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Pandemic reinforces value of production centres in the same sub-regions

Free trade zones in Central America and the Caribbean have been an important engine for the region's economies. Favoured by the increasing globalisation of recent decades, they could now be boosted by a phenomenon in the opposite direction: "glocalisation", the desirability of having production centres in the same sub-region, close to major markets, in order to avoid the problems in distant supply chains seen during this Covid-19 crisis that has affected transport and communications so much. The two leading Latin American free trade zone countries, the Dominican Republic and Costa Rica, offer affordable and sufficiently skilled labour at the doorstep of the United States.

One of the Dominican Republic's free trade zones [CNZFE].

One of the free trade zones of the Dominican Republic [CNZFE] ▲ One of the free trade zones of the Dominican Republic [CNZFE].

article / Paola Rosenberg

The so-called free trade zones, also known in some countries as free zones, are strategic areas within a national territory that have certain tax and customs benefits. In these zones, commercial and industrial activities are carried out under special export and import rules. It is a way of boosting investment and employment, as well as production and exports, thus achieving the economic development of a part of the country or of the country as a whole.

Free trade zones are important in Latin America, and in the case of the smaller economies they are the main production and export hubs. According to agreement with the association of Free Trade Zones of the Americas (AZFA), there are some 3,500 free trade zones in the world, of which 400 are in Latin America, representing 11.4% of the total. Within this region, they are particularly important in the countries of Central America and the rest of the Caribbean basin. They are particularly important in the Dominican Republic and Costa Rica, as well as in Nicaragua, El Salvador, Colombia and Uruguay (also in Puerto Rico).

These countries benefit from having abundant (especially trained in the Costa Rican case) and low-cost labour (especially in the Nicaraguan case), and this close to the United States. For manufacturers wishing to enter the US market, it may be interesting to invest in these free trade zones, taking advantage of tax benefits and labour conditions, while their production will be geographically very close to their destination.

The latter is gaining ground in a post-Covid-19 world. The trend towards sub-regionalisation, in the face of the fractured dynamics of globalisation, has been highlighted for other areas of the American continent, as in the case of the Andean Community, but it also makes a great deal of sense for greater integration between the United States and the Greater Caribbean. Insofar as the US moves towards a certain decoupling from China, the free trade zones of this geographic area may also become more relevant.

 

Reproduced from report graphic of the association Free Trade Zones of the Americas (AZFA), 2018

Reproduced from report graphic of the association Free Trade Zones of the Americas (AZFA), 2018

 

Export processing zones

Free zones can be export-oriented (external market), import substitution-oriented (internal market) or both. The former may have a high industrial component, either seeking diversification or relying on maquilas, or emphasising logistics services (in the case of Panama's free zones).

Free zones for exporting products have been particularly successful in the Dominican Republic and Costa Rica. As the AZFA indicates, of the 31,208 million dollars exported from Latin American free zones in 2018, the first place went to the Dominican Republic, with 5,695 million, and the second to Costa Rica, with 4,729 million (the third place went to Puerto Rico, with 3,000 million). Exports from the Dominican Republic's free trade zones accounted for 56% of all exports from that country; in the case of Costa Rica it was 48% (third in the ranking was Nicaragua, with 44%).

The Dominican Republic is the country with the largest issue number of free zones (71 multi-company zones) and its 665 companies generated the largest number of direct jobs (165,724). Costa Rica has 48 free zones (in third position, after Nicaragua), and its 343 companies generated 93,496 direct work jobs (in fifth position).

In terms of the profitability for the country of this economic modality , for every dollar exempted between 2010 and 2015, Costa Rica's free trade zones generated an average of 6.2 dollars and those of the Dominican Republic 5 dollars (El Salvador ranked second with 6 dollars).

As regards Costa Rica specifically, a late 2019report by the Costa Rican foreign trade promotion agency, Procomer, put the contribution of free trade zones at 7.9% of GDP, generating a total of 172,602 jobs work, both direct and indirect, with an annual growth of issue jobs averaging 10% per year between 2014 and 2018. These areas account for 12% of the country's formal private sector employment . An important fact about the contribution to development of the local Economics is that 47% of the purchases made by firms located in free trade zones were from national companies. An important social dimension is that the zones contributed 508 million dollars to the Costa Rican Social Security Fund in 2018.

The Dominican Republic's free trade zone regime is particularly applauded by the World Bank, which describes the country as a pioneer in this subject instrument of productive and commercial promotion, presenting it as "the best known success story in the western hemisphere". agreement According to the statistics of the committee National Free Trade Zones Export Zones (CNZFE), these have contributed 3.3% of GDP in recent years, thereby contributing to the significant growth of the country's Economics in recent years (one of the highest fees in the region, with an average of over 6% until the onset of the current global crisis). The geographical proximity to the United States makes its free trade zones ideal for US companies (almost 40% of investment comes from the US) or for companies from other countries that want to export to the large North American market (34% of exports go to the US).

Categories Global Affairs: Economics , Trade and Technology Articles Latin America

The finding of a "significant" amount of oil in offshore wells puts the former Dutch colony in the footsteps of neighbouring Guyana.

The intuition has proved to be correct, and explorations carried out under Suriname's territorial waters, together with the successful hydrocarbon reserves that are being exploited in Guyana's maritime borders, have found abundant oil. The finding could be a decisive boost for the development of what is, after Guyana, the second poorest country in South America, but it could also be an opportunity, as with its neighbour, to accentuate the economic and political corruption that has been hindering the progress of the population.

Suriname's presidential palace in the country's capital, Paramaribo [Ian Mackenzie].

Suriname's presidential palace in the country's capital, Paramaribo [Ian Mackenzie].

article / Álvaro de Lecea

So far this year, drilling in two offshore fields in Suriname has been positive result , confirming the existence of "significant" oil in block 58, operated by France's Total, in partnership with US-based Apache. Everything indicates that the same success could be obtained in block 52, operated by the also American ExxonMobil and the Malaysian Petronas, which were pioneers in prospecting in Surinamese waters with operations since 2016.

Both blocks adjoin the fields under the waters of neighbouring Guyana, where it is currently estimated that there are some 3.2 billion barrels of extractable oil. In the case of Suriname, exploration in the first viable field, Maka Central-1, discovered in January 2020, indicates 300 million barrels, but estimates from Sapakara West-1, discovered in April, and subsequent planned exploration, have yet to be added. It is estimated that some 15 billion barrels of oil reserves may exist in the Guyana-Suriname basin.

Until this new oil era in the Guianas (the former British and Dutch Guianas; the French Guianas remains an overseas dependency of France), Suriname was considered to have reserves of 99 million barrels, which at the current rate of exploitation left two decades to deplete. In 2016, the country produced just 16,400 barrels per day.

status political, economic and social

With just under 600,000 inhabitants, Suriname is the least populated country in South America. Its Economics is heavily dependent on the export of metals and minerals, especially bauxite. The fall in commodity prices since 2014 has particularly affected the country's accounts. GDP contracted by 3.4% in 2015 and by 5.6% in 2016. Although the trend then turned positive again, the IMF forecasts a 4.9% drop in GDP for 2020, as a result of the global crisis caused by Covid-19.

Since gaining independence from the Netherlands in 1975, its weak democracy has suffered three coups d'état. Two of them were led by the same person: Desi Bouterse, the country's president until this July. Bouterse staged a coup in 1980 and remained in power indirectly until 1988. During those years, he kept Suriname under a dictatorship. In 1990 he staged another coup d'état, although this time he resigned the presidency. He was accused of the 1982 murder of 15 political opponents, in a long judicial process that finally ended in December 2019 with a twenty-year prison sentence, which is now being appealed by Bouterse. He has also been convicted of drug trafficking in the Netherlands, for which the resulting international arrest warrant prevents him from leaving Suriname. His son Dino has also been convicted of drug and arms trafficking and is in prison in the United States. Bouterse's Suriname has come to be presented as the paradigm of the mafia state.

In 2010 Desi Bouterse won the elections as candidate of the National Democratic Party (NDP); in 2015 he was re-elected for another five years. In the 25 May elections, despite some controversial measures to limit the options of the civil service examination, he lost to Chan Santokhi, leader of the Progressive Reform Party (VHP). He tried to delay the counting and validation of votes, citing the health emergency caused by the coronavirus, but the new National Assembly was finally constituted at the end of June and is due to appoint the country's new president in July.

 

Total's operations in Surinamese and Guyanese waters [Total].

Total's operations in Surinamese and Guyanese waters [Total].

