Correa Reiterates Warning Against U.S. Interference

Prensa Latina | May 8, 2013

Quito – President Rafael Correa reiterated his warning to U.S. Ambassador, Adam Namm, to comply with his diplomatic role instead of involving himself in anti-government political activities.

In conversations with reporters in the city of Guayaquil, the Ecuadorian president discounted the expulsion of the U.S. ambassador for now, but recommended that he be more considerate with this country.

Correa described the U.S. ambassador’s participation in an activity organized by a journalists’ guild opposed to the government, as “rude,” where the alleged lack of freedom of speech in Ecuador was criticized.

“Why don’t the other ambassadors participate?” Correa asked. “Rarely have we seen so much betrayal of a calling by the U.S. ambassador, who is really trying to create an uncomfortable situation,” the president said.

Citing Namm’s words that Washington is very concerned, Correa replied that he could go home and worry from there.

“This fact, I think, was a slip by the ambassador, which says a lot about his vision. He believes that he comes to impose conditions, and who has told him that is his role?” Correa asked.

According to Correa, the action is scarcely relevant, but warned against it continuing. “Make no mistake, we are facing immense power,” he said.

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Private Bank Profits Don’t Represent the Health of the Economy

By Arthur Phillips | CEPR | May 8, 2013

Bloomberg’s Nathan Gill wrote a particularly one-sided article on Thursday, in which he states that “Ecuador’s bid to reduce poverty by taxing its banks is threatening to deepen the nation’s economic slump.”

“Slump” seems somewhat dire to describe the state of the Ecuadorian economy. In 2012 the economy grew by 5 percent, and it is projected to grow by 4.45 percent for 2013.

The report also offers no convincing evidence that Ecuador’s taxation of its banks is hurting the economy.

The article specifically focuses on a set of reforms that took effect on January 1, including the elimination of banks’ tax deductions for reinvested profits and a 0.35 percent tax on assets held abroad. The reporter argues that a sharp drop in bank profits in the first quarter of this year was a result of the taxation. He then argues that an increase in the banks’ interest rates must also be due to the reforms:

Non-government banks, including Citigroup Inc (C).’s local unit, raised rates on corporate loans by an average 0.21 percentage point in the first quarter to 8.88 percent, the highest since November 2010, according to central bank data. That compares with a decline of 0.72 percentage point to 8.81 percent in Colombia and an increase of 0.01 percentage point to 5.79 percent for similar loans in Peru.

However, this causality is not at all clear.  It is more likely that this modest increase in interest rates is attributable to a recent uptick in inflation. Consumer prices increased at an annualized rate of 4.6 percent in the first quarter of this year, as compared to a rate of 0.2 percent in the last quarter of last year.

The reforms that increased taxes on the banks were reportedly enacted to pay for increasing cash subsidies for the country’s poor, and they were passed by congress in a 79-5 vote. Gill describes these changes as having been motivated by an election race that Correa was all but certain to win, rather than being the latest step in a determined and so-far successful process to transform a country that, like many in the hemisphere, has been historically plagued by inequality. It is perhaps worth noting that Ecuador has seen some of the region’s highest growth over the past few years. Furthermore, economic gains have been broadly shared and increased social spending has significantly improved the quality of life of a broad portion of the country’s citizens.

As CEPR’s recent report on Ecuador’s financial reforms describes, President Rafael Correa’s actions in recent years are a major reason why the government has raised revenue and consequently been able to pursue expansionary fiscal policy and increased social spending. The results of this policy regime have included the lowest unemployment rate on record, a near-halving of the poverty rate, and a doubling of education funding, among other gains.

Yet, from this article, one would be led to believe that new taxes on the financial sector have only led to lower bank profits, which are presented as a serious problem for the country’s macroeconomic outlook. Among Gill’s quoted sources are the CEO of Ecuador’s biggest brokerage firm, the director of a market research and consulting firm, and the president of the country’s Private Banking Association. Their views should come as no surprise, but they are not necessarily the full picture or even accurate.

The article (on the second page) also quotes Pedro Solines, Ecuador’s banking superintendent, as saying “Less profits for the banks, yes, but where does it go? To the people who receive the subsidy.” The quote continues with Solines saying, “If I receive the subsidy, I’m going to say that the impact is very good. If I run a shop where the person who receives the subsidy spends not $35 but $50, I’m going to say it’s good. If I’m a bank, I’m going to say I’m doing badly.”

Correa was re-elected on February 17, receiving 57 percent of the vote compared to his closest competitor’s 23 percent.

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Ecuador: Correa Confirms Interest in Joining Mercosur

By Emily Tarbuck | The Argentina Independent | February 21, 2013

With Rafael Correa emerging victorious for a third and final term in Sunday’s presidential elections, the leader of the Alianza País party spoke to Argentine newspaper Página 12 about Ecuador becoming part of the Mercosur agreement, their relationship with Argentina, and same-sex marriage. During the interview, he also announced that his party obtained “97 or 98 seats” in the National Assembly, though the final results of the recount are yet to be announced by the National Electoral Council.

