: security, investment with a focus on social responsibility, and social cohesion.

“In security, we continue with advances but we need to do much more,” said Uribe, explaining that Colombia had experienced a reduction of total crimes by as much as 30 percent in the last year. He also pointed out that the murder rate dropped 50 percent over the last six years and continues to fall.

In July, a Colombian military operation rescued 14 hostages held by the Armed Revolutionary Forces of Colombia, including three American contractors and former presidential candidate Ingrid Betancourt. Uribe praised the operation’s success but said he was committed to seeking the freedom for the hundreds of remaining hostages. “We need to continue fighting to eliminate this crime from Colombia and I wish this crime could be eradicated from all over the world,” said the president.

The reduction of violence against trade union officials has been a thorny subject between Democrats in U.S. Congress and the Colombian government during the past year’s negotiation of a bilateral free-trade agreement. Uribe gave details of the security guarantees given to nearly 2,000 trade union leaders. He also noted that sentences for assassins of trade unionists have been enforced during his administration and stressed that his government had worked to dismantle paramilitary organizations.

On the subject of investor confidence, Uribe was cautious when addressing worries over the slowdown of the global economy. In 2007, Colombia showed an impressive growth rate of 8.2 percent but the forecast for 2008 stands at less than 4 percent. On a positive note, Uribe highlighted the significant increases in investment rates, which reached as much as 27 percent while foreign direct investment topped $9 billion last year.

Uribe reminded the audience that Colombia offers guarantees to all investors and encourages the expansion of private enterprise, including new oil exploration contracts signed with state-owned Ecopetrol, which started to sell its shares at the New York Stock Exchange on September 18. Furthermore, Uribe asserted that Colombia does not tax investors for their earned dividends, making the country more attractive to new capital.

In a discussion on efforts to support social development in Colombia, Uribe underlined his commitment to increasing investments in infrastructure, education, and the environment with special emphasis on the increase in biofuels production and consumption.

Colombian Trade Minister Luis Guillermo Plata briefly joined Uribe to highlight business opportunities that await potential investors in the fields of business and healthcare, software development, and health and beauty products.

When Uribe was prompted during a concluding question and answer session about his possible run for a second reelection in 2010, he answered that Colombia needs “to reelect policies, not people,” in the upcoming elections.

Read the summary as orignally published at the AS/COA website.

Surfing the Shockwaves of Financial Trouble AS/COA Online 09/19/08

Tensions on the floor of Brazil’s Bovespa on September 15. (AP Images)

Wall Street plunged into crisis mode this week as the fourth largest U.S. investment bank Lehman Brothers filled bankruptcy on Monday, followed by rescues for Merrill Lynch and AIG. Other heavyweights like Morgan Stanley and Washington Mutual seek buyers to help steer them to safer waters. The U.S. government pledged $180 billion as a lifeline for banks to borrow at affordable rates. As Wall Street drama unfolded, the effects rippled across the globe. How were the losses felt across the Western Hemisphere?

The shockwaves emanating from Wall Street reached Latin America’s largest stock market Bovespa in São Paulo, where on September 17 that market reached its lowest point of the year, dropping 6.7 percent. Stock markets in Mexico, Argentina, and Chile suffered losses ranging from 3 to 5 percent while local currencies reached record lows against the dollar. Clarín spells out how the financial crisis might affect 10 key sectors in Argentina’s economy, highlighting that the drop in the price of bonds has strained cash from banks, making lending more expensive and less accessible for consumers. Peru’s Bolsa de Valores de Lima registered a slightly better performance at the beginning of the week, with only 0.5 percent decline but also found itself coping with a weaker sol while waiting for Peru’s Central Bank to intervene and deter further devaluation.

Colombia also faces challenges. Semana’s Economic Editor Gloria Valencia explains that economic uncertainty looms and more market corrections should be expected. Devaluation of the peso against the dollar and consecutive losses in its stock market throughout the week represent short-term consequences while for coming years some worries remain, reports Valencia. Governments finance their debt from market capitals; attaining funds for the 2009-10 budgets will become difficult due to constricted cash flow. Latin American countries should also brace for a drop in commodities’ prices combined with a reduction in exports, which translates to less income. In addition, less money available in the market means less foreign direct investment for countries like Brazil, explains Vitoria Saddi in RGE Monitor.