 

Relationship with Venezuela

Suriname intends to use the prospect of the oil bonanza to strengthen Staatsolie, the state oil company. In January, before the Covid-19 crisis became widespread, it announced purpose to expand its presence in the bond market in 2020 and also, conditions permitting, to list its shares in London or New York. This would serve to raise up to $2 billion to finance the national oil company's exploration campaign over the next few years.

On the other hand, Venezuela's territorial claims against Guyana, which affect the Essequibo - the western half of the former British colony - and which are being studied by the International Court of Justice, include part of the maritime space in which Guyana is extracting oil, but do not affect the case of Suriname, whose delimitations are outside the scope of this long-standing dispute.

Venezuela and Suriname have maintained special relations during Chavismo and while Desi Bouterse has been in power. On occasions, a certain connection has been made between drug trafficking under the protection of the Chavista authorities and that attributed to Bouterse. The offer made by Bouterse's son to Hezbollah to have training camps in Suriname, for which he was arrested in 2015 in Panama at the request of the United States and tried in New York, can be understood in light of the relationship between Chavism and Hezbollah, to whose operatives Caracas has provided passports to facilitate their movements. Suriname has supported Venezuela in regional forums at times of international pressure against the regime of Nicolás Maduro. In addition, the country has increasingly strengthened its relations with Russia and China, from which in December 2019 it secured the commitment of a new credit .

With the political change of the last elections, Maduro's Venezuela has in principle lost a close ally, while gaining an oil competitor (at least as long as Venezuelan oil exploitation remains at a low level).

Categories Global Affairs: Energy, resources and sustainability Articles Latin America

High incidence of Covid-19 in the country contrasts with the government's swiftness in implementing measures

Peru has been an example in the Covid-19 crisis for its speed in applying containment measures and for approve one of the largest economic stimulus packages in the world, close to 17% of GDP. However, the high incidence of the pandemic, which has made Peru the second Latin American country in terms of cases of the coronavirus and the third in terms of deaths, has made it necessary to prolong the restrictions on activity longer than expected. This and lower external demand, weaker than initially predicted, have "more than eclipsed" the government's significant economic support, according to the IMF, which forecasts a 13.9% drop in GDP for Peru in 2020, the largest of the region's main economies.

lecture of the Peruvian president, Martín Vizcarra (r), in the presence of the head of Economics, María Antonieta Alva (l) [Gov. of Peru].

lecture of the Peruvian President, Martín Vizcarra (r), in the presence of the head of Economics, María Antonieta Alva (l) [Gov. of Peru].

ARTICLEGabriela Pajuelo

International media such as Bloomberg y The Wall Street Journal have shown admiration for Peru's young minister of Economics , María Antonieta Alva. At 35, with a master's degree from Harvard and some experience in Peru's own administration, Alva designed one of the most ambitious economic stimulus plans in all of South America at the beginning of the crisis.

"From a Latin perspective, Peru is a clear leader in terms of macro response; I could have imagined a very different result if Toni wasn't there," he said. Ricardo HausmannAlva's Harvard professor, who is leading a team of experts advising Peru and ten other countries on how to mitigate the effects of the coronavirus. The minister has also become one of the best-known faces of President Martin Vizcarra's government among the working classes.

Peru was one of the first countries in Latin America to apply a state of emergency, limiting the freedom of meeting and transit in Peruvian territory and restricting economic activity. To prevent mass infection with the virus, the government decreed the closure of borders, restrictions on interprovincial movement, a daily curfew and a mandatory period of national isolation, which has been extended several times and has become one of the longest in the world.

This prolongation, agreed in the face of the high incidence of the pandemic, has damaged the economic outlook more than expected. Moreover, the prolongation of the emergency in countries to which Peru's exports are destined has weakened their demand for raw materials and damaged the resurgence of Peru's Economics . This is the IMF's estimate, which between its April forecast and the one updated in June has added nine more points to the fall in Peru's GDP for 2020. The IMF now considers that Peru's Economics will fall by 13.9% this year, the largest among the region's major countries. Although the ambitious stimulus package will not have prevented this decline, it will boost the recovery, with GDP rising by 6.5% in 2021, the strongest rebound among the largest Latin American economies. With regard to the latter forecast, the IMF specifies that, nevertheless, "there are significant risks to leave , linked to national and global challenges to control the epidemic".

A socio-economic context that does not financial aid to containment

Despite restrictive social distancing measures, the pandemic has had a high incidence in Peru, with 268,602 diagnosed cases (second only to Brazil in Latin America) and 8,761 deaths (behind Brazil and Mexico) as of 25 June. These high figures are partly due to the fact that the country's socio-economic conditions have meant that compliance with containment has not been very strict in certain situations. The social context has made it difficult to respect the mandatory quarantine due to structural problems such as the fragility of health services and infrastructure, the difficulty of efficient public procurement, prison overcrowding and the digital divide.

The high level of labour informalityThe fact that in 2019 it was 72% explains why many people have to continue working to ensure their subsistence, without following certain protocols or having access to certain material; at the same time, this informality prevents greater tax collection that would help to improve budgetary items such as health. Peru is the second Latin American country with the lowest health investment.

On the other hand, inequalitywhich in 2018 was 42.8 in the Gini index, is aggravated by the territorial distribution of expense, linked to the centralisation of employment of the rural population in Lima. During the pandemic, workers from the country's highlands who have migrated to the capital have wanted to return to their places of origin, as many are not on the payroll and have no labour rights, in contravention of the restrictions of mobility.

This social context makes it possible to question some of the economic measures approved, according to some Peruvian academics. The president of high school Peruano de Economics (IPE), Roberto Abusada, warned that Peru's macroeconomic strengths will not help forever. He considered that certain regulations are unenforceableThe "setting parameters such as body mass index (BMI) or an age limit, creates obstacles for this group of people, who could be highly qualified, and could not return to their centre of work".

Economic package

In late April, Minister Alva presented a $26 billion economic stimulus package, representing 12 per cent of GDP. Additional measures a month later raised that percentage to 14.4 per cent of GDP, and even then it would have been closer to 17 per cent. Comparatively speaking, this is one of the largest stimulus packages adopted in the world (in Latin America, the second largest is Brazil, with a stimulus of 11.5 per cent of GDP).

From agreement with the monitoring that the IMF Peru has adopted measures in three different areas: fiscal, monetary and macro-financial, and in terms of the exchange rate and the balance of payments.

First, in terms of fiscal measures, the government approved 1.1 billion soles (0.14% of GDP) to address the health emergency. In addition, various measures have been implemented, among which two stand out: the "Stay at home" voucher and the creation of the Business Support Fund for Micro and Small Enterprises (FAE-MYPE).

The first measure, for which the government approved approximately 3.4 billion soles (0.4% of GDP) in direct transfers, is a 380 soles (US$110) voucher targeted at poor households and vulnerable populations, of which there have been two disbursements. The second measure concerns the creation of a fund of 300 million soles (0.04% of GDP) to support MSEs, in an attempt to guarantee credit for capital for work and to restructure or refinance their debts.

Among other fiscal measures, the government approved a three-month extension of the income tax declaration for SMEs, some flexibility for businesses and households in paying tax obligations and a deferral of household electricity and water payments. The whole package of fiscal support amounts to more than 7% of GDP.

On the other hand, in terms of monetary and macro-financial measures, the Central Bank reservation (BCR) reduced the reserve requirement rate by 200 basis points, bringing it to 4%, and is monitoring the evolution of inflation and its determinants to increase monetary stimulus if necessary. It has also reduced reserves requirements , provided liquidity to the system with a package backed by government guarantees of 60 billion soles (more than 8% of GDP) to support lending and the chain of payments.

In addition, exchange rate and balance of payments measures have been implemented through the BCR's intervention in the foreign exchange market. By 28 May, the BCR had sold approximately USD 2 billion (0.9% of GDP) in foreign exchange swaps. International reserves remain significant, at more than 30% of GDP.

On the other hand, in the field of trade relations, Peru agreed not to impose restrictions on foreign trade operations, while at the same time liberalising the loading of goods, speeding up the issuance of certificates of origin, temporarily eliminating some tariffs and waiving various infractions and penalties contained in the General Customs Law. This was particularly the case for transactions with strategic partners, as the European UnionAccording to Alberto Almendres, the president of Eurochambres (the association of European Chambers in Peru). 50% of foreign investment in Peru comes from Europe.

In terms of Peruvian exports, although the emergence of the coronavirus in China at the beginning of the year slowed down transactions with that country, mining and agricultural exports remained positive. in the first two months of the yearas indicated in the high school research and of the Lima Chamber of Commerce. development (Idexcam). Subsequently, exports of raw materials and tourism have been more affected, especially in the case of exports of raw materials and tourism.