In the interview, Correa first discussed the strengthening of ties with Argentina by “further deepening the bilateral relationship” through trade, and agreed with President Cristina Fernández de Kirchner’s condemnation of the “total surrender of our countries at the hands of transnational corporations”. Correa went on to say however that the relationship between the two countries is more than commercial because “with Argentina we have the same political vision”.

Throughout the interview Correa expressed his hope to join Mercosur, and when asked if the dollarisation of Ecuador would hinder the incorporation into the agreement, Correa agreed that it is “an obstacle for any integration process and trade liberalisation”. However, he insisted that “we are very interested in joining Mercosur… and they are very interested in integrating Ecuador”.

Speaking of the impending expiration of the Andean Trade Promotion and Drug Eradication act (ATPDEA), Correa said, “Andean countries have a responsibility [to join these agreements] because they are the biggest producers of drugs! But the US say nothing of the responsibility they have for consuming them.” He went on to say that this agreement is “a new form of pressure for countries that do not behave according to the mentality of the US”, and that “if [the act is] extended, fine, if not, we will know how to succeed.”

As the interview progressed, Correa was questioned on the topic of same-sex marriage, in which he responded that, “the Constitution says that marriage is an institution between people of a different sex”. Correa said that although “we promote many rights and the non-discrimination of any person for any reason… the Constitution clearly says that marriage is between a man and a woman.”

Finally, when asked if the continuation of his government would mean a less restrictive abortion law, Correa said that, “personally I will not promote any law that goes beyond the two cases that are already covered in the current legislation, in the case of a violation of a woman with intellectual disabilities and in the case of rape, when a child is violated.”

You can read the interview in full here.

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IMF Ignores Proven Alternatives With Recommendations to Honduras

By Arthur Phillips | CEPR Americas Blog | February 21, 2013

On Friday, February 15, the International Monetary Fund (IMF) announced that it had concluded its most recent Article IV consultation with Honduras. The Fund’s recommendations varied little from those it has offered many other countries in recent years: cut public spending, reduce deficits, reform pensions and depress wages.

The IMF regularly conducts Article IV consultations with almost all of its member countries—with Argentina, which since 2006 has refused to take part in the process, being one notable exception. The official reviews are a way for the Fund to present its analysis of each country’s economic prospects and to advocate for a set of reforms. While it is difficult to precisely assess the influence of the consultations, it has been noted that in many cases the recommended policies have been adopted against popular public opinion. And in countries that end up borrowing from the fund, these policies are often preconditions for receiving future IMF loans.

The Fund’s recommendations on Honduras diverged little from the policies it is pushing in many other countries. Below is a selection from the IMF’s brief (347-word, to be exact) Executive Board Assessment of its most recent consultation with Honduras:

Directors . . . underscored the need to tighten macroeconomic policies and press ahead with structural reforms . . .. [They] welcomed the planned reduction of the budget deficit in 2013, and urged early adoption of the measures needed to ensure this outcome and avoid further central bank borrowing or accumulation of domestic payments arrears. They called for sustained medium-term fiscal consolidation . . . [and] supported plans to restrain the public sector wage bill . . . and emphasized the importance of reducing energy subsidies . . .. Directors concurred that monetary policy should be tightened . . . [and] regarded plans to reform state-owned enterprises as critical to strengthen the fiscal position and support growth, and encouraged timely implementation . . . and welcomed the ongoing reform of public pension funds.

It is difficult to overlook how much this assessment resembles the Fund’s recommendations to European countries struggling to emerge from the global recession. CEPR co-director Mark Weisbrot and Senior Research Associate Helene Jorgensen recently released a paper analyzing 67 Article IV consultations for European member countries between 2008 and 2012, in which the authors found that the lending body was pushing a “one-size-fits-all” approach that often included pro-cyclical policy recommendations. In the paper Weisbrot and Jorgensen summarized their findings, in part, as follows:

This content analysis finds a consistent pattern of policy recommendations, which indicates (1) a macroeconomic policy that focuses on reducing spending and shrinking the size of government, in many cases regardless of whether this is appropriate or necessary, or may even exacerbate an economic downturn; and (2) a focus on other policy issues that would tend to reduce social protections for broad sectors of the population (including public pensions, health care, and employment protections), reduce labor’s share of national income, and possibly increase poverty, social exclusion, and economic and social inequality as a result.

Given the consistency of the Fund’s advice, one might think there are no alternatives to such prescriptions. But a look at Ecuador’s economy definitively tells us otherwise.

