LATIN AMERICAN NEWSLETTERS latin american regional report Brazil & Southern Cone April 2019 - RBS-19-04 ISSN 1741-4423
C O N T E N T S URUGUAY 2 Introduction Ruling party remains united, but opposition prepares for intense primaries In this edition of the Latin American Regional Report: Brazil & Southern Cone are included articles on matters that look set to have an impact on the BRAZIL 5 governments of Argentina, Brazil, Chile, and Uruguay. From having to pre - Brazil’s airspace is open for business – the Trump-Bolsonaro deal pare for highly contested elections to facing questions over public security, economic, and foreign policy decisions, the topics analysed pose chal - ARGENTINA 7 lenges that could diminish public support for the respective governments. Argentina’s poverty problem CHILE 10 In the midst of a general election year and with party primaries due in June, Piñera under fire over ID checks for public attention in Uruguay is turning towards who is going to be vying for minors the presidency and the general state in which the different political parties ECONOMIC HIGHLIGHTS 12 will arrive at the election. The election looks set to be one of the most contest - ed ever, with a record number of candidates expected to run. It is also believed that the leftist ruling Frente Amplio (FA) coalition will face the biggest chal - lenge since it came to power in 2005. Against this backdrop the competition for presidential nominations in the opposition parties is proving to be intense.
In Brazil , the decision by President Jair Bolsonaro to sign a bilateral deal that for the first time allows the US access to the South American country’s satel - lite launching facility located in its northern coast could be a double-edged sword. The deal reinforces Brazil-US ties and opens up potentially signifi - cant business opportunities. But critics are concerned that it could lead to the displacement of local communities; that it could produce environmental damage; and that in order to secure it the Bolsonaro government made too many concessions to the US. As such the agreement, which requires con - gressional ratification, has the potential to become a source of discontent with the Bolsonaro administration.
Argentina may, like Uruguay, also be holding a general election this year, but the attention is currently focused on the revelations that the country’s poverty rates are once again rising. This appears to be an indictment of the economic policies implemented by the government led by President Mauricio Macri. The Macri administration may argue that this is sympto - matic of the dysfunctional domestic economy that it inherited from the pre - vious administration and that it is still trying mend. But inevitably, the gen - eral deterioration of living standards makes Macri’s prospective re-election less likely as public support for his governments falls.
Meanwhile, in Chile we focus on an initiative promoted by the Sebastián Piñera government that seeks to improve public security by allowing the police to perform identity checks and searches on minors. The initiative is proving highly controversial and has even been denounced as a violation of children’s rights by international organisations. The controversy is further undermining the public image of the already unpopular Piñera government.
Latin American Brazil & Southern Cone Report 1 April 2019 - RBS-19-04 URUGUAY | POLITICS Ruling party remains united, but opposition prepares for intense primaries
Uruguay’s electoral race looks like it will boil down to a neck-and-neck contest between the leftist ruling Frente Amplio (FA) coalition and the cen - tre-right opposition Partido Nacional (PN, Blancos). All public opinion polls currently suggest that the FA is in the lead but that it will once again face a run-off if it is to win a fourth consecutive presidential term.
All polls favour the ruling party. It currently has 40% of voting intentions, fol - lowed by the PN on 29%, the right-of-centre opposition Party Colorado (PC) on 16%, the right-wing Partido de la Gente on 4%, the centrist Partido Independiente on 4%, Unidad Popular on 1%, and the Partido Ecologista Radical Intransigente (Peri), according to the latest survey by local pollster Cifra.
But if the FA does not secure 50% plus one of the vote in the first round, it will have to contest a run-off with the PN, which would have to obtain the support of the other opposition parties to win the presidency. In addition, all political Chainsaw analysts agree that the FA will have a hard time in retaining the narrow con - In his 2009 campaign gressional majority that it has enjoyed since it first came to power in 2005. Lacalle Herrera said FA united that if elected he Although there are four FA pre-presidential candidates (Daniel Martínez, would “take a Carolina Cosse, Marío Bergara, and Óscar Andrade) they have all been more concerned about displaying the sort of party unity that has long eluded the chainsaw” to social opposition than with anything else. This was evident during a political rally government held in the northern department of Paysandú at the end of March to mark th spending in order to the 48 anniversary of the creation of the FA, which was attended by all four reduce the fiscal pre-candidates. deficit. Lacalle The pre-candidate that leads the race for the FA nomination according to the Herrera’s unpopular polls is Martínez, who won election as mayor of Montevideo in 2014 but has chainsaw remarks since resigned to run in the presidential primaries. He delivered a unifying speech and defined the coalition as “the unity of the various”. Eduardo marked the 2009 Bottinelli, a political analyst and director of local pollster Factum, explained election and to LatinNews that maintaining unity is in the FA’s nature. “The FA has a contributed to the political agreement of its joint members that goes beyond differences. It is FA’s victory that year. something that the PN doesn’t have yet. Each FA member has their own pro - file but there are no attacks,” Bottinelli said . This has meant that Martínez’s candidacy has not encountered too many problems.