Comparison with Chile and Colombia 

The status in Peru can be analysed in comparison with its neighbours Chile and Colombia, which will have a somewhat smaller fall in GDP in 2020, although their recovery will also be somewhat smaller.

issue As for the issue of confirmed Covid-19 cases as of 25 June, Chile (259,064 cases) is similar in size to Peru (268,602), although the number of deaths is almost half that of Peru (4,903 Chileans and 8,761 Peruvians), which corresponds to the proportion of its total population.

In response to the pandemic, Chilean authorities implemented a series of measures, including the declaration of a state of catastrophe, travel restrictions, school closures, curfews and bans on public gatherings, and a teleworking law. This crisis came just months after the social unrest experienced in the country in the last quarter of 2019.

On the economic front, Chile approved a stimulus of 6.7% of GDP. On 19 March, the authorities presented a fiscal package of up to $11.75 billion focused on supporting employment and corporate liquidity (4.7% of OPIB), and on 8 April an additional $2 billion of financial aid to vulnerable households was announced, as well as a $3 billion (2%) guarantee plan from credit . In its June forecast update , the IMF expects Chile's GDP to fall by 7.5% in 2020 and increase by 5% in 2021.

In Colombia, the level of contagion has been lower (77,313 cases and 2,611 deaths), and its economic package to cope with the crisis has also been smaller: 2.8 per cent of GDP. The government created a National Emergency Mitigation Fund, which will be partially financed by regional and stabilisation funds (around 1.5 per cent of GDP), complemented by the issuance of national bonds and other budgetary resources (1.3 per cent). In its recent update, the IMF forecasts that Colombia's GDP will fall by 7.8% in 2020 and rise by 4% in 2021.

Categories Global Affairs: Articles World order, diplomacy and governance Latin America

The trade dependence between the two countries - greater in the case of Brazil, but the Chinese also need certain Brazilian products, such as soybeans - ensures understanding between the two countries.

The relationship between Brazil and China has proved to be particularly pragmatic: neither Jair Bolsonaro has revised his ties with the Asian country as he promised before becoming president (in his first year in office he has not only kept Brazil in the BRICS but even made a highly publicised official trip to Beijing), nor has Xi Jinping punished partner for accusing him of mismanaging the coronavirus pandemic, as has happened with other countries. The convenience of mutual trade relations, revalued by the trade war between China and the US and the current global crisis, has prevailed.

Jair Bolsonaro and Xi Jinping in Beijing in October 2019 [Planalto Palace].

Jair Bolsonaro and Xi Jinping in Beijing in October 2019 [Planalto Palace].

article / Túlio Dias de Assis

visit After years of criticising the "perverse communist government in Beijing", Jair Bolsonaro surprised people at the end of October with a state visit to the Forbidden City, which he himself specially publicised on social networks. On that trip he gave Xi Jinping the shirt of the Club de Regatas do Flamengo (the football team that at the time represented Brazil in the Copa Libertadores, which he would end up winning) and expressed his total conviction that he was in a capitalist country. In November he hosted a BRICS summit in Brasilia.

Bolsonaro's policy towards China had already begun to change shortly after he became president in January 2019, in contrast to his anti-China messages during the election campaign.

In fact, diplomatic relations between the two countries date back to the time of the board Military sample of which Bolsonaro is so proud. In 1974 Brazil recognised the People's Republic of China as the only China, thus allowing, despite being unaware of it at the time, the creation of a huge trade link between the two nations of continental proportions. Since then, as China's openness to China progressed, relations between China and Brazil have increased, so that for almost a decade now China has been Brazil's main trading partner, partner . China's dependence on Brazil is also notable in relation to certain products, such as soya, although for the Chinese, Brazil is the twentieth largest trader partner , since logically they are economies of very different sizes.

When in 1978 Deng Xiaoping decided to open China's Economics to the rest of the world, China's GDP was close to $150 billion, 75% of Brazil's, which was already over $200 billion. Four decades later, in 2018, Brazil's GDP was $1.8 trillion and China's was $13.6 trillion.

Soybeans and pigs

Brazil's greatest commercial and even political rapprochement with China occurred during the presidency of Luiz Inácio 'Lula' da Silva, during which the BRICS was formed, a club that helped create a greater level of economic and diplomatic proximity between member countries. This rapprochement led China to become Brazil's leading trade partner in exports and imports. Brazil's sales to China almost double exports to the US.

Although trade with Brazil represents less than 4% of the total value of goods that China imports annually, the South American country continues to be an important commercial partner for the People's Republic, due to the fact that the main product imported from Brazil is soya, one of the instructions of the per diem expenses habitual of a large part of the Chinese population. More than half of the soya imported by China comes from Brazil and the tendency is for this to increase, mainly due to the trade war with the US - the second main exporter of soya to China -, making Brazil practically the breadbasket of the Middle Kingdom. China is the destination for more than 70% of Brazilian soybean production.

Dependence on China, from the Brazilian consumer's perspective, was accentuated at the end of 2019 due to an exorbitant rise in meat prices. The average between the different Brazilian states hovered between 30% and 40% compared to previous months. Producers were able to substantially increase their profits in the short term deadline, but the popular classes openly protested against the uncontrolled price of a product that is very present on the average Brazilian's regular per diem expenses . The rise in prices was due to a combination of factors, including an outbreak of swine fever that devastated much of China's production. Faced with a shortage of supply in its domestic market, China was forced to diversify its suppliers, and in the midst of a trade war with the US, China had no choice but to turn to Brazil's agricultural potential, one of the few countries capable of meeting China's huge demand for meat. During this period - a brief one, as it gradually returned to the previous status - Brazil managed to obtain a certain coercive power over the Asian giant.

Huawei and credits

Brazil is extremely dependent on China at status subject technology: more than 40 per cent of Brazil's purchases from China are machinery, electronic devices or parts thereof. In the last decade, with the arrival of the smartphone and fibre-optic revolution in Latin America, Brazil decided to make a greater commitment to Chinese technology, thus becoming one of the main international markets for the now controversial Huawei brand, which has come to dominate 35% of the Brazilian mobile phone market. While the US and Europe were wary of Huawei and from the outset placed limits on its markets, Brazil saw Chinese technology as a cheaper way to develop and never let itself be swayed by suspicions of Chinese government interference in subject of privacy. Several deputies of the PSL (Bolsonaro's former party) even visited China in early 2020 to evaluate the possibility of acquiring Chinese facial recognition equipment to help state security forces fight organised crime, proposal which was ultimately rejected by parliament.

With the rise of the controversy over the risks of espionage that the use of the Chinese multinational's technology could pose, some voices have warned of the threat that Huawei's contracting could pose to quite a few government agencies and offices: a couple of embassies and consulates, part of the infrastructure of the Chamber of Deputies, and even the headquarters of the Public Prosecutor's Office and the Federal Justice in some federal states. Although given the lack of accusatory evidence against Huawei, little has been done by the government about it; only the cancellation of some purchases of Huawei devices.

Brazil is the country that has received the second largest amount of public loans from China in Latin America: 28.9 billion dollars (Venezuela is the first with 62.2 billion dollars), distributed in eleven loans between 2007 and 2017, nine of which come from the Bank of China development and another two from the Export-Import Bank of China. Although this is a large amount, it represents a very small percentage of Brazil's public debt, which now exceeds one trillion dollars. Most of the loans granted by Beijing have been earmarked for the construction of infrastructure for resource extraction. In addition, Chinese companies have invested in the construction of two ports in Brazil, one in São Luís (Maranhão State) and the other in Paranaguá (Paraná State).

The rhetoric of the coronavirus

Bolsonaro soon realised his dependence on China and opted for a policy of accommodation towards Beijing, far from his campaign messages. Once again, Brazil opted for pragmatism and moderation, as opposed to ideology and radicalism, in terms of Itamaraty (Ministry of Foreign Affairs) policy. Likewise, in the face of the instability caused by the US-China trade war and Trump's current weak position, Bolsonaro demonstrated pragmatism by not closing himself off to high-potential trade partners because of his ideology, as was seen last November at the BRICS summit in Brasilia.

