In Ciudad Mier, deploying troops is not enough

Back in November 2010, a small town on the US-Mexico border, Ciudad Mier, made headlines when most of the town’s residents left because of intense fighting between the Zetas and Gulf cartels. Both groups wanted the plaza, which is a strategic smuggling corridor for weapons, cash, and money between the United States and Mexico, and openly fought day and night for it without regard for local residents or businesses.

The story was big news because it seemed to demonstrate, through the story of a town that once was safe and a tourist haven, just how dire the security situation in parts of Mexico had become.

So an article written today by EFE reports that since then residents have begun to return due to the construction of an army base and a greater military presence in the town is laudable. It is good for the city’s residents, and, on the PR front, is a victory for the Calderon administration, as it sends the message that the government can respond to fighting. Although this victory may be in vain – more than half of all Mexicans believe that progress against the cartels is worse or the same as in 2010 – it will draw praise from those who support the use of the military in Mexico to fight drug cartels.

This strategy will also, as the Ciudad Mier case has shown, be popular among those who support Calderon’s strategy of deploying military troops in areas hardest hit by fighting. Though this strategy has had some success at quelling violence in the past, there are two major reasons why all praise should be moderated:

1. Public security in northern Mexico is still a significant problem. That Ciudad Mier’s residents are returning offers an anecdotal example against a common trend. For every Ciudad Mier, there are many other small towns where inter-cartel fighting is just as intense and where local, state, and federal exist in name only and where the real authority is at the hands of non-state actors.  While this episode in Ciudad Mier represents a battle won, the war rages on.

2. The underlying problems facing the future use of deploying the military to towns throughout Mexico. According to a recent Pew Research Center study, for the majority of Mexicans, crime and cartel-related violence are significant problems in the country. Additionally, a full 84 percent of Mexicans, according to the study, support deploying the military to improve citizen security.

Given that A) there is significant political capital to do so, and B) it is seen as an effective way to combat cartels, it follows that we may see more military deployments to retake lost towns in the future. Security is the most important thing for citizens, and thus the use of the military to ensure safety is probably the best course of action, given the strength of cartels and ineffectiveness of local authorities.

But the deployment of troops is not a sustainable or perfect solution, a point to which followers of the successes and failures of the conflict in Colombia’s consolidation program can attest. Although it has been noted that the two countries pose different problems and a blanket strategy (and thus blanket solution) will not be the same if applied to the other country, some commonalities persist. Allegations of collusion between former/current members of the military and cartels, transitioning power to competent civilian authorities, and the military’s role in day-to-day policing and conducting administrative tasks required to run a city are but a few of the problems militarized municipalities will face once a baseline level of safety has been achieved.

The homecoming of Ciudad Mier’s residents is a victory for citizen security in Mexico. But even if money, training, personnel, and corruption were not issues the Mexican government had to face, deploying troops is not the savior solution.

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Latin America’s Security Dilemma Continued

Sam Novacich and I have a piece at ISN in which we take a closer look at one of Rio’s Pacifying Police Units (UPP) in the Cantagalo/Pavão-Pavãozinho communities and document some of the challenges the community members and UPP are facing with the new game in town.

In addition to looking into some of the lesser-reported impacts of the UPP actions on community residents, we also wanted to show how some of the problems with the UPP programs can be applied to regional security challenges for the entire hemisphere – namely that arrests don’t guarantee safety for all, that these arrests do not necessarily weaken criminal networks, that criminal groups are involved in more than just drug trafficking, and that success cannot be measured by numbers alone.

The entire article can be found over at the ISN.

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Different Means, Same Ends

Oil production in Colombia is a popular topic these days. Domestic production levels are at an all time high, and Colombian state-owned oil behemoth Ecopetrol is considering selling 10 percent of its stake in the firm to the public. Dow Jones reports the deal will likely go down in 2012. Silla Vacia has an excellent analysis suggesting that unlike the first public offerings made in 2007, this time shares are significantly overvalued.

The risk of purchasing overvalued shares is not the only one facing investors in Colombia’s growing energy sector. InSight Crime highlights the fact the FARC and other illegally armed groups (ELN, BACRIM, etc.) have begun a campaign to increase attacks on oil workers:

“The FARC has combined the kidnapping of oil workers with an increase in attacks on oil and gas pipelines and energy infrastructure, suggesting that Cano’s policy is designed to undermine the government’s claim that it is now safe to invest in Colombia and thus deter foreign investment, which has been one of the major factors in boosting the economy.”

