Ethanol: Brazil Celebrates, United States Debates AS/COA Online 06/04/09

Pumping an ethanol blend at a Brazilian fuel station. (AP Photos)

São Paulo hosted the 2009 Ethanol Summit from June 1 to 3, featuring heavyweights such as President Luiz Inácio Lula Da Silva’s Chief of Staff Dilma Roussef, Petrobras CEO Jose Gabrielli, and environmental activist and former U.S. President Bill Clinton. Speakers discussed new cellulose-based ethanol plants, forecasts of increasing ethanol usage in Brazil, and concerns about deforestation. Meanwhile, Colombia has become South America’s second biggest ethanol player and seeks to build its industry. In the United States, the discussion surrounding biofuels continues to focus on subsidies given to U.S. corn growers, corn-based ethanol’s impact on food prices, and tariffs imposed on Brazilian sugarcane-based ethanol.

At the summit, Roussef announced Brazil’s moves toward producing for commercial use cellulose-based (also known as second-generation) ethanol made mainly from woodchips and switchgrass. She also said Brazil hopes to start selling ethanol in that form domestically by the year 2012. Second-generation ethanol should capture almost 30 percent of the Brazilian market by 2020, according to the president of a private firm who spoke at the summit. Gabrielli trumpeted the fact that Petrobras will invest $2.8 billions in biofuels for the next four years and expects that ethanol will represent 75 percent of the Brazilian fuel market by 2020. But with such massive growth, questions surfaced about the dangers of deforestation. Clinton urged Brazil to take decisive steps to protect the rainforest, reduce its carbon footprint, and share its technology with potential ethanol producers like the Dominican Republic and Haiti. In December, Brazilian Environmental Minister Carlos Minc unveiled an ambitious plan to curb deforestation rates by 72 percent by 2017.

Colombia is also pinning hopes on increasing its stake in the ethanol market, given its position as the second largest producer in Latin America. Colombian Agriculture Minister Andrés Fernández said last month that, with six new projects dedicated to ethanol coming online this year, the country’s production capacity should increase twofold. He also said Colombia plans for a fifth of the cars made or imported to have engines using fuel made up 85 percent ethanol blend by 2012. Still, the increases use of ethanol elevates fears that prices on food containing sugar will rise, as they did happened last year in the United States with corn-related products, El Espectador reports.

In the United States, where corn-based ethanol dominates the industry, the debate continues. The Wall Street Journal reports on two federal studies that found corn-based ethanol carries a high price tag for consumers and questionable environmental advantages. In an article for BusinessWeek, automobile journalist Ed Wallace suggests “we must immediately drop the 51 cents per gallon blending credit for ethanol creation in America and drop the 54 cents per gallon tariff on imported Brazilian ethanol.” Lula and U.S. President Barack Obama discussed the 54-cent tariff imposed to Brazilian sugarcane-based ethanol by Washington during his March 14 visit to the White House without any effect. Obama said then that the measure “it is not going to change overnight” but hinted that “over time this source of tension can get resolved.”

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Washington Weighs Cuba Travel Bans AS/COA Online 04/09/09

Cubans await family members arriving from Miami. (AP Photo)

Updated April 13 – A trip by seven members of the Congressional Black Caucus to Havana put U.S.-Cuban relations in the spotlight as hemispheric leaders prepared to meet at the Summit of the Americas. The delegation, led by U.S. Representative Barbara Lee (D-CA), met with the Castro brothers in separate meetings, marking the first official U.S. visits since President Raúl Castro took office last year and for former President Fidel Castro since 2006.

The visit came just before as President Barack Obama turned back restrictions (read a White House fact sheet) for Cuban Americans wishing to visit or send money to family back on the island. Fulfilling a presidential campaign promise, Obama took the action before the Summit of the Americas, which runs April 17 to 19 in Trinidad and Tobago and will serve as the new president’s introduction to many Latin American leaders and, thereby, the hemisphere. Relaxing the restrictions could affect an estimated 1.5 million Americans with family members in Cuba, calculates The Wall Street Journal. El País reports that Cubans hopes to experience an increased inflow of somewhere between $300 million and $500 million as a result of the change.

The changes will also allow U.S. telecommunications firms to bid for licenses on the island as well as for a freer flow of humanitarian goods.

American legislators have gone a step further. Bipartisan proposals making their way through both houses of U.S. Congress seek to lift the travel ban for all Americans. Senators Byron Dorgan (D-ND) and Michael Enzi (R-WY) introduced the Freedom to Travel to Cuba Act. A similar bill in the House drew 120 co-sponsors and calls for allowing Americans “to exercise their right to travel to Cuba.” Another House bill seeks to ease restrictions on selling agricultural products to Cuba.

Washington’s moves on Cuba could end up being a focal point at the Summit, much to the chagrin of the White House. “In a way, we believe it would be unfortunate if the principal theme of this meeting turned out to be Cuba,” says Ambassador Jeffrey Davidow, the White House advisor for the summit. Yet, as The Economist suggests in an article about the upcoming conference, the uninvited Cuba could end up being the 800-pound gorilla in the room.