But at times, rhetoric emerges that is in keeping with the original thinking. In the wake of the coronavirus pandemic, Bolsonaro has in some messages copied Trump's anti-China narrative. A good example is the exchange tweet exchange between Eduardo Bolsonaro, a federal deputy and the president's eldest son, and the Chinese ambassador, Yang Wanming. The former compared the coronavirus to the Chernobyl accident, insinuating total irresponsibility, negligence and concealed information on the part of the Chinese Communist Party. The ambassador responded that the president's son "on his last trip to the US did not contract the coronavirus, but a mental virus", referring to his ideological proximity to Trump.

However, all this status seems to have calmed down after a phone call between the presidents of both countries, in which both reaffirmed their commitments, especially those of a commercial and financial nature. Moreover, once again Bolsonaro seems to be following the Itamaraty's traditional line of neutrality, despite the constant insistence of his instructions in blaming China for the current tragedy. It is clear that economic dependence on China remains much stronger than the ideological principles of Bolsonaro's political base, however Trumpist it may be.

Categories Global Affairs: Economics , Trade and Technology Articles Latin America

Bolivia has established itself in the role of distributing Peruvian cocaine and its own cocaine for consumption in South America and export to Europe.

  • In 2019, Martin Vizcarra's government eradicated 25,526 hectares of coca cultivation, half of the estimated total area of plantations.

  • Peru had a record potential cocaine production of 509 tonnes in 2018; Bolivia's was 254 tonnes, one of the highest historically, according to the US.

  • The US accused Morales towards the end of his term of office of having "manifestly failed" to meet his international obligations with his 2016-2020 counter-narcotics plan.

Coca eradication operation in Alto Huallaga, Peru [project CORAH)

Coca crop eradication operation in Alto Huallaga, Peru [project CORAH]

report SRA 2020 / Eduardo Villa Corta [PDF version].

Since Peru's national plans against coca cultivation began in the 1980s, eradication campaigns have never reached what is known as the VRAEM (Valley of the Apurímac, Ene and Mantaro Rivers), a difficult-to-access area in the centre of the southern half of the country. Organised crime operates in this area, especially the remnants of the old Shining Path guerrillas, now dedicated to drug trafficking and other illicit businesses. The area is the source of 64% of the country's potential cocaine production. Peru is the world's second largest producer, after Colombia.

The government of President Martín Vizcarra carried out a resolute policy of suppressing illicit crops in 2019. The eradication plan (project Especial de Control y Reducción del Cultivo de Coca en el Alto Huallaga or CORAH) was applied last year to 25,526 hectares of coca crops (half of the existing ones), of which 750 were in the VRAEM (operations were carried out in the areas of Satipo, Tambo River and Alto Anapati, in the Junín region).

These actions should result, when the figures for 2019 are presented, in a reduction in total coca cultivation and potential cocaine production, thus breaking the increase experienced in recent years. According to the latest report International Narcotics Control Strategy Report (INCSR), from the US State Department's department , which closely monitors this illicit activity in the countries of the region, in 2018 there were 52,100 hectares of coca in Peru (compared to 44,000 in 2016 and 49,800 in 2017), whose extent and quality of cultivation could generate a record production of 509 tonnes of cocaine (compared to 409 in 2016 and 486 in 2017). Although in 2013 there was even more area cultivated (59,500 hectares), then the cocaine potential stood at 359 tonnes.

From Peru to Bolivia

This increase in recent years in the generation of cocaine in Peru has consolidated Bolivia's role in the trafficking of this drug, since in addition to being the world's third largest producer (in 2018, 32,900 hectares were under cultivation, with a potential production of 254 tonnes of narcotic substance, according to the US), it is a transit zone for cocaine of Peruvian origin.

The fact that only around 6% of the cocaine reaching the US comes from Peru (the rest comes from Colombia) indicates that most Peruvian production goes to the growing market in Brazil and Argentina and to Europe, and therefore its natural outlet is through Bolivia. Bolivia is thus considered a major "distributor".

Some of the drugs arrive in paste form and are refined in Bolivian laboratories. The goods are brought into Bolivia using small planes, which sometimes fly at less than 15 metres above the ground and drop the cocaine packages in uninhabited rural areas; they are then picked up by elements of the organisation. The movement is also carried out by road, with the drugs camouflaged on cargo roads, and to a lesser extent using Lake Titicaca and other waterways connecting the two countries.

Once across the border, drugs from Peru, along with those produced in Bolivia, travel to Argentina and Chile, especially through the Bolivian city of Santa Cruz and the Chilean border crossing of Colchane, or enter Brazil - directly or through Paraguay, using for example the crossing between the Paraguayan town of Pedro Juan Caballero and the Brazilian town of Ponta Pora - for consumption in South America's largest country, whose volume has climbed to second place in the world, or to reach international ports such as Santos. This port, which is Sao Paulo's outlet to the sea, has become the new hub of the global narcotics trade, from which almost 80 per cent of Latin America's drugs leave for Europe (sometimes via Africa).

Production in Bolivia has been growing again since the middle of the last decade, although in the Bolivian case there is a notable difference between the often divergent figures provided by the United States and the United Nations Office on Drugs and Crime (UNODC). Both estimates agree that there was a previous decline, attributed by the La Paz government to the so-called "rationalisation of coca production", which reduced production by 35 per cent and adjusted cultivation areas to those permitted by law in a country where traditional uses of coca are allowed.

However, the Coca Law promoted in 2017 by President Evo Morales (his political degree program originated in the coca growers' unions, whose interests he later continued to defend) protected an extension of production, raising the permitted hectares from 12,000 to 22,000. The new law covered an increase that was already occurring and encouraged further excesses that have far exceeded the volume required for traditional uses, which programs of study from the European Union puts at less than 14,700 hectares. In fact, the UNODC estimated in its 2019 report that between 27% and 42% of the coca leaf grown in 2018 was not sold in the only two local markets authorised for this purpose, indicating that at least the rest was destined for cocaine production.

For 2018, the UNODC determined a production of 23,100 hectares, in any case above what is allowed by law. The US data reported 32,900 hectares, an increase of 6% over the previous year, and a potential cocaine production of 254 tons (2% more).

Sixty-five percent of Bolivian production takes place in the Yungas area, near La Paz, and the remaining 35 percent in Chapare, near Cochabamba. In the latter area, crops are expanding, encroaching on the Tipnis natural park -reservation . The park, which runs deep into the Amazon, suffered major fires in 2019: whether intentional or not, the destroyed tropical vegetation could give way to clandestine coca plantations.

 

 

After Morales

The report of the 2020 US State department highlights the greater anti-drug commitment of the Bolivian authorities who succeeded the Morales government in November 2019, which had maintained "inadequate controls" over coca cultivation. The US considers that Morales' 2016-2020 anti-drug plan "prioritised" actions against criminal organisations rather than combating coca growers' production that exceeded the permitted volume. Shortly before leaving office in September, Morales was accused by the US of having "manifestly failed" to comply with international obligations at subject on drug control.

According to the US, the transitional government "has made important strides in drug interdiction and extradition of drug traffickers". This increased control by the new Bolivian authorities, together with the determined action of the Vizcarra government in Peru, should lead to a reduction in coca cultivation and cocaine production in both countries, and therefore in its export.

Categories Global Affairs: Security and defence Articles Latin America

Uruguay contributes 45.5% of the Latin American workforce and El Salvador is second with 12%, both ahead of the regional powers.

  • Of the total of 82,480 troops in the fourteen UN peacekeeping missions at the beginning of 2020, 2,473 were from Latin American countries, mostly military and police.

  • Almost all troops from the region serve in missions in Africa; 45.4% serve in the DRC stabilisation plan.

  • After Uruguay and then El Salvador come Argentina, Brazil, Peru and Guatemala, while Mexico is one of the lowest contributors (only 13 experts and employees, not troops).

Bolivian soldier in training exercises for UN peacekeeping missions, 2002 [Wikipedia].

Bolivian soldier in training exercises for UN peacekeeping missions, 2002 [Wikipedia].

report SRA 2020 / Jaime Azpiri[PDF version].

Latin America's contribution to international peacekeeping missions sponsored by the United Nations is below the weight of its population and Economics in the world (around 8% and 7%, respectively). Of the 82,480 people participating in the various UN missions as of 31 January 2020, only 2,473 were from Latin American countries, which represents 2.9% of the total. A similar percentage (3%) was recorded when considering only the military or police staff of the missions (around 2,150 uniformed personnel, out of a total of 70,738; the rest corresponded to employees and experts).

This is a smaller external presence than might be expected, given the insistence of many countries in the region on multilateralism and the desirability of strong international institutions that limit the expansionist impulses of the great powers. A special exception is Uruguay, precisely the most coherent nation in its defence of international arbitration, which, despite its small population, is by far the largest contributor to peace missions staff . Its 1,125 envoys make up 45.5 percent of the total Latin American contingent.