The FA pre-candidates are more interested in attacking rivals outside of the coalition. Notably, Cosse, who is currently running second in voting inten - tion polls, has been focused on criticising Luis Lacalle Pou, the PN’s presi - dential candidate in the 2014 election who is once again the favourite to win that party’s nomination. “When I hear Lacalle Pou speak of austerity I think of a chainsaw,” Cosse has said of Lacalle Pou’s pledge to tackle Uruguay’s fis - cal deficit and in reference to the remarks made in 2009 by former president Luis Alberto Lacalle Herrera (1990-1995), the PN’s 2009 presidential candi - date and Lacalle Pou’s father ( see sidebar ). In Bottinelli’s opinion, Cosse’s success will depend on her leading an aggressive campaign and securing the support of the Movimiento de Participación Popular (MPP) FA faction led by former president José Mujica (2010-2015). According to the latest polls of FA voters, Martínez has 42% support, Cosse has 21%, Andrade 14%, Bergara 8%, and there are 15% who still do not know who they will vote for.
PN primary Unity is not observed in the PN primary race. “In this political force there are differences in styles, policies, and presentation,” Bottinelli comments. The
Latin American Brazil & Southern Cone Report 2 April 2019 - RBS-19-04 two leading pre-candidates, Lacalle Pou and Jorge Larrañaga, have been con - ducting a hard-fought contest. The first element that divides both pre-candi - dates is Larrañaga’s campaign to collect signatures in support of holding a national referendum over the adoption of major initiatives aimed at improv - ing public security. These include the creation of a 2,000-strong national guard. Larrañaga has succeeded in collecting the requisite 400,000 signatures to hold the referendum. However, Bottinelli explains that “this has divided the party because Lacalle Pou does not agree with the proposals”.
Instead Lacalle Pou, who forced President Tabaré Vázquez into a run-off in 2014, is once again focused on improving Uruguay’s economic fundamen - tals. During the formal launch of his candidacy on 30 March, Lacalle Pou pre - sented five ‘shock’ measures that his prospective government will adopt to achieve this: promoting government austerity, improving economic compet - Rented supporters itivity, improving public security, rethinking social policies to move away According to El from simple ‘welfarism’ to an approach more focused on eradicating pover - Observador , in ty, and the development of knowledge and cultural economic areas. October 2018, even But Larrañaga and Lacalle Pou are not the only contenders in the PN primar - before Satori had ies. Juan Sartori, a young millionaire who has suddenly entered the national formalised his political realm, has unexpectedly shaken the contest and the party. Sartori has seen his support in voting intention polls increase significantly in recent candidacy, his weeks. He is currently running third behind Lacalle Pou and Larrañaga, campaign was ahead of the historic PN leader and governor of Maldonado department, already paying 30 Enrique Antía. Between February and March, support for Sartori increased people Ur$15,000 by eight percentage points in the Cifra poll, from 9% to 17%. Support for Larrañaga over the period increased from 18% to 29%, while support for (US$440) a month to Lacalle Pou fell from 59% to 40%. spread Satori’s name in poor “He is leaving his rivals perplexed,” Bottinelli remarks of Sartori. While all candidates appear in the media, Satori appears to be able to use his economic neighbourhoods for clout to place advertisements in all mass communication outlets, helping to four hours a day. This raise his public profile. An investigation by local daily El Observador found is an unusual that Sartori’s campaign is using ‘rented supporters’ to canvas for votes in practice in Uruguay, poor neighbourhoods ( see sidebar ). Moreover, the 38-year-old Sartori has also succeeded in attracting in-party political support. PN Senator Verónica but it appears to be Alonso, who in the past has supported Lacalle Pou but had launched a pres - working as Sartori’s idential bid earlier this year, has withdrawn her candidacy and backed campaign chief says Sartori’s. Alonso, who had less than 2% support in voting intention polls, had previously been critical of Sartori and in backing him she provides his that they currently bid with added credibility. pay 50 such canvassers that are The campaign for the PN primary has already produced some significant helping with the clashes between Lacalle Pou and his rivals that could undermine party unity. In a recent interview with the local press, Lacalle Pou said that he has not yet campaign, along with decided on who he will ask to be his running mate should he win the PN pres - 80 volunteers. idential nomination. However, he was clear that “my running mate will not be Juan Sartori nor Verónica Alonso”. The following day Sartori boldly replied by stating that “Luis Lacalle Pou would make an excellent vice president”.
