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Weekly Roundup: Venezuela's Currency, El Salvador's Expat Vote, Chile and Peru's Maritime Dispute

Weekly Roundup AS/COA

January 24, 2014

End in Sight for Chile-Peru Maritime Dispute as ICJ Ruling Approaches?

As Chile and Peru await the International Court of Justice (ICJ)’s January 27 ruling on their decades-old maritime dispute, expert consultants for Peru21 discuss expectations and possible outcomes for both sides. Though Peru officially filed its claim with the ICJ in 2008, the Andean country has struggled to regain control of nearly 24,000 square miles of water since Chile siezed the area after the 1880s War of the Pacific. Both countries have vowed to abide by the decision. Peru’s former Minister of Foreign Affairs José Garcia Belaunde told Reuters: “[W]e'll define our maritime border with Chile, and then all of Peru's terrestrial and maritime borders will be sealed forever.” Peruvian international affairs analyst Farid Kahhat adds that Peru has “nothing to lose,” other than a blow to its “collective self-esteem by losing to Chile again.” La República published an interactive timeline showing developments in the dispute over the past three decades leading up to the 2014 decision.

Chile’s Bachelet Gears up ahead of March Inauguration

President-elect Michelle Bachelet announced her cabinet on Friday afternoon. She named Rodrigo Peñailillo—who headed her cabinet during her previous administration—as interior minister, and UN Assistant Secretary General Heraldo Muñoz as foreign minister.

In addition, she named former Finance Minister Nicolás Eyzaguirre to head the education ministry. A new poll from Chile’s Center of Contemporary Reality Studies found that over 80 percent approve of Bachelet’s proposed education reform, and 71 percent approve of drafting a new Constitution. Bachelet takes office on March 11.

Peru’s New Gun Law Comes under Scrutiny

A change on gun rules to Peru’s penal code has caused an outcry in the country and abroad, as critics call it “a license to kill.” The legislation gives police officers and military prosecutorial immunity when they shoot civilians “in compliance with their duty.” The head of the country’s ombudsman office said that it exempts responsibility from police and soldiers and threatens international agreements, while Peru’s attorney general defended the law, saying it isn’t an invitation for abuses. On January 23, the Inter-American Commission on Human Rights issued a statement of concern, saying that a failure to investigate these types of crimes would create a “climate of impunity and the conditions for violations of that nature to be repeated.”

Venezuela Changes Currency System as Food Producer Issues Alert

On January 22, the Venezuelan government announced changes to its currency system, in which Venezuelans traveling overseas, airlines, and foreigners sending money out of the country must use a secondary exchange rate of about 11.3 bolivares to the dollar instead of the preferential rate of 6.3. Characterized as a “partial devaluation” by Bloomberg, the decision came the same day the country’s largest private food producer revealed that, because the government is delaying the release of dollars, the company will not be able to continue importing raw materials.

Bogota Mayor Receives Another Favorable Court Decision

On January 23, a local court ruled in favor again of Bogota Mayor Gustavo Petro, allowing him to keep his seat, and suspending the removal order by the country’s inspector general. In December, Inspector General Alejandro Ordoñez announced his decision to dismiss the mayor, claiming Petro had made an unconstitutional move in replacing private garbage collectors with a public-sector service. However, with the decision likely to be appealed, the case could make its way up to the highest judicial level, the Constitutional Court. At the same time, a recall vote in March will go on as planned unless the court rules to definitively remove the mayor. Semana notes that “perhaps in the history of Colombia, there has never been a more complex and atypical legal situation.”

Cuba to Host LatAm Leaders for CELAC Summit

The Community of Latin American and Caribbean States, a Latin American bloc founded in 2011, will hold a heads-of-state summit in Havana, Cuba on January 28 and 29. Confirmed presidents planning to attend include Argentina’s Cristina Fernández de Kirchner, Brazil’s Dilma Rousseff, Colombia’s Juan Manuel Santos, and Mexico’s Enrique Peña Nieto. It is not clear if Chilean President Sebastián Piñera or Peruvian President Ollanta Humala will attend, as they expect a decision from The Hague on a border dispute on January 27. 

Peña Nieto Makes First Official Visit to Cuba at “Key Moment”

The Mexican president heads to Havana January 28 and 29, first for the CELAC summit, but then for his first official visit to the island to meet with his Cuban counterpart, Raúl Castro. The trip comes at what Mexico’s foreign secretariat called a “key moment,” and marks the first trip by a Mexican head of state to the island since Felipe Calderón went in April 2012. That visit was seen as a fence-mending meeting after tense relations during the government of President Vicente Fox.

The Mexican government pardoned 70 percent of Cuba’s debt in November 2013.

Conflict Continues in Mexico’s Michoacan between Vigilantes and Knights Templar

Vigilantes said they faced off against the Knights Templar organized crime group this week as conflict continued in Mexico’s Michoacan state. The country’s National Commission for Human Rights charged the state’s authorities with “negligence and inaction” for leaving civilians exposed to suffering at the hands of organized criminals. Meanwhile, the federal government, which dispatched additional federal forces to Michoacan last week, announced it had made just over 100 arrests, primarily in Michoacan’s volatile Tierra Caliente region. Among those detained was suspected extorsionist Aquiles N., known as “el terror de los aguacateros” (“the terror of the avocado producers”).

President Enrique Peña Nieto responded to questions about Michoacan and Mexico’s security woes this week at the World Economic Forum in Davos, where he said that homicides linked to organized crime were down by 30 percent. New figures from the government’s National Public Security System show that, overall, homicides decreased in Mexico by 16.5 percent in 2013, but that kidnappings rose.