Canada serves as a bright spot in the hemisphere, according to an analysis in the Globe and Mail. The country’s banks avoided the subprime mortgage mess and their investment banks have enough collateral to back up their operations. The cost of borrowing money remains cheaper than in the United States and Europe and Canada’s stock market appears healthy despite world financial turmoil.

Despite the initial repercussions of Wall Street’s convulsions, by the end of the week Bovespa experienced a surge on news of U.S. bank bailouts. During the week, to placate investors’ nervousness, officials in Brazil, Mexico, Argentina, and Chile emphasized that sound economic foundations in the region had helped minimize the effects of the global economic slowdown. These countries find themselves better prepared to weather a U.S. economic storm than in the past, reports Bloomberg.

Latin American economies could look to new market opportunities with China, India, and Japan, among others. From November 20 to the 23, Peru hosts the 2008 Asia-Pacific Economic Cooperation Summit, offering an opportunity to bolster interregional trade and economic ties. Latin Business Chronicle reports that, in addition to trade with Asian countries, bilateral trade in the region is on the rise, counteracting the effects of lower commodity prices and Wall Street’s thunderous losses.

AS/COA hosts several Latin American presidents as they travel to New York City to participate at the United Nations General Assembly.

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Interview: Alfonso Quiroz on Constitutional Reform in the Andes AS/COA Online 09/18/08

In an exclusive interview, Professor Alfonso Quiroz speaks to AS/COA’s Carlos Macias about the history of constitutional changes in Latin America with an eye to recent proposed reforms in Andean nations. Venezuela voted against a new constitution in December 2007, Ecuador prepares for a vote on September 28, and Bolivia’s push for a new constitution has served as a source of tension leading to deep political rifts. In this interview, Quiroz underlines the centralization of power in the hands of the executive branch as an essential feature connecting the proposed constitutions.

A history professor at Baruch College, Quiroz is the author of Corrupt Circles: A History of Unbound Graft in Peru. He received the John Simon Guggenheim Memorial Foundation fellowship in the field of Latin American constitutional law.

AS/COA: What are some of the hemispheric precedents for this trend of constitutional reforms happening now in Latin America?

Quiroz: I would say that we’re witnessing a new wave of constitutional reforms in the last few years and it’s different from the constitutional reforms that existed in the late 1980s and 1990s. Earlier reforms, especially in the 1990s, showed a trend towards adjusting institutions in Latin American countries to a new wave of democratization that was happening at that time and that was also connected to the fall of the Soviet Union and the fall of the Berlin Wall. The reforms were part of a global expansion of democracy, so countries in the 1990s—you have the case of Colombia and Mexico and other Latin American countries—began to adapt to that transition. In the case of Colombia, for example, you also had an important constitutional reform that shifted the voting and power bases from the countryside to the urban sector. It was a major shift in Latin American countries to modernize their institutional structures.

The new wave that we’re seeing nowadays is, to a certain degree, a kind of reaction in a new historical and international environment, where the United States is no longer so much interested or so much willing to engage in Latin American issues due to other affairs that the United States has to deal with in the Middle East and in other parts of the world. In Latin America, therefore, this situation has provoked a series of reactions from certain leaders such as [Venezuela’s] Hugo Chávez, [Bolivia’s] Evo Morales, Rafael Correa in Ecuador, and the Sandinistas in Nicaragua. They are at the forefront of a distinctive move toward expanding the powers of the president. Within larger constitutional issues in Latin America going back to the nineteenth century, the issue of the executive and the controls of the executive, and the ways of maintaining or limiting the presidential power are at stake at this time in those countries. You can see it as a reverse of the process that existed in the 1990s.

AS/COA: What are the pros and cons of the current constitutional drafts, which open the door to presidential reelections?

Quiroz: The newer reforms suggested and some of those being implemented are being propelled by certain popular support. At least at the beginning, the promises of more inclusion of the populace in the political process, a series of affirmations of minorities’ rights, even the existence of popular presidents with charisma, all those factors have contributed to rising expectation in those countries for change—changes that, generally, in Latin America, are expressed in constitutional change because that is the way of shifting power bases in moments where emerging forces seek to transform the political system. As we know, the rules and regulations of the state, sometimes the policy-oriented emphasis, all those elements are seen by the popular support of these constitutional reforms as bringing about important benefits for the majority of the population.