Colorado vindication The PC ruled Uruguay throughout most of the 20 th century, before it lost power to the FA in 2005 due to the 2002 economic crisis, the worst in the country’s history. Since then, the party has been in apparent decline and is now only the third-most supported political party. However, for the first time in a decade, the party is experiencing a political revival. The most sig - nificant aspect of this is the return to the political arena of the two-time for - mer president José María Sanguinetti (1985-1990; 1995-2000). The decision by Sanguinetti, an experienced political leader who still commands broad respect, to seek the PC presidential nomination has increased the level of interest in the PC primary.
Latin American Brazil & Southern Cone Report 3 April 2019 - RBS-19-04 Ernesto Talvi, an economist and a ‘technocrat’, is Sanguinetti’s rival in the PC primary. With an oiled political apparatus, Sanguinetti, who is considered by many to be a ‘great statesman’, currently leads the race. He has the support of 49% of those who say that they will vote for the PC. But Talvi, who has assured he will win the election “in the last hour”, has succeeded in reducing Sanguinetti’s lead in recent weeks after seeing his support increase from 27% to 38%. Nonetheless, Bottinelli says that “This is the primary that I see clear - est. Save a catastrophe, Sanguinetti will win.”
Other Parties This year’s presidential election is set to have the highest number of candi - dates since the return to democracy in 1985, with 30 hopefuls. The main rea - son for this is the emergence of new political parties in recent years, which have made efforts to increase their level of support ahead of this year’s elec - tion. Senator Pablo Mieres, the main leader of the PI, sought to build a new leftist opposition coalition to challenge the FA. The main objective of this proj - ect dubbed ‘La Alternativa’ was to attract disenchanted FA voters. To achieve Newcomer this Mieres reached out to former FA leaders that have recently left the coali - The latest tion such as Esteban Valenti and Selva Andreoli. But after Andreoli, who had presidential pre- been chosen as Mieres’ running mate, appeared in a local TV programme on candidate to throw 26 March and revealed that she would not back a non-FA candidate in a pres - idential run-off, Mieres announced that the PI was abandoning La Alternativa. his hat into the ring is the former army Meanwhile, Edgardo Novick, the founder and main leader of the Partido de commander Guido la Gente, is also facing problems. Novick recently decided to expel the party’s vice president, Guillermo Facello, a decision reportedly reached by Novick as Manini Ríos. The he had “lost trust” in Facello over the numerous meetings that he had been army general was holding with representatives from other political parties. Gustavo Zubía, a dismissed from his well-known former prosecutor, has recently abandoned the Partido de la post on 12 March for Gente to join the PC. Given how tight the legislative elections are expected to be, political analysts agree that despite these problems, the smaller political making political parties could play a key role in the composition of congress. As Bottinelli statements, and states, “they should now be concentrating on winning congressional seats”. since then he has joined the Partido Social media and ‘fake news’ Neither President Vázquez nor former president Mujica have Twitter Cabildo Abierto- accounts. But Uruguay’s next president will likely be the first in the coun - Movimiento Social try’s history to interact with the electorate via social media. The two leading Artiguista (PCA-MSA), presidential pre-candidates have already become engaged in heated debates a new political party on Twitter (see box) . Social media spats aside, ‘fake news’ has already been used to try to influence the election. Following the publication of a new book founded by retired about Lacalle Pou’s life, a false version of it was uploaded online, in which it military officers. says that during his father’s presidency Lacalle Pou ran over and killed a woman in Montevideo’s Cordón neighbourhood while high on drugs. This has been denied by Lacalle Pou, who has said that he will take legal action against those behind the fake publication.
Twitter spat Lacalle Pou has posted tweets accusing Martínez of “planning to increase taxes” to address the country’s fiscal deficit. Lacalle Pou argued that Martínez “shares our pro - posal for an ‘austerity shock’. How are our proposals different? Does the FA’s answer include more taxes? Will they tell the truth this time?”. Martínez responded with the tweet: “Dear Luis Lacalle Pou I can tell you how we have generated positive results in the Montevideo municipal government and how we have implemented an infra - structure shock that has people at its centre.” This prompted Lacalle Pou to reply: “Well you know that your president and your economy minister promised one thing in the campaign but did not fulfil it,” in reference to the pledges made by Vázquez in the 2014 election campaign that his administration would reduce the tax burden, only to go on to increase taxes as part of its efforts to balance the public accounts.
Latin American Brazil & Southern Cone Report 4 April 2019 - RBS-19-04 BRAZIL | POLITICS Brazil’s airspace is open for business – the Trump-Bolsonaro deal
Brazil has finally signed a deal that could open its national spaceport to the US after almost two decades of negotiations. The safeguard accord signed by Presidents Donald Trump and Jair Bolsonaro in Washington DC on 18 March has also sent a message that business can profit from the two lead - ers’ ideological similarities and shared interests, but not without criticism and controversies. It is now up to Brazil’s congress to vote either in favour of the deal, or reject it once again.
