IV CSC Recap: 5 Years and still Growing Strong

By Carlos Macias

The IV Colombian Student Conference (CSC) started for many of us a few months before April of 2010. For The George Washington University (GWU) chapter meant countless hours of defining logistics, securing attendance of panelists, and attracting sponsors. For PorColombia’s (PC) national executive board, it represented many teleconferences, designing our first promotional brochure, and the excitement to finally experience the fourth installment of our annual signature event. For our members living in the north as far as Toronto or in the south reaching Florida, it was the anticipation to finally meet in person their fellow PorColombians (some for the first time) and get impregnated with the “from passion to action” bug.

The day before the event, we all started our journey to Washington D.C. Some of us rented “church” vans and traveled in caravan, others drove almost 10 hours non-stop from Canada, many decided to hop on the express bus service serving the I-95 corridor, and a handful just took a plane to the Ronald Reagan Airport. Several photo albums have been posted in Facebook as a testament of these unforgettable road trips. But the real fun was awaiting for all of us in D.C. In the meantime, the conference staff was fine-tuning many last minute details to make the event a total success. And you know what? In all fairness, it was.

Correa Wins Reelection Bid AS/COA Online 04/23/09

President Rafael Correa will likely win Sunday’s election. (AP Photo)

Updated April 27 – Ecuadorians headed to the polls on Sunday for presidential and legislative elections. President Rafael Correa easily won the bid for a second term. The win came as little suprise, as surveys placed him ahead with the 50 percent of the intended votes needed to avoid a runoff election. (Alternately, he needs a minimum of 40 percent of the votes and a 10-point difference after his most immediate opponent). A gloomy financial forecast may account for his decision to hold the election with two years left in his term. Less than a week before the election, Correa unveiled a buyback plan for defaulted sovereign bonds.

Correa’s presidency has represented a period of relative stability for Ecuador. “Seven presidents in the decade following 1997. Three leaders overthrown. A banking and currency collapse. This was Latin America’s basket case,” writes Henry Manse for World Politics Review. Correa won his first term in 2006 against entrepreneur Álvaro Noboa of the Partido Renovador Institución Acción Nacional. Noboa is running again, this time in a race for second place against former President Lucio Gutierrez of Sociedad Patriótica. Gutierrez was ousted from office by Ecuador’s Congress in April 2005 and barred from holding public post for two years by electoral authorities.

Ecuador has enjoyed booming economic times since the beginning of Correa’s presidency. The economy expanded continuously for the last nine years and Ecuadorians saw poverty levels drop from 52 percent in 1999 to 35 percent in 2008. Additionally, social spending went up by 71 percent under Correa’s watch.

Correa opted to run for reelection, despite the fact that two years remain in his term. A new constitution approved in September 2008 would allow him to seek the bid for a second term, whether now or then.

Forecasts by the International Monetary Fund (IMF) could offer a glimpse into why he chose to advance the election date. The IMF estimates that Ecuador’s GDP growth rate will run at negative 2 percent in 2009 and just 1 percent in 2010. This trend is consistent throughout the hemisphere, with only Peru, Uruguay, and Chile expected to post positive growth results this year. In March, Ecuador’s Central Bank reported an overall drop in exports, GDP, and remittances. Correa’s consistently high approval ratings are showing some signs of a downgrade as well. A CEDATOS poll from March 10 found that Correa’s approval rating fell 10 points down to 60 percent in the first three months of 2009.

One week before the election, Correa’s government announced a plan to buy back defaulted sovereign bonds 2012 and 2030. The government offered to pay 30 cents on the dollar, or roughly $900 million for bonds valued at roughly $3.2 billion  Finance Minister Diego Borja assured that the government has the money for the transaction using funds previously allocated to make interest payments. As Goldman Sachs analyst Alberto Ramos explains, Quito might have already repurchased some of the bonds on the sly in the secondary market by taking advantage of dropping bond prices after the default. Vistazo magazine also questioned the proposal, wondering where the money was coming from to pay for the bonds.

Correa believes investors will rally behind his government’s proposal. But the Wall Street Journal and Reuters report that some bondholders will refuse the offer and file lawsuits instead to get full compensation.

To ensure transparency in the elections, more than 200 international observers arrived in Ecuador this week. El Universo offers complete coverage. Angus Reid Global Monitor provides a backgrounder on the new constitution and the 2006 presidential election.

Read the article originally published at the AS/COA website.

Bogotá-Quito Ties Still Run Cold AS/COA Online 03/05/09

Ecuadorian soldiers fly over a border area close to Colombia. (AP Photo)

Diplomatic relations between Bogota and Quito remain broken a year after a border standoff. A March 2008 raid by Colombian authorities on a guerilla camp took out the second of the Revolutionary Armed Forces of Colombia (FARC) in command and more than 20 others. The attack, made on Ecuadorian territory, also spurred a military buildup by Quito and Caracas on their Colombian borders. Within weeks, the threat of conflict was defused. Still, squabbles continue between Colombia, Ecuador, and Venezuela, even with mediation by the Organization of American States (OAS).

