Financial & Economic Crisis hits Latin America

It was the turn of Latin America's stock market to take a nose dive this Wednesday - "Dark day for faltering LatAm stocks" . In Chile they dropped 6.3%, in Mexico by 7 %, in Brazil by 10%, and last but by no means least Argentina, where they dropped by 18%.

The magnitude of the drop in Argentina was provoked when President Cristina Fernandez announced plans to nationalise the private pension funds.

She said the nationalisation would protect retirement funds from the global financial crisis, but analysts said the move would drain company access to private capital. Argentina's Congress is expected to approve the proposal within weeks. BBC News: "Turmoil in Latin American Markets".

Privare investors have been upin arms, not least a Merrill Lynch executive who stated bluntly that his bank had now written off any investment plans in Argentina "for at least the next half decade." - AFP, "Latin America in Jaws of Global Crisis"

As I mentioned in an earlier post - "Global Depression: So What About Latin America" - much of the worry in Latin America on the back of the current world financial crisis, stems not so much from the so-called credit crunch, but rather the sharp recession that's meant to hit the world's major markets in the Northern hemisphere, and the decline in commodity prices that it will entail.

Correspondents say international demand is declining for many of Latin America's commodity exports, including oil, copper, iron ore and soy as global growth slows amid the current financial global crisis BBC News, "Turmoil in Latin American Markets".

Whilst demand may be faltering in the US and Europe, demand from the likes of China is still bouyant.

This is not to say that all is as gloomy as one could fear. Precious global recessions have tended to hit Latin America harder than most. The analogy of "when the US economy sneezes, the rest of the world cathces a cold, but Latin America catches phnuemonia" having proven to be quite fitting in th past. This time round things may be slightly different. According to former Mexican foreign minister, Jorge Castañeda:

the region would be largely impervious to the recent crisis. Mexico, Chile, Brazil and Uruguay should manage just fine, emerging with only bruises and scrapes, he argued. Colombia and Peru would weather the storm, though suffering greater harm. But he warned of "severe damage" for Venezuela, Bolivia, Ecuador, Central America and the Caribbean. BBC News, "Brazil squares up to an economic storm"

The severe damage awaiting Venezuela has much to do with the sudden drop in oil prices. Overdependent on oil revenues, Venezuela's extensive public spending could be seriouly affected if oil prices continue on this downward trend. It is therefore no surprise that Venezuela qill be pushing for oil output cuts at this week's hastily convened OPEC gathering in Vienna.

Venezuelan Oil Minister Rafael D. Ramirez said the OPEC members "have to take some action now, now," adding that Friday's meeting will reach "consensus to take a very, very, very fast action." Xinhua, "OPEC members divided over oilput cut"

Last week I attended a public meeting at the Houses of Parliament here in London, where Venezuelan ambassador to the UK, Samuel Moncada, whilst almost gleeful in his depiction of the collapse of the world's financial system, had to admit that Venezuela faced difficult times ahead. So what about all the windfall funds from record-high oil prices that the Venezuelan had been meant to have store away for precisely those times when the oil prices were on the fall? Well, according to the ambassador this would only cover Venezuela's problems for a mere 2-3 months.

South American World Cup Qualification - 10th Round

In a brief post here are the results from matchday 10 of South American qualifying competition for the World Cup.

• Chile vs. Argentina: 1-0
• Bolivia vs. Uruguay: 2-2
• Paraguay vs. Peru: 1-0
• Brazil vs. Colombia: 0-0
• Venezuela vs. Ecuador: 3-1

These results leaving the qualifying table looking like this:

1. Paraguay: 23 pts.
2. Brazil: 17 pts
3. Argentina 17 pts.
4. Chile 16 pts.
5. Uruguay 13 pts.
6. Ecuador 12 pts.
7. Colombia 11 pts.
8. Venezuela 10 pts.
9. Bolivia 9 pts.
10. Peru 7 pts.
    