While Uruguay's strong contribution is not surprising, it is surprising that the second country with the highest participation is El Salvador, with 293 people (12% of Latin America's contribution). This is followed by two very important countries, Argentina and Brazil (272 and 252 envoys, respectively); then Peru (231) and Guatemala (176). On the other hand, Mexico, despite all its economic and human potential, is particularly absent from these international missions (only 13 people, moreover, as employees or experts, not troops), both due to constitutional restrictions and political doctrine. In the case of Colombia (only 2 experts), this may be due to the need to devote its military force entirely to the pacification of the country itself, although one would expect greater capacity and availability from a global NATO partner , the only designation in Latin America that it achieved in 2018.

The international mission with the largest number of envoys, accounting for 45.4% of the region's total contingent, is the UN's mission statement mission for the stabilisation of the Democratic Republic of the Congo, whose French name is derived from the acronym MONUSCO. A total of 1,123 Latin Americans are participating, the majority of whom are Uruguayan envoys (934), with the greatest participation of Guatemalans on military missions abroad (153).

 

 

Previous highlights of missions

Although Latin American countries generally participate little in military missions abroad, the sending of troops abroad is not alien to the history of the American republics after their independence. A first intervention was the so-called "ABC", a coalition formed by Argentina, Brazil and Chile in the context of the Mexican Revolution at the beginning of the last century to prevent civil war in the North American country. Another conflict that required mediation was the Chaco War in the 1930s. In this confrontation between Paraguay and Bolivia, the interventions of Chile and Argentina were crucial to subsequently define the reaffirmation of the nationality of the Chaco region.

At the end of the 20th century, the most important was mission statement aimed at pacifying the former Yugoslav republics, known by the UN as UNPROFOR. Argentina was the Latin American country with the largest presence of troops in this scenario. Shortly afterwards, in the 1990s, two international missions were implemented, this time in the Western Hemisphere itself, to secure the agreements that put an end to the civil wars in El Salvador (ONUSAL) and Guatemala (MINUGUA). At the end of the decade, MOMEP was set up to impose an armistice between Peru and Ecuador, which were at war in the Cenepa War.

deadline In Colombia, too, some leaders at some point considered the possibility of apply for the presence of blue helmets in order to control and, in the long term, put an end to the FARC insurrection. In 1998, Colombian President Álvaro Uribe proposed the presence of international troops in the face of the government's inability to control the situation, but the initiative was not carried out. Following the peace agreement agreement in 2016, the signatory parties asked the UN to set up a UNVMC ( mission statement ) to monitor compliance with the terms of the agreement, which operates with a maximum of 120 people (some civilians and around 100 military and police personnel), of whom 94 were from Latin American countries as of January 2020.

 

 

The contrast between Uruguay and Mexico

Today, the countries of the region are present in 14 different peace missions (out of the total of 21 promoted by the UN), especially in Africa but also in other parts of the world. Nine Latin American nations participate in MINUSCA, convened for the pacification of the Central American Republic, the same issue as in UNVMC, the mission statement verification of the peace accords in Colombia. In UNMISS, mission statement of attendance in South Sudan, 8 countries participate, and in MONUSCO, implemented in the Democratic Republic of Congo, 7 do so.

As mentioned above, Uruguay is the largest contributor to ongoing missions (1,126 personnel as of 31 January). This staff is basically assigned to MONUSCO (934) and to a lesser extent to UNDOF (170), which ensures security on the Golan Heights as a force separating Syrians from Israelis; in total, Uruguayan blue helmets are present in six different missions. This service has been especially recognised by the United Nations, which values Uruguay's long history in this area subject: for example, it highlighted its attendance in the mission statement carried out in Haiti after the disaster caused by Hurricane Dean, to which it assigned 13,000 troops between 2007 and 2014. The contribution of Uruguay, a country of barely 3.5 million inhabitants, is greater than that of Spain (648), France (732) or Italy (1084).

On the other hand, the case of Mexico is the most striking due to its very limited participation in peace missions, considering that it is one of the region's powers. The North American country is the second Latin American nation that spends the second most resources on development for its armed forces, with a total of 7 million dollars, far behind Brazil's first place, with a total of almost 29.5 million dollars. Historically, Mexico has participated in more than 80 peace missions, lending troops from the Federal Police and the army, generally under issue. The previous president, Enrique Peña Nieto, announced in 2014 that Mexican units would once again participate decisively in armed operations in support of the UN, but today their contribution is reduced to 13 people (9 experts and 4 employees), which represents only 1% of Latin American participation. The most relevant reason to explain the Mexican phenomenon is the long tradition in favour of the Estrada doctrine of non-intervention in the internal affairs of other countries. Moreover, the Mexican Constitution restricts the deployment of troops abroad unless Mexico has declared war on an enemy.

Categories Global Affairs: Security and defence Articles Latin America

From the success of super-minister Sérgio Moro to the failure of 'hugs, not bullets': two different signs in the first year of populist presidents in Brazil and Mexico

  • AMLO promised to end the steady annual rise in homicides seen under his two predecessors, but over the course of 2019 he has accentuated it.

  • Improved figures in Brazil are overshadowed by an increase in accidental deaths in police operations and the issue increase in the number of provisional inmates in prisons.

  • In the first months of 2020 in both Mexico and Brazil homicides have increased, but the Covid-19 confinement could affect the annual statistics.

The Mexican president at the launch of the National Guard in June 2019 [Gov. of Mexico].

▲ The Mexican president at the launch of the National Guard in June 2019 [Gov. of Mexico].

report SRA 2020 / Túlio Dias de Assis and Marcelina Kropiwnicka[PDF version].

One of Latin America's best-known conflicts is its high level of violence, often as a consequence of the strong presence of organised crime. Within this regional paradigm, not all presidents deal with the problem of crime in the same way. While some opt for a more passive policy, others prefer to bet on an iron fist, despite the risks that this may entail. 2019 was the first year in office of Andrés Manuel López Obrador and Jair Bolsonaro, populist leaders of opposing ideologies, who came to power barely a month apart. In Brazil homicides went down, in Mexico they went up.

Mexico

There were a total of 35,588 victims of intentional homicide in Mexico in 2019. This means that, as 2019 drew to a close, a record high in homicides nationwide was left behind. In doing so, President López Obrador, known by the abbreviation AMLO, failed to deliver on his election promise to reduce violence. Although he maintained his approval rating at 72% at the end of 2019, his approval has been damaged in the aftermath by his management of the coronavirus health crisis.

Three previous governments had favoured military combat against drug cartels, but López Obrador established a divergent security strategy upon his arrival, focusing more on the self-described approach of "abrazos, no balazos" (hugs, not bullets). This approach led to the release of Ovidio Guzmán, son of Joaquín 'El Chapo' Guzmán, which the government argued was motivated by a desire to prevent an escalation of cartel violence. In addition, AMLO created the National Guard, a new security force that has been deploying tens of thousands of troops, formerly from the army and federal police, to tackle organised crime in areas core topic across the country. While the new strategy aims to strengthen security and tackle violence in the cities, it has so far failed to curb the barbarity. The president has even reneged on another promise and announced that for the time being the army will remain on the streets sharing the role of citizen security.

The issue of intentional homicides in 2019 was 34,582, up 2.5% from 33,743 the previous year; femicides reached 1,006, up 10.3% from 912 in 2018, according to the National Public Security System (SNSP). Although in previous years, during presidents Enrique Peña Nieto's term in office, there were larger increases - previous increases were 15.7% (from 2017 to 2018), 26.5% (from 2016 to 2017) and 25.1% (from 2015 to 2016) - the 2019 homicides represent the highest overall figure recorded in the last two decades. The figures from the mandate of Felipe Calderón (PAN), the first to take the army to the streets to fight drugs, were surpassed in the mandate of Peña Nieto (PRI) and now there has been an increase again in the first year of López Obrador (Morena). All three criticised the security management of their predecessors and all three failed in their purpose (AMLO at least for the moment).

On average, 2,881 murders were committed per month in 2019; the highest issue recorded was 2,993 murders in June and the lowest issue was 2,731 in April. The state with the most homicides was Guanajuato, followed by the state of Mexico and leave California. In terms of homicide rate per 100,000 inhabitants, Colima ranked first with 98.3, followed by leave California (80.6) and Chihuahua (68.7).