As detailed in a new paper by CEPR’s Weisbrot, Jake Johnston and Stephan Lefebvre (and noted recently on The Americas Blog), since Rafael Correa was sworn in as president in 2007, Ecuador’s government has taken an unorthodox approach to shoring up its macroeconomic standing. From bringing the Central Bank under the control of the executive branch, to taxing capital flight, to defaulting on illegitimate foreign debt, and launching new regulations on the financial industry, the Correa government repeatedly took steps that are antithetical to the IMF’s perspective and advice. The results? A reduction in unemployment to its lowest point on record, a 27% decline in poverty from its 2006 level, and an increase in government revenue from 26 to 40% of GDP over the same period, all in the context of greatly expanded spending on infrastructure, health, and education. The Ecuadorian example should be enough evidence that the IMF’s singular prescriptions are not the only option—in fact, they may be far worse than other “unconventional” approaches.

In the case of Honduras, it is perhaps worth noting that the IMF had a rocky response to the June 28, 2009, military coup that deposed Honduras’ democratically elected president Manuel Zelaya.

Exactly two months after Zelaya’s illegal ouster, which led most foreign governments and international lenders to freeze aid to Honduras, the IMF announced that it would extend $150.1 million in loans to the Central American country’s illegitimate government. Another $13.8 million was released just a week later. Yet on September 6, perhaps partly in response to criticism, the IMF released a statement saying the de facto government could not use the money “until a decision on whether the Fund deals with this regime or the government of Honduras.” That decision was finally made on September 24, when the IMF ordered that the funds would only be made available to the deposed president.

Despite the clumsiness of this decision and the mixed messages it sent the coup-government in Tegucigalpa, it marked an improvement over the Fund’s response to the 2002 coup that temporarily overthrew Venezuela’s socialist president Hugo Chavez. One day after the coup, a spokesman stated that the lending body stood “ready to assist the new administration in whatever manner they find suitable.”

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Reporting Ahead of Ecuadorean Elections Fits a Familiar Narrative

By Dan Beeton | CEPR Americas Blog | February 17, 2013

International media reporting ahead of Ecuador’s elections today has sounded familiar themes, understating the achievements of the Rafael Correa government and attributing Ecuador’s recent economic and social progress to “luck” or happenstance, and high oil prices. Correa is depicted as an enemy of press freedom, despite the fact that Ecuadorean media is uncensored and the majority of it opposes the government; and despite his granting of political asylum to Julian Assange. He is also depicted as a member of Latin America’s “bad left” who has ambitions of regional leadership should “bad left” leader Hugo Chávez succumb to illness or otherwise be unable to continue in office.

A common theme in press accounts is that the Correa administration’s social programs are “funded by the country’s oil proceeds.” While some reporting has gone deeper and noted that “Correa has taken on big business and media groups, imposing new contracts on oil companies and renegotiating the country’s debt while touting his poverty reduction efforts,” others have not. “High prices for oil exports resulted in higher revenues which the government invested in social programs and public infrastructure,” the Christian Science Monitor reported in a Friday article. The New York Times’  William Neuman presented a contradictory picture of the economic importance of Ecuador’s petroleum sector, writing that “Ecuador is the smallest oil producer in the Organization of the Petroleum Exporting Countries, yet oil sales account for about half of the country’s income from exports and about a third of all tax revenues, according to the United States Energy Information Administration,” just before stating in the next paragraph that “Mr. Correa has taken advantage of high oil prices to put money into social programs, earning him immense popularity, especially among the country’s poor.”

Petroleum exports have been important to Ecuador’s economy for a long time; this did not suddenly come about with Correa. While Correa was favored by high oil prices during most of his six years in office, the collapse of oil prices in 2008 was a major blow to the economy.  Also, an important change during Correa’s first term has been the Ecuadorean government’s relationship with foreign oil companies. Correa notably has driven a much harder bargain than his predecessors, “imposing a windfall profits tax for concessions made to companies for the exploitation of domestic natural resources” that “raised over $500 million for the government in 2010,” as our latest paper notes. A raft of financial and regulatory reforms have also put a considerable amount of revenue in the government’s coffers, contributing to the increase  from 27 percent of GDP in 2006 to more than 40 percent in 2012. Stimulus spending – 5 percent of GDP in 2009 – boosted the economy and allowed Ecuador to get through the global recession with minimal damage, losing only about 1.3 percent of GDP during three quarters of recession, despite being one of the hardest hit countries in the hemisphere by external shocks. Non-petroleum sectors such as construction, commerce and services have also been important drivers of growth in recent years, including in 2011, when Ecuador had some of the highest real GDP growth in the region at 7.8 percent, second only to Argentina in South America.