Brazil’s Mega-Events: Examining Costs and Security

This week, Rio’s Olympics organizing committee announced that the cost for the 2016 games rose to $2.9 billion—27 percent more than the original bid. The organizers justified the increase with the inclusion of new sports, technology needs, and rising inflation. Meanwhile, O Estado de São Paulo reported this week that the Brazilian Defense Ministry will keep air force, marine, and army reserves on standby during the World Cup in case of a security emergency. The military would be employed for “extreme cases” to substitute police. This approach is part of an operations plan released by the Defense Ministry in December to “guarantee law and order” ahead of the World Cup and potential protests in 2014.

Spain and Latin America: Reversing Roles

The Economist reports on Spain’s changing relationship with Latin America as the European country increasingly finds itself in a historically reversed role. In 2013, for the first time, Latin America companies spent more money acquiring Spanish firms than the other way around, the publication notes. Trade flows from Latin America to Spain have outpaced Spanish flows to the region. Plus, the number of Spanish migrants moving to Latin America has outpaced Latin American migrants going to Spain since 2009. 

El País observes another contrast between Spain and Latin America: recent surveys show that Latin Americans tend to be much happier than Europeans. For example, one survey found only 20 percent of Spaniards feel happy, while 86 percent of Colombians do. Columnist Juan Arias explains that while the region may be less affluent than other parts of the world, Latin Americans see their future with greater optimism as their countries grow and reduce poverty.

Report: LatAm’s Youth Unemployment

A January 21 report from the International Labour Organization (ILO) on global unemployment showed that in 2013, 6.5 percent of the active population in Latin America was looking for a job, with a labor force participation rate of about 66 percent. The study found that while employment is expected to expand in the region, youth unemployment remains twice that of adults. In Brazil, for example, over 18 percent of those between 15 and 29 years old do not work or study. In this country, women of African descent are twice as likely to belong to this group as their male counterparts.

Honduras to Inaugurate New President

President-elect Juan Orlando Fernández will be sworn in on January 27. Seven presidents are confirmed to attend, from Costa Rica, the Dominican Republic, El Salvador, Guatemala, Nicaragua, Panama, Taiwan, in addition to Spain’s Prince Felipe de Borbón. The vice presidents of Ecuador and Venezuela will also go, as well as the foreign ministers of Canada, Haiti, and Mexico.

Read an AS/COA news analysis about the challenges the new government will face.

El Salvador’s First Ever Expat Vote

For the first time, Salvadorans living abroad will be able to vote, this time during the country’s February 2 presidential election, and have already begun sending in their votes by mail. However, only a little over 10,000 expat Salvadorans registered to vote, despite the fact that nearly 3 million Salvadorans live outside the country. Because the electoral authorities have not set up polls for Salvadoran expats to cast their votes, over 132,000 people living abroad who received ID cards but didn’t request ballots will be unable to participate. In total, nearly 5 million Salvadorans are eligible to vote in the upcoming election.

Morales Announces Nuclear Reactor Plans, New Ministers

Speaking before Congress for the state of the union address this week, Bolivian President Evo Morales Morales revealed plans to build the country’s first nuclear reactor for “peaceful purposes,” and gave details on the country’s anti-trafficking efforts, noting that police operations doubled between 2005 and 2013. He also announced a cabinet shuffle, though he kept on most of his ministers and appointed two new ones: Tito Montaño in the new position of sports minister, and Elizabeth Gutiérrez Salazar as justice minister.

Latin American Human Rights in Focus

Human Rights Watch (HRW) released its annual World Report on January 21. The report includes assessments of 13 Latin American countries, highlighting prison conditions, freedom of expression, police abuses, and LGBT rights, among other topics. The report also featured an essay by HRW’s U.S. deputy director on the human rights case for drug reform based on her experiences in Colombia and Mexico.

Report: How Much Do LatAm Countries Pay in Taxes?

A new Organization for Economic Cooperation and Development study of 18 Latin American countries found that the average tax burden in the region stood at 20.7 percent in 2012, a small increase of 0.6 percentage points from the previous year. Argentina, Bolivia, Brazil, and Ecuador saw the largest increases of taxes in ratio to GDP, while Chile and Uruguay saw the largest decreases.Argentina has the highest tax revenues as a percentage of GDP at 37.3 percent, while Guatemala had the lowest, of 12.3 percent.

ECLAC Releases Annual Yearbook on LatAm Stats

On January 13, the Economic Commission for Latin America and the Caribbean (ECLAC) released its Statistical Yearbook for Latin America and the Caribbean 2013, which offers updates on annual developments across the region. The report discusses social issues such as extreme poverty, which is four times higher in rural areas than in urban ones. The report estimates regional GDP growth at 2.6 percent for 2013. It also discusses the environment: in 2013, the number of companies that requested ISO 14001, a certification that requires businesses to develop environmental management plans, rose by 17 percent.

Montezuma Avenged: Mexico City Plans Safe Tap Water Initiative

In Mexico, where people are frequently warned not to drink the water, the country’s capital is implementing recently approved legislation requiring all restaurants to install water filters in kitchens and provide free, safe drinking water to patrons. The Associated Press reports that 65,000 restaurants have six months to comply or face fines from visiting public health agents. The initiative could save chilangos—Mexico City residents—a pretty penny; per capita, Mexicans drink more than twice the quantity of bottled water than do Americans. However, a major challenge will be getting customers to trust that the water is safe to drink. Says the head of the city’s restaurant chamber: “The majority of the customers prefer bottled water. They will continue to be wary.”