Compare this strategy – sabotaging oil production for the sake of sending a message – to that used by criminal groups operating in Mexico. According to Mexican Energy Secretary Jose Antonio Meade, cartels tap Pemex (Mexico’s state-owned oil company) to siphon fuel, which the cartels will either sell or use themselves.

Though the means and rationale are different, the ends are the same, and they are disruptive.

From InSight (Colombia):

A slight increase [in kidnappings] was seen in 2010, with 282 cases, and the trend for this year is up another 30 percent, the main driver behind this a sharp increase in rebel abductions, particularly of oil workers.

From Reuters (Mexico):

“Gangs tapping Mexican pipelines stole oil and gas worth almost 70 percent of Pemex’s first-quarter profit in the first four months of this year alone.”

At its core, sabotaging oil production in Colombia has both political and financial motives. Although Alfonso Cano, the leader of the FARC, may push the former in his communications, the latter is more important to the group’s functioning.

The occasional bombings of oil pipelines that have been attributed to the FARC offer proof that the group is interested in disrupting oil production in Colombia; this coincides with the theory that the group is attacking the state for the purpose of attacking the state, thus suggesting the group’s traditional political motives. In Mexico, however, disruption serves a different purpose entirely. Unlike the FARC, Pemex saboteurs want the oil to keep flowing.

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The United States and the Wealth Gap

A Reuters analysis, “In debt row, hints of emerging-economy crisis”, highlights the point that the United States’ current debt ceiling stalemate, brought on by highly factionalized political camps, is akin to crises faced by emerging economies. The analysis itself is worth a read, although one quote, from Argentine President Cristina Fernandez de Kirchner, stands out:

“When did the American dream become a nightmare?”

Good choice of words, Mrs. President. Fresh data (AP) reveals that that within the United States, the gap is growing wider, particularly between whites and minorities. The reason for this:

“What’s pushing the wealth of whites is the rebound in the stock market and corporate savings, while younger Hispanics and African-Americans who bought homes in the last decade – because that was the American dream – are seeing big declines, said Timothy Smeeding, a University of Wisconsin-Madison professor who specializes in income inequality.”

The developed world often scolds Latin America for having some of the world’s largest disparities between rich and poor, yet within the United States, the wealth gap has been growing, at least according to some analysis.

The data in Latin America are indeed disturbing. Gini coefficients, the measure of income distribution as determined by the United Nations, consistently ranks Latin America as the world’s most uneven region. Development experts consistently point to this discrepancy as one of the largest problems facing the region, claiming that it is partly responsible for high levels of urban crime and a risk to internal security.

The following map, courtesy of Vision of Humanity, provides a visualization of the latest Gini data, published by the UN in 2009, per country.

GINI Map

Map of wealth distribution, by country. Greener means more even distribution

The deadlock here in the United States has me thinking about this (and I am not the only one). Regardless of this week’s outcome, narrowing this gap is something the United States must address.

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The Peso Paradox

One of the more troubling signs of financial difficulties in Argentina has been the recent news that the government has fined economists for publishing inflation rates that do not reflect those of the national statistics agency, INDEC.

There is another indicator, the value of the peso against the decreasing value of the dollar, that is also cause for concern.

Compared to other currencies in Latin America, the Argentine peso is moving in the opposite direction in its relation to the dollar. As the dollar has weakened against the likes of the Brazilian real, Mexican peso, and Peruvian sol over the past year, it has strengthened against the Argentine peso.

The below, courtesy of Oanda.com, shows the percent changes in the value of the dollar relative to the values of the Brazilian Real and Mexican Peso over the past year.

Dollar's value relative to Argentine, Brazilian, and Mexican currencies. Courtesy of Oanda.com

Dollar's value relative to Argentine, Brazilian, and Mexican currencies. Courtesy of Oanda.com. From 21 July 2011

Going back two and five years, the trend is the same.

A comparison with the other South American currencies shows a year over year decline on every one, with the exception of the Boliviano. Given the dollar’s decreasing value relative to other currencies, including the beleaguered Euro, one would expect the Argentine peso to strengthen against the dollar as well. A non-appreciating peso certainly favors Argentine exports and has been a stated goal of the Argentine Central Bank, but this degree of deviation from other South American currencies is surprising.

An article in La Nacion sheds some light on the reasons. The article cites Argentines’ habit of reverting to the dollar in times of uncertainty as one of the most important reason. This habit was brought on in large part because of fear that stems from the 2001 financial meltdown, as well as uncertainty surrounding the future of the currency and domestic political and economic stability.