As we have pointed out, this additional revenue has in turn allowed the Correa government to ramp up social spending in ways that are significantly improving Ecuadoreans’ living standards. While much news coverage has reported that state spending has boosted Correa’s popularity and may explain his huge lead (some 20 – 50 percentage points, according to polls) over his opponents coming into the election, some reporting has characterized this – as with last year’s election coverage of Venezuela’s state spending– as a form of vote-buying. “Public policies and subsidies are needed to temporarily keep certain sectors content,” the Christian Science Monitor quotes an analyst as saying. “[T]hey also give him votes.” The Associated Press described this as state “largesse,” a term that Merriam-Webster’s dictionary defines as “liberal giving (as of money) to or as if to an inferior; also: something so given.” The media seems at times to forget that the purpose of economic development is to raise peoples’ living standards.

The New York Times presented Ecuador’s recent economic progress by using a passive voice: “[Correa] has governed during a period of relative prosperity,” which not only understates the impact of the Correa administration’s policies but also the challenges presented over the past several years – most notably the global recession, which collapsed not only oil prices but remittances, on which Ecuador was also heavily dependent.

Some reporting has understated some of the ways in which the government’s policies have impacted Ecuadoreans’ lives. For example, the Associated Press reported that “The bulk of [Correa’s] backers are poor and lower-middle class Ecuadoreans who in 2010 represented 37 and 40 percent, respectively, of the country’s population according to the World Bank.” Bloomberg’s Nathan Gill, meanwhile, wrote:

As the head of a nation where about one in three of its 15.4 million citizens live in poverty, Correa defaulted on $3.2 billion of bonds in 2008 and pushed through laws nationalizing the country’s oil reserves during his first two terms in office. While the moves provided short-term gains, the 49-year-old Correa, an ally of Venezuela’s Hugo Chavez, is now paying the cost with stagnant crude output and declines in private investment needed to boost slumping growth.

In fact, as we noted in our new paper, “The national poverty rate fell to 27.3 percent as of December 2012, 27 percent below its level in 2006,” (before Correa came to office). (The New York Times’ Neuman noted this accomplishment: “In a country of 14.6 million people, about 28 percent lived in poverty in 2011, down from 37 percent in 2006, the year before Mr. Correa took office, according to World Bank data.”)

Nor are Ecuador’s recent gains “short term,” as Gill described them. The data shows sustained progress on reducing unemployment and poverty, for example.

Other common themes include that Correa has clamped down on freedom of press. Such statements are often ironically followed by mention of Correa’s granting of political asylum to Wikileaks founder Julian Assange, such as in the Christian Science Monitor sub-header “President Correa has been criticized internationally for limiting press freedoms and granting Julian Assange asylum in Ecuador’s London embassy.” Readers of AFP might be led to believe Assange was granted asylum in order to “irritat[e] the United States …after the anti-privacy group released tens of thousands of secret US military and diplomatic reports.”

Press coverage has emphasized that Correa is “an ally of Venezuela’s Hugo Chavez,” rather than a friend or “ally” of Brazilian President Dilma Rousseff, for example. This meme positions Correa as “part of a group of leftist presidents in the region that include Mr. Chávez in Venezuela and Evo Morales in Bolivia,” also known as the “bad left” in Washington policy circles and among media commentators. (Brazil has always been considered part of the “good left,” despite the Brazilian government’s longstanding support for Chávez, Morales and other “bad left” leaders and opposition to various U.S. government projects and policies.)

Another theme has been whether Correa seeks to be – or has the potential to be – a “successor” to the “ailing” Hugo Chávez in a “regional leadership role.” The New York Times’ Neuman wrote on Friday that “[A new four-year term] may also give Mr. Correa a chance to raise his international profile. With the ailing president of Venezuela, Hugo Chávez, sidelined by cancer, Mr. Correa is arguably the most vocal leftist leader in the region.” No evidence for Correa’s supposed regional leadership ambitions is presented, other than that “He made international headlines last year when he defied Britain by granting asylum to Julian Assange, the founder of WikiLeaks.”

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Correa wins re-election by a landslide

MercoPress | February 18, 2013

President Rafael Correa swept to a re-election victory on Sunday promising to strengthen state control over Ecuador’s economy and continue using booming oil revenues to build roads, hospitals and schools in rural areas and shanty towns.

Correa won 58% of the votes compared with 24% for runner-up Guillermo Lasso, according to preliminary results released by the electoral authority based on almost 40% of the votes counted. Correa was so confident of his victory that he appeared on state TV less than an hour after polls closed.

“Nobody can stop this revolution,” a jubilant Correa told supporters from the balcony of the Carondelet presidential palace, after claiming victory. He added “we are making history; we are building our own homeland which is Ecuador and the great homeland which is Latin America.“

The populist US-trained economist took power in 2007 and has won strong support among the majority of the population of the country which is poor.

Correa, 49, may now be in line to become Latin America’s main anti-American voice and de facto leader of the ALBA bloc of populist governments as Venezuelan President Hugo Chavez has been silenced during his battle with cancer. Correa said he dedicated his victory to Chavez.