In recent remarks, Colombian Defense Minister Juan Manuel Santos justified the raid as an act of legitimate defense, sparking controversy in both Quito and Bogota. President Álvaro Uribe responded by reprimanding the minister. Santos’ strong statements led some to wonder if they serve as an indicator of his intention to run in next year’s presidential election.

Yet Santos’ remarks did little to curry favor in Ecuador. In an interview with RCN Radio, Ecuadorian Vice President Lenín Moreno said that “it is very difficult” to normalize bilateral relations given Santos’ declarations. The comments drew the ire of Caracas as well; the Venezuelan government issued a statement about the remarks, saying that they threaten the stability and sovereignty of countries in the region.

Meanwhile, Ecuador’s Foreign Minister Fander Falconí criticized Uribe’s government for failing to handle the question of displaced people seeking refuge in and near Ecuador. The Office of the UN High Commissioner for Refugees (UNHCR) oversees a refugee registration project launched by Quito in December. The UNHCR estimates that some 20,000 refugees live in Ecuador but that as many as 130,00 could need international protection. Additionally, the government of President Rafael Correa has stepped up operations along Ecuador’s northern border by dismantling more than 200 guerrilla camps in the last two years, Colombia’s El Pais reports.

But Colombia has its own grievances with Ecuador’s government. Data obtained from a FARC laptop during the raid raised concerns about links between the guerilla group and Ecuadorian officials. Former official José Ignacio Chauvin, a close aide to former Minister of State Gustavo Larrea, admitted that he met with FARC’s late second-in-command Raúl Reyes seven times, reports El Universo. An editorial in Ecuador’s Hoy proposes the creation of an independent commission to steer Ecuadorian politics away from the dark waters of drug-trafficking influence.

World Politics Review explains that after a year, “[B]oth sides’ failure to make progress on reconciliation may be politically motivated.” The article explains that, while Correa gains support by defending Ecuador’s sovereignty at all costs, Uribe has other matters to deal with; restoring diplomatic ties with his neighbor may not stand as a top priority.

Still, despite the controversy, economic ties appear to stand strong between the neighbors. Colombian exports to Ecuador increased 16.1 percent and Ecuadorian exports to Colombia rose 10.5 percent last year, totaling more than $2 billion in 2008, according to Colombia’s Commerce Ministry.

Tensions between the two Andean nations involved OAS mediation over the past year. In an interview with AS/COA Online, OAS Secretary General José Miguel Insulza likened his OAS role in Latin America as that of a bombero (firefighter) putting out fires across the region. As recently as February 26, Insulza visited Correa and urged reconcilation, to no avail.

A new article by the Economist looks back at raid and calls it a success in terms of inflicting permanent damage to the FARC, saying Colombia paid a small price. Colombia’s Defense Ministry reports on the massive defections facing the guerilla group. Read more about he FARC’s growing weakness and signs—such as hostage releases—that it may be changing course.

Read the article as published on the AS/COA website.

Brazil Fights Recession with Investments AS/COA Online 01/27/09

Brazil announced a sharp rise in Petrobras investments. (AP Photo)

Brazil began 2009 facing deteriorating economic conditions and rising unemployment. But, through recent actions, the Brazilian government seeks to steer the economy into safer waters by committing billions of dollars to create jobs and propel Petroleo Brasileiro (Petrobras) into the heavyweight category of oil production companies. Furthermore, U.S. President Barack Obama signaled his interest to work with Brazilian counterpart Luiz Inácio Lula da Silva to move forward on biofuels and the Doha round of global trade talks. Lula will visit Washington to meet with Obama in March.

With the goal of jumpstarting the ailing economy, Brazil’s Central Bank reduced its overnight lending rate by a full percentage point to 12.75 percent on January 21. The move intended to stimulate economic activity at a moment when financial markers signaled the danger of recession; private consumption has shrunk, December job losses hit their highest level since 1999, and analysts predict GDP growth may not reach the 2 percent mark in 2009. The Economist Intelligence Unit’s ViewsWire augurs that industrial growth could be close to zero and private consumption may drop to 0.9 percent in 2009—down from 6.2 percent last year. The analysis applauds the cash infusion of more than $42 billion into the Brazilian Development Bank (BNDES), designed to stimulate the creation of new employment. The fund helped create 2.8 million jobs in 2008 alone, according to BNDES data. “The businessmen who used to shop for funds on the international market and are not managing to obtain capital due to the financial crisis will be able to resort to the BNDES,” said Brazilian Finance Minister Guido Mantega last week.