The base, run by the Brazilian air force (FAB) in the city of Alcântara, in Maranhão state, is ideally located: thanks to its proximity to both the Equator and the Atlantic Ocean, launches get an extra speed boost and can achieve orbit by burning 30% less fuel. It is therefore much cheaper to fly from than other spaceports, as Trump said during a joint press conference with Bolsonaro at the White House: “Because of the location, tremendous amounts of money would be saved.”
This efficiency would allow rockets to carry heavier payloads, potentially attracting US companies interested in launching small satellites from there and raising Brazil’s hopes of securing a share of – and perhaps in future dominating – the US$300bn-a-year market for the type of small satellites that the site has been designed to accommodate.
Officials from Boeing and Lockheed Martin, who oversee the US’s United Launch Alliance, visited the Alcântara space centre in December 2017 and stated that they hadn’t made any plans to invest there yet. Last year US Defence Secretary James Mattis went to Brasília to sign the Space Situational Awareness agreement, which ensures the sharing of real-time tracking data on objects and debris in space to reduce the risk of satellites colliding after launch. This document was the first big step towards the final deal that two other Brazilian presidents – Fernando Henrique Cardoso (1995-2003) and Michel Temer (2016-2019) – had tried and failed to pass.
The agreement Space cooperation between the two countries has always depended upon the technology safeguards agreement (TSA): a document that aims to protect US technology from foreign eyes (not just a matter of intellectual property but also of national security) while recognising Brazil’s sovereignty. This has proved to be a challenging balance to strike.
The first version of the agreement, signed in 2000, was rejected by Brazil’s con - gress on sovereignty grounds because it allowed exclusive access to an area of the base to US citizens only. This time is different, as Brazil’s new minister of science & technology, Marcos Pontes (the first South American astronaut), described: “It is like running a hotel: you give the keys to your guest, in this case the Americans who bring technology with them, but Brazil still has access to the room if it’s needed.” The new agreement also ensures that the profit from renting the base can be used to finance Brazil’s space programme.
In recent years the US has signed similar deals with India and New Zealand. Both countries have since launched technology made by US companies, demonstrating the effectiveness of the agreements. Scott Pace, the executive secretary of the US National Space Council, said the TSA covers a wide range of aerospace collaborations between the two countries, including satellite technologies that could lead to Brazil becoming more integrated into the global supply chain for aerospace products.
Latin American Brazil & Southern Cone Report 5 April 2019 - RBS-19-04 History of the base The Alcântara base opened in 1983, a symbol of national pride after the mil - itary government announced a Brazilian space mission. Yet despite its huge geographic advantage, the country has never launched a ‘made in Brazil’ rocket. In 2003, on the third attempt to send a satellite launch vehicle (VSL) Overly generous to orbit, a fire followed by an explosion at the launchpad killed 21 Brazilian concessions? workers. The accident brought the programme to a standstill, halting plans Critics of the new to launch two other satellites. French Guiana, the competitor next door, took technology advantage. The Guiana Space Centre, also known as Europe’s Spaceport, safeguards expanded and now has three launch vehicles in operation. It aims to launch agreement (TSA) ten missions per year and wants to be a global leader in commercial space transportation, guaranteeing Europe’s independent access to space. between Brazil and the US also feel that Brazil then entered into a joint venture with Ukraine, but the deal fell apart President Bolsonaro due to financial and technical problems. Ever since, Brazil has been investing made generous, to develop a vehicle to launch micro satellites (VLM), which are important to unconditional produce earth images, GPS data, and communication and surveillance. concessions to The Space Enterprise Council estimates that Alcântara could potentially get President Trump 25% of the market of small satellite launches (up to 50kg) in the next three during their meeting years. The Brazilian government hasn’t evaluated the spaceport’s full eco - in Washington. Brazil nomic potential but says it could generate R$140m (US$36m) in profit every is to implement a year just by charging for launches from the base. visa waiver for US Local communities tourists and has Part of the infrastructure of the Alcântara base left over from the failed agreed to tariff-free Ukraine accord is still in place, but there is a lot to be done in terms of logis - quotas for US wheat tics. Brazil will need to build a new seaport, renovate the local airport, and imports that may invest in hotels and restaurants to accommodate future clients – the space - port’s new tenants – in the jungle. These investments could have a big infuriate its major impact on local communities called quilombolas, the descendants of slaves trade partner, who escaped from the region’s cotton and sugarcane plantations. Argentina. In return Quilombolas have rights to the land by law, but when the space centre was Trump has promised built, 312 vulnerable families were removed from the area. They have never to support Brazil’s bid received any compensation from the government, a human rights violation denounced by the United Nations (UN). to join the Organisation for Now, following the deal with the US, Brazilian officials say that more fami - Economic Co- lies will have to move out. Once again, unions that represent the affected 150 operation and communities have denounced the government to the International Labour Development Organisation (ILO), in a bid to stop the expansion. “Bolsonaro’s recent visit to the US is a new chapter of terror and anguish for these communities, caus - (OECD), as long as ing more poverty,” the unions said in a statement. the country gives up all the current trading Former foreign minister (2003-2010) and defence minister (2011-2014) Celso benefits it has Amorim, who served under former presidents Lula da Silva (2003-2011) and through its Dilma Rousseff (2011-2016), remains very vocally opposed to the treaty. In his view, it serves the interests of the US and puts Brazilian sovereignty in developing country jeopardy. “It starts in Alcântara and later it’s the Amazon,” he says. status at the World Trade Organization Many Brazilians, including some diplomats involved in the negotiations, (WTO). share his concerns ( see sidebar ). But for the government, Bolsonaro’s first visit to Washington was a triumph and the spaceport agreement a tangible result of the new Brazil-US relationship. Standing next to Trump in the White House’s Rose Garden, Bolsonaro stated his wish to make Brazil great again. The future he envisions will, however, require the support of a congress that has so far proved to be more polarised and less amenable than ever.