The principal challenge in Correa’s new four-year term will be wooing investors needed to boost stagnant oil production and spur the mining industry. A 3.2 billion dollars debt default in 2008 and aggressive oil contract negotiations scared many off.

Critics view Correa as an authoritarian leader who has curbed media freedom and appointed aides to top posts in the judiciary.

But the fractured opposition failed to make a consolidated challenge. It fielded seven candidates, making it easy for Correa, and he is now on track for a decade in office.

That is rare stability in a country where three presidents were pushed from office by coups or street protests in the decade before Correa took power in 2007. He is already the longest-serving president in Ecuador since the return to democracy in the 1970s following a military dictatorship.

Correa’s success has hinged in part on high oil prices that allowed for liberal state spending, including boosting cash handouts to 2 million people, and spurred solid economic growth.

He has promised to diversify the economy away from its dependence on oil, in part by bringing in new investment for the mining sector. Despite promising reserves of gold and copper, mining operations have barely gotten off the ground.

In a news conference on Sunday after polls closed, Correa played down the need for more foreign investment. He insisted the ultimate goal was to ensure economic growth rather than ”mortgaging“ the country to bring in cash from abroad.

”We welcome foreign investment, and we’re already getting plenty of it,“ Correa said. ”Ecuador is one of the most successful economies in Latin America.”

Ecuadorans also chose a new Congress on Sunday.

The ruling Alianza Pais party was expected to win a majority in the legislature, which would let Correa push ahead with controversial reforms, including a media law and changes to mining legislation, without having to negotiate with rivals.

The results of the vote for Congress are not expected to be known for several days.

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Ecuador’s Financial Reforms Help Explain Why Voters Likely to Re-Elect Correa

By Alex Main | CEPR Americas Blog | February 14, 2013

On Sunday Ecuadorians will head to the polls to vote for a president and vice president, members of the National Assembly, mayors, and other elected officials. As we’ve done ahead of other elections in Latin America, CEPR has published a report offering some economic context to help understand the choices that voters are likely to make.

The report, entitled Ecuador’s New Deal: Reforming and Regulating the Financial Sector, focuses on the innovative financial reforms that have been implemented since President Rafael Correa took office in 2007.  The report explains how these measures helped Ecuador recover from some of the hemisphere’s worst shocks during the world recession.  It also shows how the reforms contributed to a substantial increase in government revenue much of which has been channeled toward health, education, housing and other social spending.  Given these advances, it is not surprising that the latest polls put Correa at 50 percentage points ahead of his closest opponent.

Earlier today, CEPR issued the following press release outlining the contents of the paper:

A new paper from the Center for Economic and Policy Research (CEPR) examines the financial reforms carried out by the Rafael Correa administration, reforms which the paper concludes are in large part responsible for the economic success Ecuador has experienced over the past several years, including its successful counter-cyclical policies during the global recession after 2008. The paper, “Ecuador’s New Deal: Reforming and Regulating the Financial Sector,” examines the Correa government’s taking control of the Central Bank, implementation of capital controls, increased taxation of the financial sector, and other regulatory reforms. It concludes that these played a major role in bringing about Ecuador’s strong economic growth, increased government revenue, a substantial decline in poverty and unemployment, and other improvements in economic and social indicators.

Ecuador will hold presidential elections on Sunday, February 17. Correa is almost certain to be re-elected; Reuters reports that he “has a lead of as much as 50 percentage points over the nearest of his seven rivals in opinion polls.”

“Ecuador has gone against the conventional wisdom and shown that there are alternatives,” CEPR Co-Director Mark Weisbrot and lead author of the paper said. “By pursuing policies that have prioritized economic development, employment, and poverty reduction over financial and foreign interests, Ecuador has surmounted some of the problems that had previously held it back, and that have hampered progress in other countries.”

The paper notes that by the last quarter of 2012, unemployment had fallen to 4.1 percent, its lowest level on record (for at least 25 years), while the national poverty rate fell to 27.3 percent as of December 2012, 27 percent below its level in 2006.

The paper finds that financial reforms contributed significantly to an unprecedented rise in government revenue under Correa, from 27 percent of GDP in 2006 to more than 40 percent in 2012.  This not only allowed for vitally important expansionary fiscal policy, but also a large increase in social spending.  The biggest increase was in housing, but there were also significant increases in health care spending and other social spending.  The government’s most important cash-transfer program (the Bono de Desarollo Humano) increased by one-fourth, and education funding more than doubled, as a percent of GDP, from 2006-2009.

The paper concludes that “What is most remarkable is that many of these reforms were unorthodox or against the prevailing wisdom of what governments are supposed to do in order to promote economic progress. Taking executive control over the central bank, defaulting on one-third of the foreign debt, increasing regulation and taxation of the financial sector, increasing restrictions on international capital flows, greatly expanding the size and role of government – these are measures that are supposed to lead to economic ruin.  The conventional wisdom is also that it is most important to please investors, including foreign creditors, which this government clearly did not do.”