Much of the violence that has occurred across the country is directly related to gang formations and drug traffickers, and the struggle for dominance of local markets. It is therefore not surprising that Colima, home to the strategic port of Manzanillo, a focus of illicit activities, is the state at the top of the blacklist. In addition, there is partnership between criminal groups on both sides of the US-Mexico border for the mutual supply of drugs and weapons. Seventy per cent of homicides are committed with firearms, many of which have been smuggled across the border. The status not only undermines security in Mexico but also in the US. 

Donald Trump has urged Mexico to "wage war" against the cartels. In November he announced that he would officially label them as terrorist organisations. "The United States is ready, willing and able to engage and do the work quickly and effectively," Trump tweeted at the time. However, he ended up postponing the proclamation at the request of the Mexican president.

In the first quarter of 2020, homicides continued their upward trend, with 269 homicides more than in the same quarter of the previous year. While the social distancing measures taken during the Covid-19 crisis may change the trend in the second semester, the reduced investment in security to direct the public expense towards the health and economic sectors may push up the issue murder rate.

 

 

Brazil

In contrast to Mexico, Brazil has achieved a series of more positive results, following a trend to leave already experienced in the last year of Michel Temer's presidency. This is mainly due to the measures taken by the until recently appointed Minister of Justice and Public Security Sérgio Moro, the former federal judge in charge of Operation Car Wash. Bolsonaro's choice of Moro as minister was not random, since Moro is considered by a large part of the population as a hero in the fight against corruption, due to the various trials he led against members of Odebrecht and the political class , including the one that led to the imprisonment of former president Lula da Silva. Having promised in his campaign a tough hand against crime and corruption, Bolsonaro decided to merge the ministries of Justice and Public Security and offer Moro its leadership.

issue The decision was a wise one, and one of those that best sustained the Brazilian president's popularity in his first year in office. test of this was the significant drop in violent crime, including a 19% drop in the number of homicides issue . This is one of the most worrying indicators in Brazil, as it is the country with the highest issue gross annual homicide rate in the world. In 2018 homicides were 51,558, while in 2019 they fell to 41,635, a decrease of 19.2%. Excluding larcenies from these figures, the decrease was from 49,120 to 29,750.

In addition, cargo thefts were down by 35% and drug seizures increased by 81%. In Rio de Janeiro, one of the most problematic states in terms of security, larceny (robbery followed by death) was reduced by 34% and seizures of illegal weapons increased by 32%.

One of the measures that contributed most to this decline was the integration of the different institutions of state security forces at all levels: federal, state and municipal. This has allowed for a higher level of coordination, especially significant in the area of intelligence services, where information now flows more easily between institutions. Furthermore, in this same area, it is worth highlighting the investments made in Big Data and intelligence systems. The main focus has been on facial recognition and video surveillance systems.

Another important policy has been the transfer of gang leaders to more isolated prisons, thus preventing their possible communication and coordination with gang members on the outside.

Finally, mention should be made of the so-called "anti-crime package": a series of laws and reforms to the penal code that increase the power of the security forces to act, as well as establishing harsher penalties for violent crime, organised crime and corruption. The project C finally adopted by the Brazilian Parliament is a far cry from Moro's original proposal , but it has contributed, albeit to a lesser extent, to the drop in crime.

On the other hand, these positive figures were accompanied by a worrying increase in accidental deaths in police operations, with several cases of children killed by stray bullets in shoot-outs between drug gangs and security forces going viral. In addition, the issue number of provisional prisoners in Brazilian jails increased by 4.3% compared to the previous year. All this has encouraged criticism from most of the civil service examination and various national and international human rights NGOs.

In the first two months of 2020, 548 more deaths were recorded than in the same period of the previous year. This spike occurred in 20 of Brazil's 27 federal states, suggesting that this is a general trend rather than a sporadic episode. However, due to the mandatory quarantine library porter in several states and municipalities, homicides fell again, making any extrapolation for this year as a whole difficult. Another factor to take into account for 2020 is the recent resignation of Minister Moro; without him, the likelihood that the reforms initiated in the first year will continue is greatly reduced.

Categories Global Affairs: Security and defence Articles Latin America

Argentina, Paraguay, Colombia and Honduras have already C , while Brazil and Guatemala have pledged to do so shortly.

  • The 25th anniversary of the AMIA bombing served to unleash a cascade of pronouncements, breaking down the lack of adequate legal instruments against the group

  • Several countries have established lists of terrorist organisations, allowing for greater coordination with the US in the fight against terrorism in the region.

  • Hezbollah's involvement in the TBA's illicit economies and drug trafficking networks explain the decision of the countries concerned in South and Central America.

report to those killed in the AMIA bombing in Buenos Aires [Nbelohklavek].

report to those killed in the AMIA bombing in Buenos Aires [Nbelohklavek].

report SRA 2020 / Mauricio Cardarelli [PDF version].

The 25th anniversary of the biggest terrorist attack in Latin America - the attack on the association Mutual Israelita Argentina (AMIA) on 18 July 1994 - prompted several countries in the region to announce their intention purpose to declare the Lebanese Shiite organisation Hezbollah a terrorist organisation group . Hezbollah is blamed for the AMIA bombing in Buenos Aires, which killed 85 people, as well as the bombing of the Israeli Embassy in the Argentine capital two years earlier, which killed another 22 people.

The year 2019, then, marked an important leap in the confrontation of Hezbollah in the Western Hemisphere, since previously no Latin American nation had declared this organisation to be a terrorist organisation, which the United States, the European Union and other countries have identified as such. In fact, Latin American codes of law, beyond the guerrilla phenomenon itself, have barely taken external terrorism into account, as these are states that have not suffered as much as other parts of the planet from the rise of international terrorism, especially so far this century and above all from the hand of Islamist radicalism.

The round of declarations was opened by Argentina itself in July, on the anniversary of the AMIA massacre. In mid-August it was Paraguay's turn, while Brazil then announced its intention to follow in the same footsteps. lecture Later, US efforts catalysed the process, so that at framework of the Third Hemispheric Ministerial Meeting on Combating Terrorism, held in mid-January 2020 in Bogotá, both Colombia and Honduras proceeded to include Hezbollah on lists of terrorist organisations. For his part, the Guatemalan president-elect pledged to take a similar step when he takes office.

The cataloguing already effectively carried out by Argentina, Paraguay, Colombia and Honduras (countries attentive to Hezbollah's activity in the so-called Triple Frontier or its involvement in drug trafficking), and the as yet unimplemented but supposedly imminent cataloguing of Brazil and Guatemala should help to make the fight against this radical group by the national security forces and in the sentences handed down by the respective courts of justice more forceful.

If in 2018 the arrest of part of the Barakat clan's network was already a step forward in police coordination between Argentina, Brazil and Paraguay in the area shared border (the Triple Frontier, a place of intense commercial activity and of financing and concealment of Hezbollah operatives, sheltered by elements of a large Muslim population), the steps taken in 2019 constitute a decisive action.

Infiltration in Latin America

Hezbollah militants and cells have been able to penetrate Latin America in recent decades primarily by taking advantage of the Lebanese diaspora. Following Lebanon's civil war between 1975 and 1990, thousands of people emigrated to the American continent, sometimes settling in places where there was already a certain Arab presence, as was the case with Palestinians or Syrians. While some of these immigrants were Christian, others were Muslim; the latter's awareness of the fight against Israel led to the formalisation of networks for financing radical groups, in a process of money laundering from the profuse commercial activity - and also smuggling - carried out in many of these enclaves.

A strategic point in this dynamic has been the Triple Frontier, home to some 25,000 people of Lebanese origin, as well as other Arab groups: it is the area with the most Muslims in Latin America. The porous border connects Ciudad del Este (Paraguay), with 400,000 inhabitants; Foz de Iguazú (Brazil), with 300,000; and Puerto Iguazú (Argentina), with 82,000. It is a hotbed of illicit activities linked to money laundering, counterfeiting, smuggling and drug trafficking. Illicit trade in the TBA is estimated to be worth some $18 billion a year. The authorities have been able to identify Hezbollah financing networks, as well as the presence of group operatives (the preparations for the Buenos Aires bombings of 1992 and 1994 were traced back to this tri-border enclave). Last year, Assad Ahmad Barakat and some 15 members of his clan, which generated funds for Hezbollah, were arrested.

Other points of support for Hizbollah have been certain places in Brazil with mosques and radicalised Shia cultural centres, which host activities of extremist clerics such as Bilal Mohsen Wehbe. On the other hand, Hugo Chávez's rapprochement strategy with Iran involved a close relationship partnership manifested in the submission of Venezuelan passports to Islamists and their involvement in the drug trade under the protection of Chávez's leadership. This interrelation also contributed to its greater dispersion throughout the region, through Hezbollah's progressive links with those involved in the drug trafficking structure, such as the FARC or some Mexican cartels (Los Zetas and Sinaloa).