Paraguay are seemingly running away with the qualification campaign leaving the region's giants - Brazil and Argentina - to fumble about, scrapping points against teams they should normally be able to put away with ease. For Argentina, their defeat away to Chile, the first time this has happened in absolute eons, marked the end for Argentine coach Alfio Basile. The writing had supposedly been on the wall for a good few months now. Lacklustre performances, an endless procession of drab draws in recent matches was not want the Argentine public were demanding. Especailly since Argentina stormed to a gold medal at the Olympics, sweeping aside Brazil along the way. But, this under the guidance of the younger a more attack-minded Sergio Batista - Basile having opted of a leading the young Argentine squad at the Olympics.

Here is what BBC's Latin American football specialist Tim Vickery of Basile's legacy:

But as Basile leaves the scene, he deserves to be remembered. He is one of the game's romantics, for whom the joy of expression speaks louder than the fear of defeat - a philosophy that might be old fashioned, but which should never be out of date.

He remains the last Argentina coach to win a title at senior level - the 1991 and 93 Copa America triumphs from his first spell in charge, which ended with one of the great World Cup matches of recent times, the 3-2 defeat to Romania in 1994. It was a classic tie of attack versus counter-attack, made attractive by the fact that Argentina accepted the risks of taking the game to their opponents.

The highlight of his second spell, before the breakdown in relationships started corroding performance, came last year in the Copa America.It ended in tears, stiffled and picked off by Brazil in the final. But the previous matches were an exhibition of passing football, patient and audacious, hypnotic and dazzling. Being there in Venezuela to watch Alfio Basile's side in action was an immense privilege

Qualification games take a bit of a break for the next few months, with the next not taking place until late March. Plenty of time I'm sure for the Argentine media to get hyped up about the return of the prodigal son, Maradonna, as a possible successor.

Will the Brazilian Police be Taking Note?

Three years on, and the inquest into the fatal police shooting of Brazilian, Jean Charles de Menezes, remains ongoing.

Today on the TV news we could watch judge, jury, lawyers and de Menezes’ family being shown around the underground passages of Stockwell tube station, re-enacting Jean Charles’ final movements, before he was shot at point blank range by anti-terrorist police officers.

Tragic as the whole incident is, I can’t help but at least commend the British judicial system in assuring that this horrific accidence is understood and the surveillance system that failed so horribly is brought to account. The question that lingers at the back of my mind is, whether the same level of insistence to come to the bottom of such a police error would be taking place, had this happened in Jean Charles’ native Brazil? A flicker through any of the cop-films coming out of Brazil, such as “Elite Squad”, and you get a picture of the extreme use of violence by the Brazilian police force, and their perceived immunity in the face of any misuse of power. I wonder what attention the inquest into de Menezes’ death is getting back in Brazil and whether or not the Brazilian police are taking notice...

Is Brazil Part of Latin America?

There has never been any contestation that Brazil is somewhat unique amongst the assemblage of Latin American states:

• It’s Portuguese heritage
  
• It’s ability to remain united – rather than splinter into numerous squabbling territories, as happened with the Spanish empire
  
• It’s sheer size – population, economy, territory is as large as that of all the other South American countries put together.

So the differences between Brazil and the rest of the Latin American nations are obvious. However, it would be impossible to see Brazil as anything else but an integral part of any study of Latin America? Well so we thought... Leslie Bethell of Oxford University gave a talk the other week at the Institute for the Study of the Americas entitled “Is Brazil part of Latin America?” Well he would say that given that he was director of the Centre for Brazilian Studies - when it is normally commonplace just to lump Brazil in under Latin America.

Simon Bolivar was supposed to be the great instigator for Latin American unity, However his grand vision had nothing to do with Latin American unity as we know it, but rather of a confederación hispanoamericana – a Hispanic confederation that excluded Brazil. Brazil was not Hispanic and seen as intrinsically different from the rest of the Americas:

• It wasn’t a republic, but a monarchy
  
• It still permitted slavery
  
• It has closer ties with Europe, something the new Hispanic American republics were at pains to distance themselves from.

Not that Brazil really cared about not being part of this Hispanic American club. It’s Portuguese heritage meant that it was naturally imbued with a hostile attitude towards anything related to Spain. This along with a sense of superiority meant that Brazilians were quite happy to be excluded.