“While not all of Ecuador’s reforms went against orthodox policy advice,” Weisbrot said, “many of them did – and they succeeded. It should be no surprise that Correa is such a popular candidate heading into this Sunday’s elections.”

The paper notes that “Ecuador’s success shows that a government committed to reform of the financial system, can – with popular support – confront an alliance of powerful, entrenched financial, political, and media interests and win. The government also took on powerful international interests as well, in its foreign debt default, its renegotiation of oil contracts, and its refusal to renew the concession for one of the United States’ few remaining military bases in South America.” It notes that this success indicates that developing countries may have more and better policy options than is commonly believed to be the case.

Bolivia slams US over ‘irrefutable evidence’ of meddling

RT | January 7, 2013

Bolivia has “concrete evidence” that the US is plotting to destabilize the Latin American nation, Minister Juan Ramon Quintana said. Proof of US “harassment” of the Bolivian government will be handed over to President Obama, he added.

The Bolivian government is “scrupulously following” US activity in Bolivia, Minister for the Bolivian Presidency Quintana said in a press conference

“There is so much evidence to hand over to the President of the USA to say to him: Stop harassing the Bolivian government, stop politically cornering and ambushing us!” Quintana stressed. He added that investigations into drug-trafficking and human rights abuses would reveal a “permanent battle” waged by the US to impede progress in Bolivia.

“In the offensive against the government there are no visible subjects… What we’re seeing are the political machinations of the US Embassy,” which seeks to damage the image of the Bolivian government, Quintana said.

The country’s US ambassador was ejected in 2008 after being accused of plotting against the Bolivian government by President Evo Morales. The US quickly followed suit, removing its Bolivian ambassador.

A charge d’affaires now heads the American Embassy in La Paz; both nations signed a deal in 2011 that would pave the way for the reinstatement of the ambassadors. However, diplomatic relations between the two countries have yet to be normalized.

Larry Mermmot, the US diplomatic representative in La Paz, said that he was confident that 2013 would see the ambassadors restored in both countries.

A significant bone of contention in these tensions is drug-trafficking in Bolivia. A damning report released by the American government last year ranking Bolivia, along with Venezuela and Burma, as “failing demonstrably during the previous 12 months to adhere to their obligations under international counternarcotics agreements.”

President Morales denied the findings, accusing the US of hypocrisy and calling the illicit drugs trade with Latin America the US’ “best business.”
­
A thorn in the US’ side

Bolivia has been a thorn in the US’ side because of its anti-neoliberal and anti-imperialist policies, pioneered by President Evo Morales; the US also could not permit challenges to its policies in the heart of Latin America, Minister Quintana said in an interview with state radio station El Pueblo.

“What we have been fighting since 2006 and what we will continue to fight is a war against Bolivian progress,” he said, adding that the political objective of the US was to dismantle the “process of rebellion” by any means necessary.

Bolivia is currently led by Evo Morales, the country’s first indigenous leader, who is a close ally of Venezuelan President Hugo Chavez and Ecuadorian President Rafael Correa. The three leaders are known for their anti-American rhetoric, and have often been critical of what they criticize as the US overstepping its authority in Latin America.

Ecuadorian President Correa spoke out over the weekend, voicing concerns of a possible CIA plot to remove him in the run-up to governmental elections in February. He cited a report written by a Chilean journalist, which described an alleged US plot to destabilize the region.

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Unasur Creates Electoral Council, Moves toward Greater Economic Cooperation

By Ewan Robertson – Venezuelanalysis – December 3rd 2012

Mérida – The Union of South American nations (Unasur) has created an electoral council, as well as moving forward on initiatives for greater economic integration.

At a meeting yesterday between Unasur nations in Quito, Ecuador, the regional bloc’s newest council was formally inaugurated. The twelve Unasur member countries now cooperate through nine different councils, including defence, energy and health.

According to the Unasur electoral council’s pro-tempore president, Francisco Tavara of Peru, the council’s aim will be “to strengthen the role of Unasur observation and electoral accompaniment missions in regional electoral processes”.

He added that, “The [electoral observation] missions will be a substantial contribution to the creation of a climate of confidence and transparency for the peoples of South America”.

The electoral council was created after the experience of Unasur’s electoral mission to the Venezuelan presidential elections earlier this year. The council’s first official mission will be to the Ecuadorian presidential election in February 2013, when Rafael Correa will seek re-election.

The Unasur electoral council will have a rotating presidency and representatives from a variety of electoral organisations, and can only send an observation mission in response to a member state’s request.