This will worsen this year, as presidential elections slated for October 2011 will encourage more people to buy dollars. What is most interesting about these dollar purchases is that they are small in scale. Up to 35 percent of the $10 billion dollars purchased during the first quarter of 2011 are taking the form of dollar purchases of less than $1500. The phenomenon, known is Spanish as “Fuga Hormiga” (loosely translated as ‘petty [capital] flight’), has led the Argentine government to discourage people from purchasing dollars illegally, instead encouraging them to invest in Argentine industry and the MERVAL, the Argentine stock exchange.

It is not clear whether Cristina’s attempts will decrease demand for the dollar (particularly as campaigning heats up); the dollar is still seen as a bastion of safety in Argentina in spite of the its current vulnerability. The Argentine government will continue to pay extra close attention to large flights of currency. With the election of Cristina and continuation of the norm the expected outcome in October, this uncertainty might be here to stay.

A comparison with the other South American currencies shows a year over year decline on every one, with the exception of the Boliviano. Given the dollar’s decreasing value relative to other currencies, including the beleaguered Euro, one would expect the  Argentine peso to strengthen against the dollar as well.  A non-appreciating peso certainly favors Argentine exports and has been a stated goal of the Argentine central bank, but this degree of deviation from the performance of other South American currencies is surprising.
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Ideas, not money, will make Central America safer

Boz has a great point about the fresh funding headed to Central America:

I think a lesson is that there is no amount of money that the US could put on the table and no amount of attention the US could give that would guarantee Central America’s success in fighting organized crime.

The US is not alone in its monetary commitment. The US pledge of $300 million is less than the $1 billion promised by the World Bank and the $500 million from the Inter-American Development Bank that came out of Guatemala City earlier this week. Aside from the fact that this money does not compare to the up to $39 billion per year that goes to Mexico alone from drug trafficking each year, the problem that Boz points out is that the money needs to be spent better.

Less attention should be spent on how much, and more on how spent. For example, nuts and bolts ideas those proposed by Colombian President Juan Manuel Santos to set up an anti money laundering unit and to train special forces in Colombia with veterans who have seen similar insurgencies are what will lead to improvements.

The dialogue needs to change to focus on these specific ideas, and more broadly, how, when, and why they should be implemented. In an ideal world, we could give the problem carte blanche with a theoretical limitless amount of cash, and shift the focus not so much on securing money, but on stimulating ideas on how to improve security. Obviously this idea would never happen in reality, but it is one I put forward to suggest that the center of attention change from money to ideas.

Lead with good ideas, and the money will follow. Fund all (or most) ideas. Scrap the bad ones, and invest more in the good ones. Revise, tweak, and remain as nimble and creative as the enemy, which is very much both of those things. The simple promise of more money creates the illusion, and the expectation, that the problem will be solved.

Posted in Belize, Colombia, Costa Rica, El Salvador, Guatemala, Honduras, Latin America, Panama, nicaragua | Tagged , , , , | Leave a comment

Cristina Will Run (and Probably Win)

A little less than three years ago, LatAmThought wrote a commentary questioning the viability of the at that time new Kirchner administration. CFK was less than one year into what had been one of the more tumultuous since 2003. We had good reason for our words – a bitter feud with the agricultural sector, a split with her vice-president, soaring inflation, expensive domestic meat prices, and local and foreign commentators questioning her ability to govern. In December 2009, her approval rating fell to 27 percent, and she was for months the most unpopular president in the Americas. Some estimates even had that rating as low as 21 percent.

Today, we are singing a different tune. After months of feigned speculation (there was never much doubt she would run), at 7 pm local time on June 21, CFK announced that she would indeed seek re-election in this year’s presidential election. Were elections held tomorrow, CFK would probably win, potentially even in the first round. According to a poll cited by Bloomberg, she is a full 35 points ahead of her next closest rival. This does not mean victory is guaranteed – this is Argentine politics, where things can change instantaneously, especially with four months to go – but does bode well, given that she has more or less maintained high approval ratings in spite of a recent scandal involving the misuse of funds by the popular ally Madres de Plaza de Mayo and January 2011 protests from the grain workers that hurt exports.

Politically, CFK has been the beneficiary of a great tragedy, the death of her husband Nestor in October 2010. Many in Argentina credited Nestor with rescuing the country from the yolk of international creditors, a legacy that has helped Kirchnerismo become a powerful mainstay in Justicialist politics and helped pave the way for CFK’s landslide October 2007 election. Cristina invoked Nestor during her announcement

More recently, she has been the beneficiary of more typical political issues, such as the lack of a coherent opposition. Of the five expected candidates – Ricardo Alfonsin, Hermes Binner, Elisa Carrio, Eduardo Duhalde, and Alberto Rodriguez Saa – only Alfonsin is within shouting distance (and it would have to be a loud shot). Mauricio Macri, the mayor of Buenos Aires, formally dropped out of the race last month, likely because he did not believe he would have the support to beat CFK.