In the late 19th century, with the dreams of a unified Hispanic Americas long gone, the notion of Latin America did grow as an idea, especially amongst Latin American intellectuals. They sought to focus on the similarities across the Latin American continent as a counterweight to the increasing dominance and interventionism of the US and its of ides of American (North + South) unity through the a US-led Panamericansim.

However well up into the 20th century Brazil was still seen as a non-integral part of Latin America. In an era of fervent anti-Americanism in Latin America, Brazil persistently remained less critical of the US and was of the US’s more reliable allies. Furthermore Brazil continued to perceive itself unique and indeed superior from the rest of Latin America.

Arguably Leslie Bethall had indeed made a persuasive historical argument as to how Brazil had differentiated itself from the rest of Latin America. However he continued to argue that still today Brazil is markedly different from the rest of Latin America, is still perceived so by Brazilians themselves and that it ultimately deserves to be studied as a completely different entity in exclusion from Latin America. I think this was the point at which most people in the audience would have started to take issue with him.

The interconnectedness of Latin American countries – Brazil included – is plain to see. Brazil borders almost all South American nations, and in today’s world can’t not be influenced, culturally, economically, politically by the rest of Latin America and vice versa. Aside from a difference in language, there is no doubt in my mind, that Brazil is an integral part of Latin America. Yes there are many things which are unique to Brazil, and yes Brazilians will no doubt from time to time see themselves as unique and superior to the rest of the neighbours. But you need just to take a trip over the river Plate to realize that the Argentineans are just as capable, if not more so, in espousing a sense of difference and a superiority with the rest of the continent. Brazil’s leadership in MERCOSUR and the recently unveiled Union of South American Nations (UNASUR) only highlights its attempt to place itself, if not at the centre of Latin America, then at least South America – Mexico, Central America and the Caribbean already seem locked into the US sphere of dominance.

Critics may well turn around and say – and Leslie Bethall would be one of them – that Brazilian leadership is not much wanted amongst South American nations, who view these attempts of regional unity with Brazil at their helm as merely a means to help Brazil to propel itself onto the world stage…

This has been quote a long post…thank you if you’ve managed to get this far. I’ll finish with a few comments by former Brazilian President on this very issue - “Brazil: A Latin American Nation?” - that seem to underscore my point of view as well.

Despite differing colonial histories, languages and state institutions, Brazil does indeed share a relation with Latin America. […] Along with some cultural, geographical, and ideological traits, Brazil and other Latin American nations share a position on the “periphery” of the modern globalized world. […] We belong to Latin America […] We feel at ease in Latin America. (The Washington Institute for International Studies, 14/03/2007)

South American World Cup Qualification - 6th Round

Whilst Brazil's former coach was getting knocked out of Euro 2008 with Portugal, his former side weren't making much progress back in South America. Brazil played out a dreary 0-0 draw against arch-rivals Argentina in the so-called clásico. A result that now leaves them in 5th place in the South American qualification table for the 2010 World Cup. Of course the Brazilian press were quick to pile the criticism on Brazil's coach Dunga

The Brazilian media were in no doubt as to who was responsible for the Canarinha's unsatisfactory showing. The harshest criticism came from Lance!, which ran with a cover featuring Dunga's head inside a noose and topped by the headline "Hung". "Brazil draw with Argentina as the fans vent their fury on coach - Zico now the popular choice," fumed the sports daily.O'Globo also registered its displeasure on its website. "Dunga gets the donkey treatment as off-key Brazil draw 0-0 with Argentina," ran the merciless headline. Publishing a photo of Ronaldinho in the stands at the Estadio Mineirao, the website added that the Barcelona man and Kaka were sorely missed, stating that "without them the future looks bleak". With Brazil's other stars having another off day, O'Globo also remarked on the warm applause Lionel Messi received when he was substituted.Running with a front page photo of a closely marked Adriano trapping the ball on his chest, Jornal do Brasil opted for a short but no less powerful headline: "270 minutes without a goal". The online version of the paper was just as critical: "Even with the Mineirao right behind them, Brazil were incapable of beating Argentina. To cap it all, the fans chanted 'Dunga out' as he made his way off the pitch. All in all, a sad goodbye for a coach who had stakedeverything on this game."Joining in the chorus of disapproval was Folha de Sao Paulo. "What a miserable clásico", it complained before highlighting the fans' displeasure: "The crowd whistled the team and demanded Dunga's sacking." (source: fifa.com)

Otherwise results of note included group leaders Paraguay losing 4-2 to Bolivia. Bottom spot in the group now belongs to Peru after being 6-0 thumping by Uruguay. And Chile have now displaced Brazil from the important 4th place spot - the top 4 teams qualify for the World Cup -with an exciting 3-2 away win to Venezuela.