Lenin Housse, the international relations director of the Ecuadorian National Electoral Council, claimed that Unasur electoral observation missions would be different from those of the Organisation of American States (OAS) or the European Union (EU), because they will be “attached to South America’s reality,” with the principle “of establishing mechanisms of accompaniment, information, and joint assessment”.

The electoral council is expected to emit a joint declaration of principles today, which will include “inclusive democracy”, “transparency of electoral processes”, and “promoting citizen democracy”.

New Court, New Bank

The Unasur is also expected to establish South America’s own forum for the settlement of investment disputes, to replace the Washington-based International Centre for the Settlement of Investment Disputes (ICSID).

“The issue is very advanced, practically all [Unasur] countries agree with this. It was proposed to finish the analysis and begin operating next year,” said Ecuadorian foreign minister, Ricardo Patiño, after a meeting between Unasur heads of state in Lima, Peru, last weekend.

Accusing bodies such as the ICSID of having a “colonialist vision and structure”, he said it would be “good for Unasur to have its own organisation for the resolution of disputes, not to have to go to the ICSID or others so that they tell us how to develop our own systems of arbitration”.

In January this year Venezuela announced its withdrawal from the ICSID, citing the court’s bias against Venezuela in its decisions, and the need “to protect the right of the Venezuelan people to decide the strategic orientation of the social and economic life of the nation”. Fellow leftist governments Bolivia and Ecuador left the ICSID in 2007 and 2009 respectively.

Patiño also confirmed that the Bank of the South, which will fund joint projects and promote regional development, should be functioning by April 2013.

“This is one of Latin America’s most important hopes. It’s about regional growth,” he said in an interview with Venezuelan current affairs program Dossier on Friday.

He reported that the bank currently has two-thirds of the necessary capital to begin activities, and that once launched, could support a range of projects, such as regional rail and food storage networks, joint production of generic pharmaceuticals and greater energy integration.

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Study: Venezuela’s Chavez 4th Most Popular President in the Americas

By Ewan Robertson | Venezuelanalysis | September 24th 2012

Mérida – Venezuelan President Hugo Chavez is the 4th most popular president in the Americas, according to a new study of presidential approval ratings in the region.

The study, by Mexican polling firm Consulta Mitofsky, gives President Chavez a “high” approval rating of 64%, gaining 6 percentage points since the firm’s last study and jumping up the table of presidential popularity levels.

The findings come less than two weeks before Chavez seeks re-election on October 7 against right-wing opponent Henrique Capriles Radonski.

According to the study, which measured the approval ratings of 20 leaders in the Americas by compiling public opinion polls from their respective countries, Ecuadorian president Rafael Correa is the most popular president in the Americas with an “outstanding” approval rating of 80%.

“Rafael Correa repeats his first place with 80% (a point less than his previous evaluation), maintaining the approval with which his presidency began almost five years ago,” the ‘Approval of Leaders: America and the World’ report stated.

He is followed by Maurico Funes of El Salvador and Guatemalan president Otto Perez, on 72% and 69% respectively.

Chavez and Correa are joined at the top of the popularity table by other presidents considered left or centre left, with Brazil’s Dilma Roussef on 5th with 62% approval, and Nicaraguan president Daniel Ortega on 7th place with a popularity of 59%.

Meanwhile, two months ahead of his re-election bid against Republican rival Mitt Romney, US President Barack Obama placed 10th in the study, receiving a “medium” approval rating of 49%. Canadian Prime Minister Stephen Harper was classed on a “very low” popularity of 37%, putting him down on 16th place.

The study highlights a north-south divide, with South American presidents enjoying an average approval of 50%, against 44% for leaders from the North of the hemisphere.

Many rightist presidents have dropped in popularity since the earlier 2012 study by Consulta Mitofsky, and find themselves on the bottom half of the table. Colombian president Juan Manual Santos still figures on the top half of the table with 54% approval, yet has dropped 13 percentage points and has lost his “high” approval rating.

Furthermore, Mexico’s Felipe Calderon placed 11th (46%), while Paraguayan President Federico Franco and Chilean President Sebastian Piñera share 17th place on 36%. Franco was came to power through an “institutional coup” in June by the Paraguayan Senate, and is less popular than deposed leftist president Fernando Lugo, who had 44% popularity in August 2011.

However, the findings aren’t all good news for South America’s “pink tide” governments, with 12th, 13th, and 14th places going to Argentina’s Cristina Fernandez (43%), Bolivia’s Evo Morales (41%) and Peru’s Ollanta Humala (40%) respectively.

The last places in the poll are occupied by the presidents of Honduras and Costa Rica, on approval ratings of 14% and 13%. The full study in Spanish can be accessed here.

