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.

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Funes Calls for Unity after Win AS/COA Online 03/17/09

Byline shared with Carin Zissis.

Salvadoran President-Elect Mauricio Funes addresses supporters. (AP Photo)

Salvadorans chose leftist candidate Mauricio Funes as their new president in the heavily contested March 15 election. Funes put his first foot forward as president-elect with a call for national unity, vows to jump-start the ailing economy, and a pledge for moderation over radicalism. “There will be no confiscation, we will not reverse any privatizations. We will not jeopardize private property. There is no reason at this moment for fear,” said Funes, who pulled in just over 51 percent of the vote.

The former CNN journalist’s victory could be considered a major milestone in El Salvador’s history as it marks the end of 20 years of presidents from the Nationalist Republican Alliance (ARENA). Seventeen years after the end of the country’s civil war, the Farabundo Marti National Liberation (FMLN), once a Marxist guerilla group, comes to hold executive power. The Economist reposted a 1992 article online marking the end of the 12-year civil war that claimed 75,000 lives and turned the country into “a pawn on a great board whose far corners were in Angola and Afghanistan.” A GlobalVoices post logs positive reactions to Funes’ win from across the Salvadoran blogosphere. An editorial in the Los Angeles Times says the “peaceful change of power is gratifying.” It also describes the country as “supremely divided and impoverished” and commends Funes for his calls for unity following a deeply discordant campaign.

Despite Funes’ pledges to take a more centrist path—along the lines of Brazilian President Inácio Luiz Lula da Silva—some suggest he could be pulled to the left by members of his party. He has said he does not plan for his country to exit from membership of the Central American Free Trade Agreement. But some suspect that other members of his party, including his vice president Salvador Sanchez Ceren, will seek to reverse market friendly reforms. Wall Street Journal explains that, while El Salvador’s economy has one of the most dynamic private sectors in the region, some business owners worry about Funes’ capacity to govern in tune with some of the more radical members: “Many here fear that the FMLN bloc in the National Assembly, with whom Funes has never had to work on legislation, may not share the new president’s willingness to compromise with private enterprise.” Still, even if Funes finds himself pressured to turn leftward, he will also have to find a way to work with ARENA, which holds a large number of seats in El Salvador’s legislature and could block legislation.

During the election cycle, Arena candidate Rodrigo Ávila brought up concerns about Funes and the FMLN, comparing his rival to Venezuelan leader Hugo Chávez or neighboring Nicaragua’s Daniel Ortega. Indeed, as a Foreign Policy web exclusive noted, a great deal of the language used by both campaigns “focused on the situation outside the country’s borders.” The article suggests that, although some raised concern about U.S. intervention in the Salvadoran election, Barack Obama’s victory likely helped boost the FMLN as Funes modeled his campaign rhetoric after the U.S. president’s “change” message.

The impact of events beyond the Central American country’s borders could play a role in economic policy charted by Funes. As financial crisis grips the United States, concerns rise over the dependability of remittance flows from Salvadoran immigrants working abroad. Last year, Salvadoran immigrants living in the United States sent $3.2 billion home and 22.3 percent of families in El Salvador receive remittances. The Inter-American Development Bank this week predicted a drop in remittances to Latin America in 2009. Funes himself raised concerns about remittances in an interview with Los Angeles-based La Opinión. He pointed out that these funds represent 18 percent of El Salvador’s GDP, making close relations with the United States crucial.

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How Correa Weathers Quito’s Economic Strom AS/COA Online 02/27/09

President Rafael Correa. (AP Photo)

Ecuador, facing declining remittances and low oil prices, finds itself confronted with financially tough 2009. But the upcoming presidential elections present an opportunity to redirect voters’ attention to other quarrels picked by the administration of President Rafael Correa. His style of governing has mustered ample support for his political party Movimiento Pais while sparking multiple controversies abroad. Along with his Vice President Lenin Moreno, Correa will get another chance to put his formula for government up for a reelection test, thanks to a revamped constitution approved last August. The presidential campaign begins March 10 with the election following on April 26.

Quito’s short-term financial forecast appears bleak. The Economist Intelligence Unit predicts Ecuador faces negative growth of 3.2 percent and, from 2010 up to 2013, experience half the growth rate of the past four years. In addition, the bond default announced by the Finance Minister María Elsa Viteri on February 16 unnerved investors, on guard since December over whether Correa’s government would make payments on what the president called “illegitimate” external debt.

Like most of the countries in the Western Hemisphere, Correa may have to drastically cut spending in 2009 as a result of the global crisis decreasing his popularity levels. Statistics prepared by Ecuador’s Central Bank confirm the downward slope in oil and non-oil related exports, gross domestic product, and remittances. El Comercio reports that international reserves have dropped significantly in the last six months thanks to lower oil demand and prices. Lower inflation rates starting in October stand as one bright spot.