Let’s just remember a very important case that we can say was, to a certain degree, comparable to the situation today: The enormous expectation that the Cuban constitution of 1940 could provide the necessary rights and democracy and distribution of income that was expected in Cuba, especially because [Fulgencio] Batista undermined that constitution through his dictatorship. One of the first important fights was for the restitution of the constitution of 1940, which after the Cuban Revolution was never brought back. Instead, a constitution that limited democracy was established many years later under a totalitarian type of regime.

AS/COA: Can we talk about the connections between the proposed changes in Bolivia, Ecuador, and Venezuela? What is the underlying connection between these changes?

Quiroz: One of the main connections, of course, is the centralization of power and the preeminence of the executive over the other branches of the state, which mainly means aiming at less constitutional control on the presidential branch, or less checks and balances. There are other common elements, in the cases of Ecuador and Bolivia regarding ethnic minorities and the power bases of certain regions or the weight of local provinces or states within the larger national unit. This is an important subject that’s being debated. It has been addressed in other Latin American countries, even in Spain in the late twentieth century.

Countries like Bolivia and Ecuador now have regional issues that remain unsolved, and bring about a series of conflicts and frictions that are expressed in the constitutional and electoral debates of those countries. The use of referendum and their disputed legality and outcomes are producing the conflictive part of the process. The problem is how you bring about constitutional change by using established constitutional rules or introducing other types of rules to achieve that. That’s a serious problem that appears as the events unfold.

Read the interview as originally published at the AS/COA website.

Caracas, Moscow Play Cold War Games with Washington AS/COA Online 09/11/08

Leaders of Venezuela and Russia are conducting joint miltary operations. (AP Images)

At a time of strained relations between Washington and Moscow, Venezuela and Russia could cause further irritation by stepping up their military ties. On September 10, two nuclear-capable, long-range Russian bombers arrived in Venezuela on a training mission. This came within days of an announcement from Venezuelan President Hugo Chávez confirming joint military exercises with the Russian Navy in the Caribbean by early December.

Some speculate that Russian Prime Minister Vladimir Putin and Chávez hope to play a geopolitical game in response to the U.S. backing of Georgia, Washington’s missile defense shield plans for eastern Europe, the reactivation of the U.S. Fourth Fleet in Caribbean waters, and NATO’s temporary deployment of its Maritime Group One in the Black Sea. Media outlets speculate that Russia’s moves to step up its presence in the Western Hemisphere raises Cold War specters.

But the reaction to joint naval operations from the United States has, thus far, been muted. As the Economist notes, “The public response from Washington has been a barely-stifled yawn.” In a September 8 press briefing, U.S. Department of State Spokesman Sean McCormark responded to a question about the planned naval operations by saying, “I suppose if it is, in fact, true, then they found a few ships that can make it that far.” A Navy Times article writes of similar indifference from the U.S. Department of Defense. Indeed, most of the Russian vessels date back to the Soviet era and some are riddled with mechanical problems. “Russia’s military must leap huge hurdles—financial, industrial, technical and professional—before it will ever be more than a regional, mostly defensive force,” reports Wired’s “Danger Room” blog in its coverage of Moscow’s plans to send a Cold War-era ship called Peter the Great to Venezuela.

Despite a seeming lack of concern emanating from Washington, the announcement about joint naval operations coincided with other signs of U.S.-Russo fractures. On September 8, U.S. President George W. Bush announced intentions to rescind the 123 Agreement (approved in May) with Russia on peaceful nuclear cooperation. “Unfortunately, given the current environment, the time is not right for this agreement,” said U.S. Secretary of State Condoleezza Rice in a statement. And the arrival of bombers may have caused more raised eyebrows, with the State Department saying it plans to closely monitor the warplanes’ activities.