Her next step is to see which candidates will emerge from the war of attrition that is likely to heat in the weeks leading up to the August 14 primary, when the presidential field will narrow. This will only work in her favor – the candidates will be more concerned about strengthening their own chances – and buys her time to shore up support from fringe supporters, including those who may have split from the Justicialist Party to join Duhalde.

It’s too early to tell what will happen, but prospects for CFK are looking good.

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Patagonian hydroelectric dams approved

The multibillion-dollar HidroAysén project has been given the final green light to build five hydroelectric dams in an untouched area of Chilean Patagonia. HidroAysén proposes to dam up two rivers at five locations, inundating 14,000 acres of wilderness to produce 2,750 megawatts of energy by 2020. The argument is a familiar one coming from a developing country: Chile needs cheap energy in order to grow.

The decision has been met with widespread disapproval from citizens. According to a poll by La Tercera, one of Chile’s largest newspapers, 74 percent of Chileans “reject the hydroelectric project.”

HidroAysén proposes to build dams on the Baker and Pascua rivers in southern Chile, in Aysén state. The two glacier-fed rivers roar through a remote piece of Patagonia that abuts several national parks, accessible from points north by ferry and by road over the Andes from Argentina.

“This project destroys all of Patagonia,” insists Rodrigo Pizarro, the former director of TerrAm, a Chilean NGO focused on sustainable development. “It’s like virginity. You can only lose it once,” said Pizarro, adding that former dictator Augusto Pinochet wasn’t protecting Chile’s environment when he signed over the water rights to the private energy industry at the end of his reign.

Pizarro is now a graduate student in food security and the environment at Stanford University, where he studies conservation policies in Latin America. He warns that once these floodgates are opened, there is no stopping energy companies from exploiting Patagonia for its resources. He says Chile should be more aggressively pursuing wind, solar and geothermal electricity generation because of how well-suited the country is to these.

In fact, Spanish-owned Solarpack is currently building a 1 megawatt solar farm in northern Chile that will power a nearby copper mine (owned by Codelco with which it is financing the project). It is among the first industrial scale solar farms in South America, says Jon Segovia, Solarpack’s director in Chile. Along with California’s Mojave desert and the Sahara, Chile’s Atacama desert has the world’s highest levels of solar radiation, an advantage that Segovia says will allow Solarpack’s farm to operate much more efficiently than it would anywhere else.

“Chile needs long-term vision that includes this kind of energy,” said Segovia. He admits that Chile also needs cheap energy fast and that because of this, HidroAysén — which will produce almost 3,000 times the energy his solar farm will — is a necessary evil. But this isn’t to say solar can’t compete with non-renewable utilities: construction begins today on a solar thermal farm near Blythe, California that will produce a little more than 1,000 megawatts once completed.

Chile depends on dammed-up rivers for 20 percent of its energy, according to the country’s national energy commission’s figures from 2008. Most of what Chile consumes for energy is oil, of which 99 percent is imported. HidroAysén, a joint venture of Colbún and Endesa Chile (which Endesa Spain indirectly controls), views this as a reason to pursue hydroelectricity domestically.

Earlier this month, the Aysén state commission charged with weighing the HidroAysén’s environmental effects voted almost unanimously to construct the dams, with 11 of 12 delegates voting in the project’s favor. The approval was accompanied by the commission’s requests for reforestation, discounted power for local municipalities, compensation for relocated families and an independent environmental audit at each stage of construction.

What remains, however, is the approval to construct a transmission line to carry the Patagonian energy up to Santiago and the northern regions (where 90 percent of the Chilean population lives and the mining industry operates). This may prove to be the project’s Achilles’ heel. The transmission line must cross nine Chilean states and cut a 2,000-kilometer gash that will zigzag around about a dozen national parks. Each state must approve the construction and representatives will have to weigh the political cost of voting for the line’s approval.

HidroAysén officials expect to receive a decision by the end of this year and begin construction by 2014. Although company officials have said they won’t begin construction until the transmission line is approved, they would be breaking no laws by breaking ground and thus rendering the transmission line’s approval moot, says Pizarro. This may be a lose-lose waiting game for environmental protection advocates.

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Reclaiming Brand Mexico

Roberto Newell Garcia of the Woodrow Wilson Center has published a great report titled “Restoring Mexico’s Reputation.”