Latin American Brazil & Southern Cone Report 6 April 2019 - RBS-19-04 ARGENTINA | ECONOMY Argentina’s poverty problem
Simon Kuznets, the renowned economist who was awarded the 1971 Nobel Prize in economics, famously said that there are four types of country: developed countries, underdeveloped countries, Japan, and Argentina. His singling out of Argentina was in reference to the country’s decline from one of the ten richest countries in the world pre-World War I, to being ranked 89 th in 2017 according to GDP per capita, behind neighbours Uruguay and Chile.
This downward trajectory seems to be continuing, as government statistics for the second half of 2018 show that 32% of Argentines living in urban areas are poor, a 6.3 percentage point increase compared with same period in 2017. The country’s poverty rate has oscillated from a high of 47% during the hyper-inflation year of 1989 to a low of 17% in 1993. The current rate of 32% is the same as in 1988, a fact that has led many in the local media to conclude that Argentina has seen no economic progress in 30 years.
In absolute terms, 8.93m people now live below the poverty line across 2.1m households in urban Argentina. Of these, approximately 1.87m people are classed as destitute, a term used to define households that are unable to afford a basket of basic goods that ensures a minimum protein and calorie intake. The poverty line is measured according to whether a household is able to afford a set of essential food and non-food goods and services includ - ing, for example, education, clothing, and healthcare. Poverty in Argentina, second halves of 2017 and 2018
Source: Instituto Nacional de Estadística y Censo (Indec) In a report on households’ capacity for subsistence from December 2018, the Observatorio de la Deuda Social, part of the Universidad Católica Argentina (UCA), found that 7.9% of Argentines suffer the effects of severe food insecuri - ty, meaning that they frequently suffer from hunger. This figure is up from 6.2% in 2017, further confirming the difficulties that the country is experiencing.
What is driving the increase in poverty? There is a generalised consensus that the main cause of increasing poverty in Argentina is rampant inflation. The national statistics institute (Indec) reported that annual inflation had soared to 47.6% in 2018, almost double the 2017 rate of 24.8%.
Latin American Brazil & Southern Cone Report 7 April 2019 - RBS-19-04 The high inflation is itself driven by the constant devaluation of the Argentine peso. In 2018, the Argentine peso lost 50% of its value relative to the US dollar. In 2015, when President Mauricio Macri took office and liber - alised the exchange rate, the peso experienced a devaluation of 42%. President Macri has defended his government’s economic policies by saying that the devaluation of the national currency is a necessary evil for long-term economic stability. Macri was elected promising to eliminate the exchange rate controls introduced by previous administrations and end what he called the ‘artificial propping up’ of the peso. The impact of these continuous Poverty and devaluations, however, has been felt in the daily lives of Argentines. development in Uruguay The Indec estimates that a family of four requires US$620 per month to be Although Uruguay above the poverty line. This is equivalent to more than twice the minimum wage, which has not followed the increase in prices and currently stands at has been successful approximately US$280. in reducing its poverty rate, in line The unemployment rate has also significantly increased, from 5.7% in 2015 with sustained to 12% in 2018, contributing to the increase in the poverty rate. Despite these growth, over the past worrying numbers, the national daily La Nación cites figures according to which 82% of Argentines perceive themselves as middle class, even though 14 years, it has the real figure sits closer to 45% (taking into account factors such as employ - encountered social ment and level of education, usually correlated with level of income). inequality problems of its own [ RBS-19- Important regional disparities in poverty rates 02 ]. Furthermore, The increase in poverty has not been felt the same throughout the country. The city of Corrientes, near the border with Paraguay, has the highest rate in data recently the country, with almost half its population (49.3%) living in poverty. With a released by poverty rate of 31.3%, the greater Buenos Aires metropolitan area is in line Uruguay’s national with the national average. The largest urban area, it is also the most unequal, statistics institute as within this region, the city of Buenos Aires proper stands out with a show that poverty poverty rate of 12.6%, the country’s lowest. In the districts of greater Buenos actually increased in Aires, however, poverty reaches 35.9% of the population. 2018, for the first According to a March 2019 report on multidimensional poverty by the time since 2003, Observatorio de la Deuda Social, greater Buenos Aires is the metropolitan although it remains area where there has been the greatest increase in multidimensional poverty, low at 8.1% of the from 34.9% of the population in 2017 to 41.1% in 2018. In contrast, 8.6% of population (with only the population is affected by multidimensional poverty in the city of Buenos Aires (up from 7% in 2017). This index as measured by the UCA looks at six 0.1% affected by social and economic criteria: 1) food and healthcare; 2) basic services such as indigence). For the electricity and running water; 3) adequate housing; 4) living environment latest analysis on (levels of pollution and exposure to toxic waste); 5) education access; and 6) these issues see our employment and access to a social-security safety net. sister publication The government’s response Latin American Analysts agree that there is no easy, short-term solution for the current eco - Weekly Report . nomic crisis and rising poverty figures. President Macri also insists that he is reforming with a view to the long-term, which necessarily requires short- term sacrifices. Argentina will need several years of sustained, stable eco - nomic growth to start improving living conditions for its citizens.