The Russo-Venezuelan military connection predates the joint exercises announced in the last few days. In 2006, Chávez made a $3 billion weapons purchase from Moscow followed by another deal a year later involving five submarines. More recently, Chávez visited Russia in July, when leaders strengthened ties in areas ranging from energy to technology sharing and Venezuela purchased more than 50 helicopters and 24 fighter planes.

The joint operations provided Chávez with another opportunity to rail against Washington. “What’s coming is a multipolar world in which Venezuela is a free country, that’s what’s coming,” said the Venezuelan leader following the planes’ arrival. Furthermore, a Venezuelan television show played tapes of Venezuelan military officers allegedly plotting against the president, prompting Chávez to call the program live, order an investigation, and rant against his foes. On Thursday, Chávez expelled the U.S. ambassador to show support for Bolivia, which expelled an ambassador a day earlier and saw the Bush administration reciprocate.

Read AS/COA’s coverage of the recent warming of Russo-Cuban relations.

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Americas’ Security Cooperation Revisited AS/COA Online 09/05/08

Brazilian Supertucanos in a military demonstration earlier this year. (AP Images)

Officials from 34 countries gather at the VIII Conference of Defense Ministers of the Americas held in Banff, Canada, from September 2 to the 6. The central premise of the summit—first held in 1995—revolves around “confidence-building through cooperation and collaboration.” This year, topics include peacekeeping support in places like Haiti and generating security assistance for events such as the 2010 Winter Olympics in Canada. A recent event hosted by the Council of the Americas examined how the ministerial filled a void by allowing defense counterparts from countries across the Western Hemisphere to interact and thereby readied to cooperate in times of natural disasters or political disputes. Yet speakers at the COA meeting also raised a critique that the summit had yet to provide results beyond introductions and interactions.

This year’s summit comes at a crucial moment when several nations in the Western Hemisphere are beefing up their defense capabilities, enacting regional defense cooperation treaties, and when some intend to boost their status as weapon suppliers. Setting the example as host, Canada revealed its 20-year, $490 billion “Canada First Defense Strategy,” a detailed plan to modernize its armed forces and its military industry. U.S. Secretary of Defense Robert M. Gates also delivered a speech highlighting ongoing cooperation programs such as the recently approved Merida Initiative involving a U.S.-Mexico-Central America partnership to fight drug-related violence, Caribbean Community efforts to improve security on their waters, and the proposed South American Defense Council. “We have a collective dream: a free, prosperous, and secure hemisphere. By working together, we can transform that dream into reality and embrace the great promise and potential of the Americas,” added Gates.

Just two months ago, the United States reactivated its Fourth Naval Fleet drawing mixed reactions from South American leaders calling to establish a defense council to safeguard the region’s biodiversity and, more importantly, its hefty energy reserves. During a speech at AS/COA’s Latin American Cities Conference in São Paulo on July 10, U.S. Ambassador to Brazil Clifford Sobel raised the fact that some had suggested the fleet could have more aggressive purposes. “Let me be very clear. Let me use this forum to say it is not true,” asserted Sobel, saying the fleet will have no offensive capabilities and will instead serve to provide humanitarian support during natural disasters.

Using cash flow from the booming commodities markets, countries such as Brazil, Chile, and Venezuela have been modernizing their militaries. Brazil has doubled its military expenditure since the year 2000, according to the Stockholm International Peace Research Institute, and reached an agreement with France to get the necessary technology to start building nuclear submarines in 2009. Blogger Sam Logan points out that Brazil—with plans to expand its ammunition industry—serves as South America’s champion arms supplier, selling army vehicles to Bolivia, and Supertucano planes to Colombia and Chile.

Meanwhile, Chile purchased 340 German tanks, frigates, submarines, and more than two dozen F-16 fighters. Venezuela also inked a deal with Russia this past July worth more than $3 billion, represented in Sukhoi fighters, helicopters, and air-defense missile systems.

Some analysts remain skeptical about the utility of the conference. Ray Walser of the Heritage Foundation, a conservative think tank, criticizes the lack of strategic and diplomatic meaning of the summit and suggests that effective partnerships require “actual friends and genuine partners.” While holding Caracas responsible for causing rifts, Walser also charges Washington with “inflicting serious wounds to our hemispheric relationships” by failing to approve a trade pact with Colombia or drop a tariff on Brazilian ethanol.

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