Results:

• Brazil vs Argentina: 0-0
• Venezuela vs Chile: 2-3
• Ecuador vs Colombia: 0-0
• Uruguay vs Peru: 6-0
• Bolivia vs Paraguay 4-2

Table:

1. Paraguay.....13 pts
2. Argentina....11 pts
3. Colombia.....10 pts
4. Chile.............10 pts
5. Brazil.............9 pts
6. Uruguay........8 pts
7. Venezuela.....7 pts
8. Ecuador.........5 pts
9. Bolivia............4 pts
10. Peru...............3 pts

Here is a good youtube video with all the highligts from this weeks' games. Disfrutenlo!

South American World Cup Qualification - 5th Round

So whilst the major European soccer power (minus England, I guess) slug it out for the European championship this summer, South American nations took another step in their long and arduous qualifying campaign for the 2010 World Cup. Up until now, after 4 games, the story had been of Paraguay leading the way with 10 points, and I guess of Brazil still not having started to fire on all cylinders, with only 2 wins from 4 games.

Well yesterday’s 5th round of qualifying matches emphasised those points with Paraguay stunning the Brazilians with a 2-0 victory in Asuncion. With plenty of games still to go and the first 4 teams guaranteed qualification there is no need to push the Brazilian panic button quite yet, but still…

Otherwise it’s a case of ‘as you were’ with all 3 of the ties ending in draws and Bolivia predictably losing to their age-old enemies Chile in La Paz – so much for the advantage of altitude. And also of note is Venezuela's progress. They're normally the team cemented to the bottom, given how Baseball probably overrides football as their national sport.


Bolivia vs. Chile 0-2
Argentina vs. Ecuador 1-1
Peru vs. Colombia 1-1
Uruguay vs. Venezuela 1-1
Paraguay vs. Brazil 2-0

_______________________

The table now looks a bit like this:

1. Paraguay 13 pts

2. Argentina 10 pts

3. Colombia 9 pts

4. Brazil 8 pts

5. Venzuela 7 pts

6. Chile 7 pts

7. Uruguay 5 pts

8. Ecuador 4 pts

9. Peru 3 pts

10. Bolivia 1 pt

________________

Below are a few youtube video highligths of the differetn games. The quailty isn't great but the audio commentary is as outrageously South American as one could hope for. Enjoy...

Paraguay vs. Brazil: 2-0

Argentina vs. Ecuador: 1-1

Bolivia vs. Chile: 0-2

Peru vs. Colombia: 1-1

Uruguay vs. Venezuela: 1-1

The next round of games take place later this week with the obvious highlight being the battle of the titans- Brazil vs Argentina. Paraguay should also be looking to consolidate thier lead at the top of the table with a relatively easy game against the Bolivians. But I'll make sure to let you all know how they got on.

Reflections on a Forgotten Continet

Michael Reid the author of “Reflections on a Forgotten Continent” passed by our Institute the other day to give an informal talk on his book. A book that tries to go beyond the headlines (e.g. Chavez’s fiery rhetoric, the home of the illicit drug trade etc.) and paint a picture of Latin America that is far rosier than would otherwise be imagined.

Latin America is, as his title suggests, the “Forgotten Continent”. Unable to attract the same levels of attention as other region of the world, it persistently slips under our - not as poor as Africa, not as tumultuous and oil-rich as the Middle East nor home to booming economies such as India and China. What Michael Reid wants to point out is that Latin America deserves much greater attention. It’s a crucial laboratory for capitalist democracies, the success of which is important for the consolidation of other capitalist democracies around the world.