Specialists from the United Nations Children’s Fund (Unicef) agree that sus - tained economic growth is the main driver of poverty reduction. Unicef cites as an example Uruguay, a neighbouring country whose economy has been grow - ing at an average rate of 4.5% over the past 15 years and has successfully reduced its poverty rate in that time from 40% in 2003 to 9% in 2018 ( see sidebar ).
Latin American Brazil & Southern Cone Report 8 April 2019 - RBS-19-04 According to the Centro de Implementación de Políticas Públicas para la Equidad y el Crecimiento (Cippec), a policy think-tank, even in an optimistic scenario of 5% growth over five years, the percentage of people living in poverty in Argentina would drop from the current 32% to 26%. After growing 2.7% in 2017, already well below the Cippec’s optimistic 5%, Argentina’s GDP contracted 2.5% last year according to figures released by the Indec in March.
President Macri has said on several occasions that his government’s economic policies are aimed at restoring macroeconomic stability and reducing the fiscal deficit based on the notion that it is time to stop spending beyond the country’s means. Macri considers that the increase in the cost of living is a reflection of the reduced spending by his government as well as the end of previous admin - istrations’ habits of keeping the peso over-valued and goods under-priced.
However, the increase in the price of basic goods and services has caused eco - nomic hardships for a large number of Argentines, as illustrated by the pover - ty figures. Since Macri took office, natural gas tariffs have increased by 930%, the price of electricity by 920%, and water by 683%. Under previous govern - ments, these services were heavily subsidised and were some of the most affordable in the continent. Similarly, the cost of public transport, which had been subsidised until 2015, increased by 207% after Macri came to power.
Macri, who is expected to seek re-election in the October general election but is seeing his hopes of victory diminish with every new negative economic indica - tor, has insisted that the greatest hour of darkness comes before dawn. He is call - ing upon the population to have faith and pull together to ensure that Argentina will have a brighter future (by giving him a second presidential mandate).
When opening a new session of the federal congress in March, Macri announced that he was increasing the Asignación Única por Hijo (AUH), a child benefit provided to families in need. He explained that this increase would help alleviate the situation of families most in need. The AUH increased by 46%, at a cost of approximately US$340m to the government. This subsidy benefits around 4m Argentines.
Macri reminded Argentines that the increase in the AUH was possible within the framework of the Stand-By Agreement (SBA) his government has reached with the International Monetary Fund (IMF). The SBA makes US$56.3bn available to Argentina until 2021, on condition that certain terms are met, notably to achieve a fiscal balance in 2019 and to refrain from inter - vening in currency markets except in exceptional circumstances such as extreme devaluation. The IMF also made its aid conditional to a limited increase in social spending to 0.2% of GDP. The Macri government has asked to increase this cap to 0.3% of GDP so as to respond to the increase in poverty.
In the same speech to congress in March, Macri lamented the increase in the poverty rate as reported by the Indec. While recognising the negative impli - cations of such figures, Macri reminded his audience that his government is committed to transparency and will continue to publish such statistics. Macri pointed out that the government of his predecessor Cristina Fernández (2007-2015) had suspended the collection and public sharing of data on poverty levels so as to mask the country’s dire socio-economic situation.
The next measure of the poverty rate will be published in September, one month ahead of the presidential elections. It remains to be seen if the reforms enacted by Macri and supported by the IMF will deliver improve - ments in the short-term, or if, as Kuznets believed, Argentina is a law unto its own in terms of economic development.
Latin American Brazil & Southern Cone Report 9 April 2019 - RBS-19-04 CHILE | POLITICS & SECURITY Piñera under fire over ID checks for minors
Chile’s President Sebastián Piñera took office a year ago assuring that chil - dren will come first in his government. Yet he recently presented a draft bill that would allow the police to stop and control minors as young as 14, a measure which violates children’s rights, according to the United Nations Children’s Fund (Unicef).