Yet, despite these financial trials, Ecuadorians continue to favor Correa’s administration. A poll by Cedatus/Gallup show that Correa’s approval ratings remain at a solid 70 percent in January. Some of the initiatives undertaken by his government include his calls against renewing the lease for the U.S. air force base in the port of Manta, breaking diplomatic relations with Colombia after Bogota’s unauthorized military raid against guerrillas last year, and threatening Repsol to freeze its assets for non-tax compliance. The Latin American Thought blog offers an explanation of how the initiative to turn the town of Manta into a megaport developed by Hong Kong-based Hutchinson Port Holdings may turn sour as a result of sinking manufacturing numbers in China. On bilateral relations with Colombia, World Politics Review says 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 deal with so that restoring diplomatic ties with its neighbor may not stand as a top priority. To defuse the Repsol affair, a prompt visit by Spain’s Foreign Minister Miguel Angel Moratinos on February 25 forged a compromise to repay 20 percent of the $444 millions demanded by the government by a March 12 deadline, Hoy newspaper reports.

In spite of a new occupant in the Oval Office, Quito’s relations with Washington remained strained after Ecuador’s decision to expel the U.S. Embassy’s First Secretary Mark Sullivan, accusing him of meddling with internal affairs. The move was preceded by the expulsion of U.S. official Armando Astorga on February 7 after Washington ended support for a police support program. In a daily press briefing on February 19, U.S. Department of State Acting Deputy Spokesman Gordon Duguid expressed concern and suggested that the United States is weighing whether or not to engage in diplomatic retaliation.

The Instituto Latinoamericano de Investigaciones Sociales in Quito unveiled an analysis of Ecuador’s state of the economy in 2008.

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The Americas 2008: A Year in Retrospective AS/COA Online 12/23/08

View a slideshow of the most compelling events in the hemisphere. Also, read an article by AS/COA Online Managing Editor Carin Zissis on the most riveting events affecting the Americas in 2008.

Click the image to watch the photo gallery.

Recession Strikes Immigrant Jobs, Remittances AS/COA Online 12/12/08

Immigrants struggle with fewer employment options. (AP Images)

In the midst of a financial storm, the U.S. labor market lost more than half a million jobs in November alone. While unemployment affects all segments of the population, legal and undocumented Latino workers have been particularly hard hit. The Hispanic unemployment rate hit 8.8 percent in October, outpacing the national figure of 6.5 percent.

The rising joblessness coincides with slowing remittance rates, delivering another blow to Latin American economies—particularly in Mexico and Central America—that depend on emigrant money flows. Remittances slowed down worldwide from a 16 percent annual increase in 2007 down to only seven percent in 2008. In October, the Inter-American Development Bank forecasted that this year, for the first time since 2000, remittances to Latin America would decrease in value when adjusted for inflation.

Given the circumstances, Latin American migrants to the United States find themselves contemplating the idea of returning home, faced with the difficulty of holding down jobs in hard-hit sectors such as construction as well as stiffer immigration enforcement that includes random workplace raids. The Philadelphia Inquirer reports about Latin American immigrants moving home, and notes that even circular migration across the border may drop as Mexicans return home permanently. A Pew Hispanic Center report from October found that the number of illegal immigrants entering the United States dropped from 800,000 per year between 2000 and 2004 to 500,000 per year in 2007. Additionally, immigration officials claim that tougher enforcement has helped reduced illegal immigration; more than 290,000 illegal immigrants were deported in 2007, which they say has induced others to consider the option of returning home.

Those who return or remain must also contend with economic consequences. NPR covers the struggles of poor residents in the Mexican state of Michoacán receiving fewer remittances from their relatives. The report also envisions problems for local governments if, for example, 10 percent of migrant workers decide to return. “No, there’s no work…there are some serious complications. This is reality,” State Legislator Antonio Garcia says.

However, the Associated Press reports that remittances to Mexico rose by $2.4 billion in October compared with $2.2 billion a year ago as Mexican immigrants sending money ahead of the Christmas season and cashing in on the declining value of the peso. That means more purchasing power in the hands of millions of families already strained by a weak economy. Despite this positive glimpse of recovery, the Economist explains that many workers might be sending home their savings in advance of their planned return.

In the United States, the immigration debate became a lesser issue in the 2008 presidential race and could be relegated to the back burner of Barack Obama’s presidential agenda, given the pressing need to confront the financial crisis. During his campaign, Obama promised to secure U.S. borders, reform existing immigration laws, and “bring illegal workers out of the shadows.” The recent nomination of Arizona’s Governor Janet Napolitano to the secretary of Homeland Security post by Obama is perceived as a strong sign that the next administration will eventually tackle immigration reform, given Napolitano’s expertise in border issues and immigration law.

The Migration Policy Institute recaps the top 10 immigration issues of 2008 and suggests which issues to keep an eye on in 2009.

Read AS/COA coverage on how the financial crisis has hit immigrant pockets this year.

En español.

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