Despite all the doom and gloom that seems to come out of Latin America over the last 25 years - debt crises, economic stagnation, growing inequality, the return of the populist demagogue – Latin America is finding its feet. Democracy is becoming increasingly consolidated and many of the major nations of the region (Chile, Brazil and Mexico) are going through periods of substantial economic growth. And this growth is supposedly being used to tackle the immense levels of inequality.

I couldn’t help but feel as if he was unduly optimistic about the region – something he acknowledges. Perhaps he was too comfortable, for my liking, to fall into line with the post-Washington consensus view of the region. i.e. that the initial Washington Consensus reforms were implemented badly, or not at all, and should be supplemented with more institutional reform and token social justice measures. Yes, many Latin American countries are improving, but is this on the basis of the post-Washington consensus reforms, or merely because the world economy is booming. What happens when we reach the top of the current economic business cycle and economies start going slightly pear-shaped? Have the likes of Brazil and Mexico done enough to better social welfare and the likes so that when the tough times come, the tough don’t cut and run and leave the poor to bear the brunt of a crisis (as happened with the debt crisis).

Anyway that’s me just being overly pessimistic. Latin America has been on the up in the recent years, but my structuralist/dependency theory leanings has me worrying that the global economy will always eventually undermine the efforts of Latin American nations to seek out a better lot for themselves in the world economic order.

His book is probably a good read for anyone interested, but not overly familiar with Latin America. For those who already know the ins and outs of present day in Latin America it probably won’t shed too much light on the region. It’s possibly overly broad and simplistic given that it wants to cover so many issues, in so many countries, within the boundaries of a single book.

But who am I to say? Here’s a glowing review of the book from the New York Times.

Brazilian Democracy under Lula and the Partido dos Trabalhadores (PT)

With exams out of the way it’s great to be able have the time to finally attend some of the seminars that my Institute put on. (Events at the Institute of the Americas)

Yesterday saw David Samuels, a professor from the University of Minnesota, give a talk on the state of Brazilian democracy under President Lula and the ruling Partido dos Trabalhadores (PT).

Luiz Inácio Lula da Silva, popularly known as Lula, successfully ran for President in 2002 – this was his 4th attempt - and was re-elected again in 2006. The fact that a boisterous, and a once imprisoned trade union leader from a humble background could rise to become the President of Brazil is nothing short of remarkable given the elitist domain that is Brazilian national politics. The symbolism of this ‘rags to riches’ tale will undoubtedly have a lasting effect on Brazilian democracy and across the region (Evo Morales’ rise to the Presidential palace in Bolivia has followed a somewhat similar route).

So Lula and the PT entered office with 3 basic principles that were meant to reformulate and transform Brazilian democracy:
· Popular Participation
· An inversion of governmental priorities (i.e. an agenda that focuses on social justice)
· Ethical governance (i.e. and end to corruption)

However as David Samuels was at pains to stress, Lula has neither transformed Brazilian democracy, nor undertaken the structural reforms that he and the PT had been promising whilst they were in opposition.

With regards to fighting social injustice, Lula may well have introduced the very successful and innovative Bolsa Familia programme (here’s a link that tells you what it is all about) but there has yet to be any implementation of major universalistic social reform programmes a la Chavismo. Perhaps he hasn’t needed to given the benefits the Brazilian economy is reaping from the expansion of the global economy. As the neo-liberal ethos goes, perhaps wealth really is trickling down in Brazil.

David Samuels spent most of his time however, detailing how the Lula government has been marred by corruption and has put paid to the belief that Lula and the PT was ever serious about ethical governance. I don’t want to bore anyone with the details but there have been loads. But hey this is South America isn’t it? Don’t we come to expect this type of thing? Well it seems as if the Brazilian electorate kind of think that way. Despite all the corruption that marred the PT’s first term in office, Lula remains as popular as ever – the Teflon President per excellence.

Many people viewed Lula and the PT with rose-tinted glasses before they entered power. Much of the romanticism has been lost. However as long as Brazil’s economy surges forward, as long as they can remain branded as part of ‘the Good Left’ internationally, it seems that the Lula and the PT will remain in office for quite some time.

Unfortunately this has come at the cost of the admirably high standards the PT had promised to bring with it into Brazilian Democracy.

The PT didn’t change the political system, the system changed the PT.