In March 2018, 24 hours after taking office, President Piñera announced a national accord to protect children. “We will do everything humanly possible so that not one of our children is abused or mistreated. This is an accord for our children to recover their homes, their innocence, their dignity and their joy of living,” Piñera had said, while repeating the phrase “children first”. A year later support for Piñera is at its lowest in the opinion polls after announcing a draft bill on preventative identity control, which would allow the police to perform identity checks in the street on children from the age of 14 upwards.
“This is a contradiction if we look at it from the perspective of protecting the human rights of children, but it’s not a contradiction with the kind of con - cern that this government has had, with what type of childhood. When the president says ‘children first’ he is generally referring to a certain type of child over another,” Alejandra Gonzalez, an academic from the school of social work at the Universidad Academia de Humanismo Cristiano, told LatinNews . “This government has exacerbated the difference between chil - dren who appear kind and innocent versus those who are lawbreakers, dan - gerous, those who are the ones to be controlled in the streets,” she adds.
Piñera’s centre-right government, during both his first presidential term (2010- 2014) and the current one (begun in 2018), has made citizen security one of its hallmarks. Along this line, in early March, Piñera announced a project to expand the powers of the police to control people on the streets. If this bill on preventative identity control is approved in congress, the police will be allowed to inspect people’s clothing and belongings – including bags or backpacks – while performing identity checks, as part of wider crime prevention measures.
The issue became controversial when it was announced that the measures would extend to minors from the age of 14 upwards. “We will send to con - gress the bill on preventative identity control, to strengthen Calle Segura [the government’s public security programme], and so that the Carabineros [mil - itarised police] can ask for identity cards, school or transport identification, or fingerprints from people over 14 years of age, and also inspect the contents of backpacks when appropriate,” Piñera said on Twitter on 13 March.
Currently, Chile’s two police forces, the Carabineros militarised police and the civilian Policía de Investigaciones (PDI), are authorised to control people over 18 in public spaces, according to a law approved in 2016 during the left - ist government of Michelle Bachelet (2014-2018). This law allows the police to ask for identification only. To date, more than 4.4m identity checks have been performed by the police, resulting in 100,000 arrests. “The Chilean gov - ernment, and not just this government, has been working with a logic of cit - izen security for some time, constructing a logic that is punitive and that is based on a form of population control,” Alejandro Tsukame, a sociologist at the Chilean NGO Aldeas Infantiles, told LatinNews.
The draft bill including the proposal to perform identity checks on minors, announced on 13 March, has since been presented to the chamber of deputies. However, it has not been without criticism. Patricia Muñoz, the head of the Defensoría de la Niñez, Chile’s recently-created children’s ombudsman’s office, has denounced the measure as incoherent with the
Latin American Brazil & Southern Cone Report 10 April 2019 - RBS-19-04 government’s commitment to children’s rights. Chile ratified the United Nations (UN) Convention on the Rights of the Child in 1990, and the Defensoría de la Niñez was set up last year to promote and protect children’s rights in accordance with this.
Raúl Zarzuri, a master’s student in anthropology and specialist in youth cul - tures, also highlighted this lack of coherence in comments to LatinNews . “For the government, a 14-year-old child has discernment in some areas but not others. So, why don’t we lower the voting age to 14, and bring down the age for driving or getting married from 18? In terms of juvenile crimes, pre - vention should be the priority,” Zarzuri said.
Interior Minister Andrés Chadwick’s response to such criticism has been to justify the initiative with crime figures. “There is a significant participation of young people in crimes,” he said. The interior ministry cites figures from the government’s secretariat of crime prevention, according to which 28.9% of vehicle thefts, and 22.8% of thefts with violence and intimidation were committed by minors in 2018. “We cannot and should not remain without doing anything in the face of this reality,” Chadwick said. Meanwhile, Muñoz argues that there has been a sustained decline in the number of young offenders (between 14 and 17 years old) over the last three years – an accumulated 31% decrease nationwide.
Piñera and Chadwick have the support of the parties within the ruling Chile Vamos coalition. For example, national deputy Gonzalo Fuenzalida, from the centre-right Renovación Nacional (RN) party, has shared through Twitter a poster of a child dressed as the caricature of a convict, bearing the caption “not all minors are white doves”. Piñera recently took part in a TV interview in which he defended the overall measure with the argument that those who have nothing to hide have nothing to fear. “When you go to the super - market they ask you for ID, so why can we not allow the Carabineros…to ask for identification?...This way, we succeed in making innocent people feel safer,” Piñera told Canal 13.
