Esquina Latina – April 8

Lots of interesting things have been going on in Latin America the past couple of weeks, and here are a few of the articles that caught my eye.

  • Brazil supermarkets ‘to avoid Amazon meat’ (BBC) – This is an exciting turn of events for people concerned about deforestation in the Amazon rain forest. While conversion of land from rain forest to pasture for livestock is not the only cause of deforestation it is a major factor. Providing incentives to discourage the expansion of livestock production in the Amazon would definitely help reduce deforestation. The challenge will be on policing this promise. It is easy to say you won’t accept meat from the Amazon, it is a lot harder to track cows from birth to slaughter to ensure they are not coming from the Amazon. Nevertheless, it looks like a promising private sector action that could reduce deforestation in Brazil, and if effective done may serve as a model to other countries.
  • Peru declares oil contamination emergency in Amazon jungle region (Washington Post) – Peru’s indigenous population in the amazon region have been protesting the deplorable treatment of the environment by the oil industry. It is a sadly common example of what can happen when there are extreme power asymmetries in an economy with poor accountability and government oversight. The government needs to done a better job of regulating the industry to encourage the protection of the environment.  This hasn’t happened in the past, and now Peru is in the more difficult position of trying to clean up the mess then preventing the mess from happening.
  • Peru’s new military draft (Washington Post) – This policy isn’t very fair. It is, however,  fairly common in Latin America, where individuals with money are often able to avoid or greatly reduce their military service. In many countries the military does serve a valuable role in providing economic ladders to economically disadvantaged members of society. However, I think Peru is treating the symptom (low enlistment) instead of the cause of the the problem. They should try to understand why people are enlisting less, and correct the cause of the low enlistment. I suspect enlistment is low because people do not find the military experience valuable. Perhaps what they should do is try increasing the payoffs of joining the military. Increasing the criminally low wage, and providing opportunities to gain high quality education would be a good place to start. Increasing the payoffs from the military experience would certainly be fairer than forcing the poorest members of society to partake in an institution, which richer members happily pay to avoid.
  • Argentina May Defy NY Courts With Payment Offer (NY Times) and Argentina Defends Payment Plan (NY Times) – A couple of recent articles looking at the litigation surrounding bond holders who refused to accept Argentina’s greatly reduced bond settlement from the early 2000s. Not sure how things are going to turn out, but it looks like Argentina, may be heading toward another disastrous default.
  • Why is less cocaine coming from Colombia (the economist) – An interesting look at the changing dynamics in the cocaine trade in South America’s Andes, and how Colombia has been displaced by Peru and Bolivia as the world largest producers of cocaine. The article does a good job of describing the historical transition of cocaine production between Colombia, Bolivia, and Peru. While the article doesn’t make a specific point about the futility of attacking drug production at the point of supply, it does point to the significant effects that changes in demand have on production. Yes, Colombia has clamped down hard on production, and this has undoubtedly contributed to decreased production. However, long term, continuing to decrease cocaine production will require a global decline in cocaine consumption, or some other dramatic change in the drug trade (legalization, new synthetics that replace cocaine, etc.). Else as we learned from prohibition, if there is a demand someone will figure a way of getting the product to the market, and this short term decline may just be a temporary blip.
  • Colombian Prosecutor’s Court Challenge Threatens Peace Talks (NY Times) – This court challenge could make the ongoing peace talks in Cuba even more complicated. While I sincerely hope that it doesn’t derail the peace talks, I think there are some very valid points that have been made, and it is important for a pluralistic and democratic society like Colombia to discuss publicly the framework of this peace negotiation. Only by doing this will the end result have long standing legitimacy. The question being raised is definitely a tough one to answer. By giving amnesty to human rights violators there may be many injustices that are never heard in court and victims may be unable to have their moment to say their piece and get valuable closure. However, without the amnesty it may be difficult to get the FARC to the negotiating table, which could lead to the violence lasting longer. With news that Catatumbo, one of the high ranking members of the FARC recently joining the negotiations in Havana, it will be very interesting to see if this challenge is successful, and if it is, what effect it will have on the willingness of the FARC to continue negotiating.
  • Port strikes halt shipments of copper, fruit in export dependent Chile (Washington Post) and Most Chile Ports to End Strike (NY Times) – This is big news for global copper markets. Chile is one of the world’s largest exporters of copper and over 50% of all copper shipments pass through Chile. Chile’s government also rakes in a substantial portion of its revenue from royalties on this vital metal, and if the tentative settlement falls apart it could threaten vital government services. The strike also wreaks havoc on the overall economy which is heavily dependent on exports not only of minerals but also of horticultural goods like grapes, apples, and wine. On the one hand it is a bit scary that one sector can hold the whole economy hostage, but on the other it seems utterly ridiculous that it got to this point, as the initial strikes appear to have started because the dock workers wanted a 30 minute lunch break. Here is to hoping that a settlement is reached allowing the free flow of trade, and that gives the Chilean dock workers a more hospitable working environment.
  • Chavez Protégé Invokes Venezuelan Curse on Opposition Voters (NY Times) – Only a week left before Venezuelans will go to the polls and choose their first post-Chavez leader. Maduro continues to make outrageous claims. This last week before the elections ought to be fairly interesting.
  • Pablo Neruda Exhumed (NY Times) – I didn’t realize there was a possibility Neruda had been poisoned. Poisoning Neruda would have been a petty and detestable act by the Pinochet regime. Neruda was already suffering from terminal stomach cancer, and could not have been much of a threat to him. I’ll be very curious to see what the results of the study of Neruda’s body show,