The basic premise of Newell’s argument is that Mexico is facing a number of problems, but that the one that gets far and away the most coverage – organized crime/drug-related violence – is not necessarily the most important. Citing successes across issues as disparate as improved health care/life expectancy and economic conditions that should be the envy of the BRICs, he implies that in many ways, things in Mexico are going well.

What is not going well, the author argues, is how Mexico has managed the onslaught of negative media surrounding the body counts and gruesome killings of the drug war, which he implies does have a real negative economic impact on the country. This is not to suggest that the violence, impunity, and lawlessness are not a major concern (follow any social media on the drug war and you will hear of horrific atrocities being committed on a daily basis), but rather to say that it is one that receives a disproportionate amount of coverage.

There are numbers behind this. One of the most fascinating points in the report is a study conducted on the content of articles published in the NYT and WSJ between 1987 and 2010. Newell points out that between that time period, not only has coverage of the country shrunk, but the focus of attention has shifted almost exclusively to organized crime, undocumented immigrants, and corruption. In 1993 13 percent of articles focused on these three issues, by 2010 84 percent did.

The recent explosion of news articles focusing on the narco-tanks serves as a good example for the overall debate. That story was picked up by dozens of English-language media, while very few analyzed its overall significance (or lack thereof) in the grand scheme of issues Mexico must confront. Newell’s report strikes a similar tone, suggesting that narco tanks are not the issue, but rather:

…the need to dramatically improve the quality of law enforcement and the judicial system. The country also needs to improve and reform vital regulatory institutions, especially those that regulate telecommunications and the energy sector, and create the conditions that will stimulate labor productivity growth. There is also a need to reduce the dependence of public finances on oil revenues. Steps should also be taken to improve the quality and pertinence of higher education.”

Newell argues for a coordinated communications campaign that runs through the president himself, and talks about the importance of recapturing Mexico’s brand to restore faith in the international community. While I agree that it is important to present a more balanced account of everything that is happening in the country and that Mexico would benefit from ‘reclaiming its brand’, it is important to recognize a few major issues with this strategy:

  • That people, especially journalists, decision makers, and opinion influencers will recognize a government flack campaign as hollow and disingenuous at best and deceptive and manipulative at worst
  • The drug war is a popular story, and apparently, according to the afore-linked critique from the Mex Files, one that editors constantly seek out that could lead to selective pitching
  • Simply trying to change the brand will not be enough. The reality must also be changed. Companies dealing with supply chain issues or violence at maquiladoras along the border and people in towns where fear of talking is pervasive are facing realities that require immediate action that messaging alone does not solve

So how do you reclaim brand Mexico? To me, it starts with changing the organized crime narrative that has characterized coverage of Mexico in the mainstream media for the last five years.

This is obviously no small order, and one that no amount of PR, even led by the president (Calderon’s pithy remarks about at a recent tourism industry summit in Las Vegas included) will be able to change. So it has to change with the gatekeepers of information themselves. Broaden the scope to include other issues. After all, selective attention is a real phenomenon, and sometimes, as a result, the big picture slips through the cracks.

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US-LatAm Relations

My apologies in advance: the last thing the world needs is another blog post on US-Latin American relations. With that out of the way, there really are some interesting developments going on that warrant mention.

The NYTimes reports on a recent private dinner between Secretary of State Hillary Clinton and six former Latin American presidents. The article talks about the vacuum created by the departure of Arturo Valenzuela, the United States’ top diplomat to the region, and a clash of cultures on what US policy in the region should be. The article also talked about certain Latin American leaders’ opinion that it is a “lack of sustained US engagement” that is the biggest risk to US (economic)  interests in the region.

For anyone interested in the future of hemispheric relations, I recommend it. Colombia’s El Tiempo has coverage here, Living in Peru here, Excelsior (MX) here.

Moving forward, sustained engagement and dialogue are no doubt extremely important to future commercial and diplomatic ties. As are the need for country-specific approaches to region-wide problems. But perhaps equally important is to rethink the notion that the United States needs to be extremely active in what is going on in Latin America.

Many have criticized President Obama and former president Bush for neglecting the region. Yet during these supposed periods of neglect, Latin America has in some ways surged ahead. Although fears of a bubble exist, some are calling this “Latin America’s decade”.

So what role does the US now play? What role should it play? If that role is diminished, what are the consequences and advantages to the United States? To Latin America? Economic and cultural ties between the two regions are generally very strong, with the possibility the latter grows stronger as the Latino population grows in the US, and these are things that will likely not change in the immediate future. But what will US policy towards the region be (if there are changes), and how will it differ from the status quo?

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