Muñoz has rejected this argument also, but the strongest condemnation of the measure has come from Unicef Chile. In a statement, the organisation pointed out that the initiative goes against the rights of children and that the bill also contravenes all the relevant international treaties of which Chile is a signatory. The UN Convention on the Rights of the Child, for example, com - mits Chile to “promoting in its legislation and public policies the principles and rights contained in the Convention. This means guaranteeing all chil - dren and adolescents the exercise of their rights according to their stage of development,” as Unicef Chile reminds.
This comes as polls show a fall in President Piñera’s popularity. In a survey conducted in March by Chilean consultancy Criteria Research, the results of which were published on 4 April, Piñera’s approval fell by ten percentage points compared with the previous month. According to a separate survey by consultancy Cadem undertaken in the first week of April, Piñera’s approval stands at 36%, the lowest it has been in this term so far, while his disapproval ratings reach 51%. While this dip has not been directly linked to the controversy surrounding the proposed identity checks, it suggests that the timing of the broadly unpopular measure is inauspicious.
Nevertheless, it is difficult for the government to back down on the project. “The government now realises that this [project] has generated a lot of rejec - tion, but I don’t believe it will give up on this punitive agenda because it’s part of its identity as a government,” Tsukame says. The draft bill is now in the hands of congress, where Piñera does not have a majority so will need to negotiate with the opposition.
Latin American Brazil & Southern Cone Report 11 April 2019 - RBS-19-04 ECONOMIC HIGHLIGHTS
Bolsonaro’s first bonds: On 21 March, Brazil’s government successfully issued US$1.5bn worth of 10-year bonds in the US and European markets, with an interest rate of 4.7%. This was the first bond issuance under the government of President Jair Bolsonaro. The national treasury said that the issuance attracted four times the volume sold and celebrated the operation as “successful”.
Improving the business environment: On 25 March the Paraguayan government proposed three new legisla - tive initiatives to congress designed to improve the country’s business climate. These initiatives were devised by the ministry for industry & commerce (MIC) along with the justice ministry, the central bank (BCP), private sector guilds, the World Bank, and specialised lawyers. The MIC cited the objective of adapting legislation to align with structural changes currently taking place in government, reducing costly and bureaucratic proce - dures implemented in the creation of new businesses and to facilitate loans for small & medium-sized enter - prises (SMEs), which currently employ 76% of the Paraguayan population. The first proposal aims to improve access to credit for SMEs through secured transactions. The second is a bill to simplify the legal process under - taken in the creation of new businesses, involving an online platform to simplify and reduce the costs of a business’s legal management. The third would see national insolvency laws updated.
IMF disbursement: On 5 April, the International Monetary Fund (IMF) executive board announced that it had concluded its third review of Argentina’s economic performance under the Stand-By Agreement (SBA) reached last year, and approved a new disbursement of US$10.8bn. “The government’s policies underpinning the IMF-backed agreement are bearing fruit. The high fiscal and current account deficits – two major vulner - abilities that led to the financial crisis last year – are declining,” declared Christine Lagarde, IMF Executive Board President and Managing Director. Country GDP growth rate, quarterly annualised figure* End 2018** 2019 forecast** Q1 2018 Q2 2018 Q3 2018 Q4 2018 Argentina -2.60% -1.80% 3.60% -4.20% -3.50% -6.20% Brazil 1.30% 2.00% 1.29% 1.03% 1.27% 1.08% Chile 3.90% 3.30% 4.10% 5.30% 2.80% 3.60% Paraguay 4.20% 4.20% 4.10% 6.20% 1.10% 1.20% Uruguay 1.90% 1.50% 2.20% 2.50% 2.10% 0.60% * Figures from local Central Banks ** Figures from United Nations Economic Commission for Latin America and the Caribbean Inflation rate (%) (Monthly annualised rate)
LATIN AMERICAN BRAZIL & SOUTHERN CONE REPORT is published monthly (12 issues a year) by LatinNews , Fourth Floor, Hamilton House, Mabledon Place, Bloomsbury, London, WC1H 9BB, England; Telephone +44 (0)203 695 2790, EMail: [email protected]. Visit our website at: http://www.latinnews.com. EDITORS: CONSTANCE MALLERET, GUNTHER BAUMGARTEN . CONTRIBUTORS: JUAN PABLO DE MARCO, YULA ROCHA, ANDRÉS BAYONA, DAVID CORNEJO. Subscription rates will be sent on request. Overseas subscription sent by airmail. Printed by Quorum Print Services Ltd, Units 3&4, Lansdown Industrial Estate, Gloucester Road, Cheltenham, Glos. GL51 8PL COPYRIGHT © 2019 in all countries. All rights reserved. No part of this publication maybe reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, electrical, chemical, mechanical, optical, photocopying, recording or otherwise, without the prior written permission of the publishers. Registered as a newspaper by Royal Mail. REFERENCES: Back references and cross-references in the current series will be made thus: RBS-19-01 will indi cate Brazil & Southern Cone Report, 2019, issue 1.
Latin American Brazil & Southern Cone Report 12 April 2019 - RBS-19-04