Related articles

• Ecuador’s Correa and El Salvador’ Funes, leaders with the highest approval-rate (en.mercopress.com)

Ecuador Will Cease Participation In School Of The Americas

School of the Americas Watch Statement on Ecuadoran Decision to Cease Participation in SOA/WHINSEC | June 28, 2012

This Wednesday, June 27, Ecuadoran President Rafaeal Correa, after hearing from a delegation of SOA Watch, has taken the decision to cease sending Ecuadoran soldiers to the School of the Americas.

We wish to express our happiness for this decision by the Ecuadoran government, convinced that the School of the Americas – now called the Western Hemisphere Institute for Security Cooperation –indeed trained and trains Latin American soldiers under the doctrine of National Security, based on fighting the internal enemy. This doctrine has borne human rights violations throughout Latin America.

In 2010, in the Truth Commission Report that investigated human rights violations in Ecuador, the training that Ecuadoran soldiers had received at the School of the Americas was called to attention, and the report recommended that the State cease sending troops to the military school. Today that recommendation has been taken into account and we are happy.

The thousands of victims of human rights violations in Ecuador and all of Latin America have the right to know those responsible for the killings, forced disappearances and torture, and that they are brought to justice to pay for their crimes. At the same time, nations must give guarantees to society and survivors that this will not happen again. One concrete way to do this is to end military training at the SOA, that has caused so much damage and suffering to our people.

Ecuador joins Venezuela, Uruguay, Argentina and Bolivia, who have pulled out of the SOA. As a result, we call on the other countries of Latin America to stop sending their troops to the School of the Americas as soon as possible.

We congratulate President Rafael Correa for this sovereign decision and to finally protect the Ecuadoran people from being subject to future human rights violations.

In solidarity,

School of the Americas Watch

Paraguay faces expulsion from Mercosur/Unasur, economic isolation

MercoPress | June 23, 2012

President Cristina Fernández assured on Friday night that “Argentina does not condone the coup in Paraguay” and anticipated that “appropriate measures” will be taken at next week’s Mercosur Summit, scheduled to take place in Mendoza.

The Argentine leader also said that Unasur expressed a unanimous voice regarding the impeachment process that removed President Fernando Lugo from office on Friday.

Brazilian president Dilma Rousseff also suggested that Paraguay could be expulsed from Mercosur and Unasur since the two organizations have clauses in support of democratic rules and governance.

Speaking at a press conference before addressing the UN Rio+20 summit Rousseff said there “are anticipated sanctions for those who do not comply with the principles that characterize democracy” but admitted Paraguay was going through “a complicated situation”.

When a country violates the democratic clause the sanction is “non participation in multilateral bodies; that is expulsion from Mercosur and Unasur”.

Ecuadorean president Rafael Correa anticipated that his government “will not recognize any other Paraguayan president but Fernando Lugo”, and independently of the decisions from Lugo and Unasur “Ecuador will not recognize the new president”, Federico Franco, named by Congress.

“We are not going to remain idle to the advance of these type of issues in our region because what happened in Paraguay is absolutely illegitimate” and recalled the democratic clause from Unasur which enables the regional block to act when against the rupture of democratic order in any member country.

“What has happened in Paraguay is a big farce disguised as legality but it is totally unacceptable that the decision to oust a president was taken in 24 hours ignoring his right to due process and defence”, added Correa.

Venezuelan Foreign minister Nicolas Maduro said in Asuncion that a meeting of Unasur heads of state will take place soon to decide on the Paraguayan case, which he described as “absolutely shameful”.

Maduro is in Paraguay as one of the Unasur Foreign ministers’ delegation sent to try and mediate in the political crisis.

Unasur ministers cautioned that if due process was not respected “this would mean the rupture of cooperation of Unasur, Mercosur and Celac with Paraguay” which involves among other things cutting of subsidized fuel, limiting communications and commercial dealings.

Unasur Secretary General Ali Rodriguez said in a release that country members “will assess how it can be possible to continue cooperation with Paraguay in the framework of South American integration”, if the impeachment process ignores due process and the right to defence.

“The foreign ministers mission reaffirms its total solidarity with the Paraguayan people and its support for constitutional president Fernando Lugo”, underlined Ali Rodrigues.

Venezuela’s Maduro said that “we came (to Paraguay) with the best of willingness and open minds to help but disappointingly we were not listened by those making the decision”.

“There is an evident breaking down of constitutional order” pointed out Maduro who added the delegation arrived in Asunción “to support Paraguayan democracy, the Paraguayan people and the constitutional president Fernando Lugo”.

Maduro claims lawmakers listened in “silence and with indifference” to the Unasur request for respect to due process in the impeachment of the head of state.

~

See also:

Argentina recalls ambassador

Brazilian embargo could impact 60% of Paraguay’s exports

Related articles

• Rousseff suggests expulsion of Paraguay’s Mercosur and Unasur (ireport.cnn.com)
• Paraguayan Senate impeaches leftist president, causing international uproar (weeklyintercept.blogspot.com)