 

Designation of Hezbollah as group terrorist

 

Cascade of signals

Argentina opened the round of Hezbollah finger-pointing (and the creation, in most cases, of lists of terrorist groups, which did not previously exist in Latin American countries) on the 25th anniversary of the AMIA bombing in July 2019. The then president Mauricio Macri, who had put an end to the Kirchnerist presidencies of certain complicity with Iran, approved the creation of a public register of persons and entities linked to acts of terrorism and its financing (RePET).

On the occasion of the landmark anniversary, the University Secretary of the Organisation of American States (OAS), Luis Almagro, encouraged the countries of the contin ent to make this subject declaration against Hezbollah.

Paraguay followed in Argentina's footsteps a month later. Mario Abdo Benítez's government had been criticised for failing to act decisively on the Triple Frontier, whose smuggling, such as tobacco, and other illicit activities feed the perception of corruption that accompanies the country's politicians. The Paraguayan president also plans to introduce a package of legislative reforms against money laundering.

Brazil announced on 20 August its intention to proceed in the same way as its two neighbours, although it has not yet implemented this decision. At the end of February 2020, Eduardo Bolsonaro, son of the Brazilian president and national deputy, confirmed that the step would be taken 'soon'; he suggested that the delay in adopting the measure was due to the fact that the grade of group terrorist is also being considered for other organisations, such as Hamas.

In December it was Guatemala's advertisement , whose president-elect, Alejandro Giammattei, announced that he would blacklist Hezbollah when he took office position . Giammattei linked the decision to a pro-Israeli policy that would also lead him to move the embassy from Tel Aviv to Jerusalem, following the example of the US (Honduras and Paraguay are also on the same line). Giammattei took office on 14 January, but has yet to implement his promises.

Behind these moves by Latin American countries was US diplomacy. The deployment of US diplomacy was evident in the third meeting of the Hemispheric Counterterrorism Ministerial lecture , an initiative promoted by Washington with Hezbollah in its sights, among other objectives. This meeting was held on 20 January 2020 in Bogotá and was attended by the US Secretary of State, Mike Pompeo, attendance .

Colombia took advantage of meeting, which it hosted, to announce its consideration of Hezbollah as a group terrorist organisation. President Iván Duque announced that three days before the country's National Security committee he had adopted the US and EU lists of terrorist individuals and organisations. The approved list included the ELN guerrillas and FARC dissidents, with the former FARC disappearing from the list.

Honduras, the Central American country that is the most compliant with US strategies, also carried out its international advertisement at the same lecture. Its foreign minister commented at the end of a previousmeeting of the National Security and Defence committee that Honduras had designated Hezbollah as a terrorist organisation group and proposed the creation of a register of individuals and entities linked to terrorism and its financing.

Categories Global Affairs: Security and defence Articles Latin America

The region purchased only 0.8% of total Russian arm exports in 2015-2019; the US has recovered its position as the main arms supplier for the Americas

  • Over the last five years, the region carried out 40% less arms imports than during 2010-2014; the end of the commodity boom era reduced military equipment purchases

  • Chavez's Venezuela got almost $20 billion in Russian loans to buy weapons, but the collapse of the Venezuelan oil industry has left Moscow without a clear full repayment.

  • The arrival of the Bolivarian left to power in many countries brought tight relations with Moscow. But the pink revolutions wave has subsided in almost all places

A Russian Sukhoi Su-30MK2 bought by Venezuela, in Barquisimeto in 2016 [Carlos E. Pérez].

▲ A Russian Sukhoi Su-30MK2 bought by Venezuela, in Barquisimeto in 2016 [Carlos E. Pérez].

ARS Report 2020 / Peter Cavanagh[PDF version] [PDF version].

Over the last two decades Latin America increased its military expenditure. As the Latin American countries improved their economies, they looked to modernize their military and defence systems. The purchasing spree was notorious during the golden decade of high commodity prices (2004-2014), especially during the first five years, which were the most profitable in public income terms. After the commodity boom was over the region lowered its military purchases.

The trend was not uniform. Meanwhile Central America and the Caribbean, less affected by the commodity cycle, kept increasing the expenditure in arms imports over the last years, South America, more depending on minerals and oil exports, reduced the volume of arms transfers. Taken the region as a whole, Latin America's military purchases were 10% of global arms transfers in 2010-2014, and 5.7% in 2015-2019, according to SIPRI. Between the two periods, arms imports by Latin America dropped 40%.

This general evolution was mirrored by the ups and downs of Russia's portfolio in the region. Moscow managed to exploit the opportunity of the golden decade to the fullest. Russia positioned itself as a willing partner in arms sales and became the leading arms exporter in the region, surpassing China and the United States by far. Russia tried to exert its influence in Latin America to the highest extent possible, taking advantage of a wave of leftist governments (the so-called pink revolutions). Latin America has traditionally fallen under the sphere of influence of the United States. With Russian arms sales in the region, it serves as a direct challenge to US influence. As the second largest exporter of military arms in the world, after the US, Russia has a unique opportunity to affect policy in the region.

However, it is important to note that from 2014 onwards, Latin American arms imports have really begun to drop off, and this includes Russian exports as well. Russian arms exports decreased by 18% globally between 2010-2014 and 2015-2019, first affected by a prominent drop of purchases by India (-47%), which is its main client (25% of Russia's sales in that period), and, less importantly, by a reduction of imports from the Americas. Russian sells to Latin American countries were only 0.8% of total Russian military exports. From 2014 onwards the US recovered its traditional position as the main arms supplier for the region.

 

 

Countries

In the last two decades Venezuela has been Russia's biggest customer in the Western Hemisphere. Since the mid 2000's, after Hugo Chávez consolidated his power, Venezuela has purchased almost $20 billion in military equipment from Moscow. The years 2005 and 2006 saw the beginning of the transactions: Russian loans for Chavez's government to buy arms in exchange of future Venezuelan oil deliveries.

Over the years Caracas carried out more than thirty operations of arms acquisitions. more than the number of operations done by the other countries combined: Mexico 7, Peru 6, Nicaragua 5, Brazil 4, Colombia 3, Ecuador 2, and Argentina, Uruguay and Cuba 1 each. Among other significant material Venezuela acquired 24 Sukhoi fighters Su-30MK2s (and ordered 12 more), the S-300 surface-to-air missile system, various combat and transport helicopters such as the Mi-35M and Mi-26 models, and 92 T-72M1 tanks.

The prospects of Russia getting all its money back any time soon from Venezuela is quite low. Due to the severe economic conditions of the country, Venezuela has not been able to continue its payments, so the terms of the debt had to be renegotiated. Since 2014 Moscow has not delivered any new material. After the withdraw of the giant Russian energy company Rosneft from the country at the beginning of 2020 there have been fewer ways for the Russians to recover the loans. In many respects, this has left Venezuelan-Russian relations at a crossroads.

As Venezuela continues to decline rapidly, Russia is faced with deciding whether to keep making large investments in a country where it is tremendously risky or just abandon all efforts which have been made over the past few decades. Only time will tell which course of action the Kremlin will take.

Besides Venezuela there are a handful of other nations which have also carried out arms deals with Moscow. Nicaragua for example has been the beneficiary of many arms deals. According to the SIPRI Arms Transfers Database, in the first decade of the 21st century almost no arms orders had been made. However, this changed two years after Daniel Ortega came to power in 2007. Since then 90% of all military imports that Nicaragua has received have been supplied by Russia. In 2016, 50 T-72B1 Russian tanks were shipped to Nicaragua as part of a reported $80 million deal. Then in 2017 two Antonov An-26 military transport aircraft were sent.

The Nicaraguan government justified these purchases, saying that the equipment would be used as part of the struggle against drug trafficking. However, this has caused many other Latin American nations to become concerned of a military imbalance in the region, especially because some of the new equipment is more proper for waging war rather than keeping internal security.

Reports on Nicaraguan-Russian relations point to the fact that Russia may have ulterior motives beyond just influence. In many ways it comes down to military real estate. The arms deals between the two countries has been seen as an attempt on the part of Russia to curry favour with the Nicaraguan government in attempts to gain access refuelling facilities by the equator.

Other significant Russian arms sales recipients, as already mentioned, include states such as Peru, Mexico and Brazil. In the case of Peru, a country that even during the Cold War had some Soviet weapons systems in its inventory in order to diversify its arm imports, the most recent deal occurred between 2014 and 2016 valued at approximately half a billion dollars: the purchase of 24 transport helicopters Mi-8MT and Mi-17 (another 24 units were ordered in 2017).