In tune with the government’s actions, Petrobras unveiled a plan on January 23 that promises a 55 percent expenditure increase over the next five years. The package includes investments of more than $174.4 billion, with $28 billion alone to finance exploration of recently discovered pre-salt oil fields. The company also hopes to double its total oil and natural gas output by 2015, counting on the Tupi oil field and three other offshore camps to begin production. The day after the plan’s release, the first fully Brazilian-made natural gas platform, with capacity to generate electricity for 300,000 people, started operations. This also marks a step forward for Brazil’s naval industry, which will build another eight platforms to be deployed by 2013.

Washington’s new administration has signaled interest in working with South America’s largest economy this week in the fields of energy and trade. Following Monday’s phone conversation between the presidents of both countries, a spokesperson from Lula’s office announced that Obama “is interested in continuing discussions to advance the Doha round” of trade negotiations. In his January 26 edition of his radio show, “Café com o Presidente”urged Obama to push Doha forward.

A new report by AS/COA’s Trade Advisory Group entitled Building the Hemispheric Growth Agenda: A New Framework for Policy proposes creation of a hemispheric energy partnership that would include Brazil: “[A]s a starting point to greater regional integration, the United States and other willing partners across the hemisphere, perhaps as an E4 or E5, should join together to formulate a mutually beneficial hemispheric energy agenda roughly analogous to the original European Coal and Steel Community.” The report also suggests that the new U.S. administration should scrap the 54 cent-per-barrel tariff on Brazilian ethanol and consider a pact for a civil nuclear program similar to the one signed with India during the Bush administraion.

A December AS/COA panel analyzed the investment climate for energy in the region, with an emphasis on Brazilian energy and Latin American integration.

Read the article as published at the AS/COA website.

Download a PDF file here.

Economic Revival in Peru AS/COA Online 07/18/08

President Alan Garcia and new Finance Minister Valdivieso at the latter’s swearing-in ceremony in Lima on July 14. (AP Images)

Over the past couple of weeks, the already strained American economy has been plagued by bad financial news. After heavyweight investment bank Bear Stearns needed a rescue from bankruptcy, giant mortgage lenders Fannie Mae and Freddie Mac also required a bailout from a federal government struggling to handle an economy not officially in “recession,” but “sluggish,” to say the least.

In contrast, several emerging economies in Latin America have thus far shown signs of remaining insulated from the U.S. credit crunch and a weak dollar market. Peru serves as a prime example, posting impressive growth results. As reported by the Instituto Nacional de Estadística e Informática, GDP growth in May 2008 rose (PDF) to 7.3 percent, resulting in 83 consecutive months of growth. In the last 12 months, the growth rate hit 9.37 percent, boosted by strong performance in the construction, mining, and agriculture sectors. In another indication of growing confidence in the country’s economy, when comparing May 2008 statistics with May 2007, the number of Peruvians returning (PDF) from abroad increased by 4.3 percent while the portion emigrating decreased by half a percentage point.

Following in the footsteps of Fitch ratings, Standard & Poor’s raised Peru’s credit rating to investment grade on July 14, making the country even more attractive for investors. Meanwhile, Luis Valdivieso, a former International Monetary Fund official, was sworn in as Peru’s new finance minister to replace Luis Carranza, who resigned (Carranza will remain close to the government as a presidential adviser). Valdivieso has emphasized goals that include more equal wealth distribution and taming growing inflation. Investment bankers, who perceive him as likely to uphold his predecessor’s tight fiscal policies, approve of the new minister.

To complement Peru’s gain in financial momentum, other reports signal that more growth is on the way. Peruvian exports to the European Union (EU) grew 21 percent in the first five months of 2008, totaling more than two billion dollars worth of trade. The news comes as Peru continues to be part of free trade agreement (FTA) negotiations with the EU as a member of the Andean Community—composed of Bolivia, Colombia, Ecuador, and Peru. Yet talks have stalled since the EU recently approved a controversial new immigration directive.

But Peru faces other challenges beyond the blocked FTA with the EU. In the country’s southern regions, recent protests led by disgruntled miners highlight the wealth disparity between the rural and urban populations. The Financial Times reports that 39 percent of the total population lives below the poverty line, with residents of rural areas accounting for a disproportionate amount of the Peruvians living in poverty. Protesting miners demand better wage controls on rising prices, and a more equal distribution of mining company revenue.

In an op-ed for Poder magazine, COA’s Eric Farnsworth examines how Peru has seized the moment to improve its global standing. Speaking at COA’s annual Washington Conference in 2008, Carranza stressed poverty reduction as a key to Peru’s sustained growth. Read an AS/COA’s hemispheric update on Peru’s economic growth.

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

Download a PDF file here.