Latin American leaders expressed their support to end the 47-year-old U.S. embargo in a December summit held in Brazil. “I am unable to understand the continued blockade of Cuba. It doesn’t make any sense,” said Brazilian President Luiz Inácio Lula da Silva. Reinstatement of Cuba into the Organization of American states (Havana was suspended in 1962) could be another proposal that comes up in Port of Spain. “It has turned out that we are the isolated country,” said Rep. Emanuel Cleaver (D-MO) after returning from Cuba on Tuesday.

Some of the warm steps from Washington have drawn optimism in Havana, including from Fidel. In his weekly column, the octogenarian former leader detailed his meeting with the U.S. lawmakers and hailed the visit, making reference to the historical nature of Obama’s electoral win.

But human rights on the island remains a thorny issue, prompting criticism of the congressional delegation to Cuba. A Washington Post editorial decries that fact that lawmakers didn’t meet with political dissidents in jail or visit their families. “The black U.S. lawmakers’ concerns weren’t for the 300-plus Cuban prisoners of conscience listed by Amnesty International or the hundreds of dissidents working from their homes under the watch of a totalitarian regime,” writes Miami Herald columnist Myriam Marquez.

With all the buzz about U.S.-Cuban ties and power shifts in Havana, are changes underfoot in Cuba? As one man interviewed in Havana put it to the New York Times, “Politics here is a sport whose spectators are all blind. Everyone knows things are happening. No one is sure what. So you stop trying to watch.”

Read AS/COA analysis of the recent reshuffling of Raúl Castro’s cabinet.

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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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Predicting U.S.-Brazil Ethanol Policy AS/COA Online 11/10/08

Byline shared with Carin Zissis.

An ethanol plant. Some firms have felt the crunch of rising production costs and lower prices. (AP Images)

With a new U.S. administration on the horizon, questions arise over opportunities for cooperation between Washington and Latin American countries in the field of biofuels. In particular, how will an Obama presidency affect collaboration and negotiations between the United States and Brazil in the field of ethanol?

In his latest Miami Herald column, Andres Oppenheimer suggests President-elect Barack shrink U.S. dependence on Middle Eastern oil by working with Brazil, Central America, and the Caribbean to produce sugar-based ethanol, which is both cheaper and better for the environment than the corn-based ethanol produced in the United States. During campaign season, the Obama-Biden ticket proposed working with leaders from across the hemisphere on a new “Energy Partnership for the Americas” to support of clean energy. Obama also voiced support for deepening relations with Brazil through developing markets for biofuels and promotion of “green” technology. The future president has praised Brazil, where more than 70 percent of cars are flex fuel, for providing a model for taking steps toward energy independence.

Yet Obama’s praise for the Brazilian biofuels industry may translate to supporting ethanol subsidies in the United States rather than reducing a tariff on Brazilian ethanol. Bloomberg reports that Obama will likely continue the current administration’s policies of subsidizing the industry, including tax credits.The cost of ethanol production has grown while more supplies of the fuel spell price drops. Less than a week before the November 4 election, VeraSun Energy, the biggest U.S. ethanol producer, filed for bankruptcy protection, according to the Financial Times.

In the past, Obama supported a 54 cent per gallon tariff on imports of sugar-based ethanol and voted for the Farm Bill, which maintains the tariff for two more years. The tariff has been a source of consternation for Brazil, which stands as the world’s biggest sugar-based ethanol producer. A New York Times article examines Obama’s ethanol policy on the campaign trail.

But in a May appearance on “Meet the Press,” Obama acknowledged that rising food prices could spur a policy change, saying, “[I]f it turns out that we’ve got to make changes in our ethanol policy to help people get something to eat, then that’s got to be the step we take.” Moreover, opportunities exist for cooperation with Latin American countries that would sidestep the tariff. By making use of its locations and a recently signed free-trade agreement with the United States, Peru stands poised to expand sugarcane-based ethanol production. AmericaEconomia reports that millions in investments from U.S., Brazilian, and domestic companies in northern Peru could lead to a production boost to supply the U.S. market, given that the FTA allows Peruvian products to enter the United States duty-free starting in 2009.

Meanwhile, Brazil’s ethanol industry could see short-term losses as a result of the credit crunch and related shrinking investments. Still, new deals are cropping up, such as a proposal by Archer Daniels Midland to invest $500 million over seven years in new sugar mills and boosting crop production in Brazil. Addressing a conference at the Organization of American States last month, former Brazilian Agriculture Minister and Co-Chairman of the Inter-American Ethanol Commission Roberto Rodriguez highlighted Brazil’s goal to increase the amount of sugarcane used in producing ethanol to 51 percent from the current level of 41 percent, offering growth and job opportunities.

In the Fall 2008 issue of Americas Quarterly, both Bolivian opposition leader President Jorge Quiroga and Gerdau Board Chair Jorge Gerdau Johannpeter suggest the next U.S. president should deepen ties with Brazil. Visit the new AQ website.

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