Mexico has not Russians among its main arms suppliers (64% of Mexican purchases were to the US in the period 2015-2019; 9.5% to Spain and 8.5% to France), but still it carried out six arms deals with Russia since 2000. There has not been a deal made since 2011 when three Mil Mi-17 Military helicopters were purchased.

Brazil has also had a handful of deals with Russia in recent years, during the presidencies of Lula da Silva and Dilma Rousseff, when an amore pro-Russia stance was held by the government. This has changed immensely since the election of Jair Bolsonaro in 2018. The Brazilian government is now openly concerned for Russian influence in the region and has begun to take a more pro-USA stance when it comes to foreign policy. In any case, in the period 2015-2019 the main arms suppliers to Brazil were France (26%), the US (20%) and the UK (17%).

Overall, Russian arms sales to Latin America grew considerably, with some fluctuations, over the course of the last twenty years. The latest trend however has been a significant drop in overall Russian arms exports to Latin America. Between 2015 and 2019, as already mentioned, Latin America accounted for only 0.8% of all Russian arms exports.

This drop can be attributed to two main factors. In the first place, the change of ideological orientation in the Latin American countries, with less leftist parties in power. Secondly, the end of a booming economy in the region. And additional reason could be the international sanctions against some specific Russian industries due to the aggressive foreign policy conducted by Putin.

Categories Global Affairs: Security and defence Articles Latin America

Spain sells less defence materiel to Latin American countries than it should, given the volume of trade.

  • 2019 saw a recovery in Spanish arms sales to Latin America, surpassing 2018 figures, which were the lowest in a long time.

  • In the last five years, Spain has sold 691.2 million euros worth of defence material to the region, 3.6% of its world arms exports.

  • Mexico (24.8%), Ecuador (22.5%), Brazil (16.1%), Peru (14.4%) and Colombia (8.6%) are the five countries that purchased the most material from Spain in the last five years.

Airbus NH90 helicopter, final assembly at Airbus Military facilities in Spain [Airbus] [Airbus].

Airbus NH90 helicopter, final assembly at Airbus Military facilities in Spain [Airbus].

report SRA 2020 / Álvaro Fernández[PDF version].

Latin American countries constitute a area of clear commercial interest for Spain. However, despite being the seventh largest arms exporter in the world and therefore particularly active in this sector, Spain sells less defence material to Latin America and the Caribbean than it would be entitled to in terms of its overall export quota to the region.

While between 2014 and 2018 Spain's overall export of products to Latin America remained between 5.3% and 6.5% of its global exports, in the case of the arms sector it was around 3.2% in 2016 and 2017 and fell to 1.06% in 2018. It is to be expected that this minimum percentage will have risen again in 2019, a year for which there is still no official data complete, but in view of those of the first semester it would seem that it will not even be close to 3%.

The explanation for this lower weight of arms exports in Spain's overall exports to Latin America can be found in two facts. One is the lower budget devoted to the purchase of this subject of material by most Latin American countries, compared to some large buyers(in 2018 Spain's first customer was Germany - in turn the fourth largest exporter in the world -, which accounted for 33% of Spanish sales). The other is that Latin American nations have other important market options: the United States, Russia and China (first, second and fifth largest arms exporters in the world; France is the third).

In 2018 there was a significant drop in Spanish defence exports to Latin America, which amounted to 38.3 million euros, well below any of the previous years. The partial data for 2019 indicates a recovery, although without reaching the figures recorded in 2015, when a peak of €239.4 million was reached, or those of the previous years of 2016 and 2017, when they were €130.7 million and €139.3 million, respectively.

The decrease in 2018 corresponds to a lower purchase list from most Latin American customers. Of the five largest customers over the past five years, Colombia was the only one to maintain a similar level of purchases, amounting to €11 million. Colombia and the next largest buyer, Mexico, were the only ones to slightly increase their imports in 2017, although they were lower than in previous years. The reduction was significant for the next two customers in 2018, Brazil and Peru. This year marked a further reduction in imports from Ecuador, which has continuously cut its order book from Spain over the last five years.

The figures considered in this article only take into account defence material, not other subject material, which the administrative office considers separately, such as riot control material, hunting and sporting weapons, as well as dual-use technology products.

 

 

General and Latin American sales

Spain has around 130 companies dedicated to the arms sector. These include Airbus Military, Navantia and Indra, which are among the world's top 100 defence and security companies. Most of the sector are private companies, although there are some unique cases of public ownership, such as Navantia, dedicated to shipbuilding, both civil and military, created in 2005 when the assets of another public company, business , group IZAR, were spun off.

According to the official data of the administrative office of State for Trade, the issue of defence material exports has been increasing notably over the last few years. More than half of Spanish arms exports during 2018 and the first semester of 2019 were destined for countries belonging to NATO or the European Union. In 2017, exports exceeded 4.3 billion euros, after several years of increases in this market. In contrast, arms worth €3,720.4 million were sold in 2018, which was 14.4% less. In the first semester of 2019, however, an improvement was recorded, reaching €2,413 million, an increase of 41.5% compared to the same period last year.

In terms of trade with Latin America, between 2014 and 2018 Spain sold €691.2 million worth of military equipment to the region, representing 3.6 per cent of Spain's total arms exports of €19,042 million.

Over the five years as a whole, the leading importer was Mexico, which with purchases worth 171.4 million euros (of which 140.9 million euros corresponded to 2015 alone), acquired a quarter (24.8 per cent) of the defence materiel sold by Spain to Latin America over the five-year period. The second most important country was Ecuador, with 155.7 million and 22.5 per cent (slightly more than half -85.9 million- were purchases made in 2014 alone). It is followed by Brazil, which made more regular purchases over this time, with 111.8 million and 16.1%); Peru, with 99.5 million and 14.4% (the largest amount -78.4 million- was executed in 2017), and Colombia, with 59.5 million and 8.6%.

 

 

Some countries

Mexico has been the leading purchaser of Spanish defence material in the last five years (2014 and 2018) due to purchases made in 2015, when it acquired four transport aircraft, worth 127.2 million euros. In 2018 it only imported €10.1 million worth of parts, pieces and spare parts for Spanish-made aircraft, engine equipment for an aircraft derived from a European cooperation programme and instruments for an air surveillance system.

Brazil is one of the countries with the greatest diversity in the destination of its imports. In recent purchases, 19.7% went to private business , 74.2% to the Armed Forces and the remaining 5.9% to individuals. In 2018, it purchased 7.9 million euros worth of pistols, rifles and magazines for private individuals, as well as day sights, armoured vehicle parts, and Spanish and US-made aircraft parts for the Armed Forces.

Colombia imported in 2018 a total of 11 million euros in spare parts for the maintenance of artillery howitzers, artillery ammunition, spare parts for Spanish and US-made armoured vehicles, and parts for Spanish-made transport aircraft.

Until a few years ago, Venezuela was an important client for the Spanish arms industry. However, following the authoritarian drift taken by Nicolás Maduro's government, relations in this field have weakened. As recently as 2015, Spain sold 15.3 million euros worth of defence material to Maduro, in operations that were shrouded in controversy as some of the exported equipment could be used in the severe repression carried out against its citizens. Since then, with the increase in tensions between the Chavista regime and the United States or the European Union, a series of restrictions have been placed on the export of this subject material to Venezuela. Thus, sales went from having a value of 3.3 million euros in 2017 to just 44,000 euros in 2018, corresponding to payment for spare parts and parts for the modernisation of French-made armoured vehicles, in a transaction that was approved before the trade restrictions of this subject imposed by the EU.

The official data provided by administrative office distinguishes between authorised exports and realised exports. Authorisations do not always materialise in actual sales and sometimes these are executed in subsequent years. The difference is particularly notable in Venezuela, whose political status forced the restriction of exports to that country. In 2018, Spain suspended four licences already approved for Caracas, relating to helicopter maintenance and the provision of electro-optical supplies and systems. In addition, extensions to contracts for the modernisation of battle tanks were denied.

Bolivia and Nicaragua have stopped buying defence materiel from Spain: while between 2014 and 2018 they made no purchases, between 2007 and 2013 they imported 1.5 million and 62,000 euros, respectively.

Cuba, which had a peak in purchases in 2015 at €208,080, in 2018 spent €20,600 on pistols and pistol barrels for the police.

Categories Global Affairs: Security and defence Articles Latin America

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