Politics in Brazil isn't a joke anymore

Yesterday saw a march and protest along Rio's Copacabana beach. About 50 comedians, some of them famous in Brazil, wore specially made T-shirts and red noses to parade up and down Brazil's most famous beach and were joined by a big crowd of people that either agreed with them, or wanted a stroll, or were looking for an autograph. And the protest? It's against a recent ruling from the "Superior Electoral Tribunal" (the election judges) that prohibited radio, TV and internet programmes and shows from (and we quote) "using tricks, montages or audio or video effect that leave candidates parties or electoral alliances ridiculized". The court ruling also said that future production of such programs would be suspended.

After all, just the subject of Brazilian politics is set up for satire. The politicos there have long been the butt of jokes and quite right too as the vast majority need bringing down a peg or two hundred. But in its push to be seen as a serious country these days Brazil is achieving just the opposite; this kind of pettyfogging just makes the country look more stupid than before.

Bringing Brazil Down to Earth, by Armen Kouyoumdjian

There are many reasons to love Armen Kouyoumdjian. The way he knows LatAm better than any other economic/political analyst I know, the way he speaks his mind with eloquence and wit, the independent nothing-is-sacred attitude, the way he recently threw Andres Oppenheimer off his mailing list due to the moronic bullshit published by Schloppenheimer on the region. The list continues.

But here comes another reason to love the dude. Published last week, the following analysis on Brazil gives a much-needed counterweight to the permabull, Brazil-Is-Economic-Miracle sheep bleating of our current era. Kouyoumdjian's view is essential reading for anyone interested in Brazil's economic (and political, for that matter) future. I have been given permission to reprint his analysis here on the blog. I also recommend that you use the mail address included in his title line, shoot the great man a mail and ask nicely if you can join his free mailing list.

BRINGING BRAZIL DOWN TO EARTH
As the “Hadji Yatmaz” Country Inflates its Image

By Armen Kouyoumdjian
kouyvina (AT) cmet.net
October 2, 2009

Once again, Brazil is riding the top of the wave in terms of world consideration. Comments one reads describe it as leading the recovery in Latin America in the short-term, flexing its regional and international muscle on the diplomatic stage, and even on the road to becoming a “new Saudi Arabia” for oil production. When you point out that in a 33-year career covering Latin America, you have all heard it before, several times over, your cynicism is countered by the comment: “ah, but this time, they really have got it right!”. How many times I have heard that one as well. Unfortunately, many of the analysts and journalists behind this enthusiasm were not even born when I started looking at Latin America in November 1976.

This is one of the main problems in not only analysing, but also putting across any contrary views on Brazil. The fan club is so large and militant that they will not hear anything against the subject of their undying love and admiration. Moreover, even with the evidence under their nose, they will not even look at it. “A virtuous circle” as one London analyst described it to me some years ago. The other problem is that, fully conscious of this goodwill, Brazilian authorities themselves take advantage and put across a positive image in an unparalleled decades-old exercise in cosmetic dressing-up.

Though I am fully capable of it (once I see the colour of your money), I am not planning here to undertake a detailed Country Risk analysis of Brazil, but just to underline some cautionary aspects which are always ignored.

WHAT IS A HADJI YATMAZ? I normally do not translate foreign expressions used in my reports, because even though I have little faith in the cultural level of much of my readership, I think it is a job for foreign embassies in Santiago. After all, there is something they should spend their time on, because updating their websites, managing their invitation lists and organising proper catering does not seem to be much of their concern. However, in this case, the concept of “Hadji Yatmaz” is fundamental to this report, so I shall have to explain it.

In the Beirut of my childhood, before it was destroyed by the invading vandals of the territory to the South, there used to be a toy called a “Hadji Yatmaz”. Probably a result of the Ottoman occupation, the expression used is Turkish. It means roughly “the Hadji that won’t lie down”. It consisted of a small plastic figure, with a piece of lead in its base. If you bent it downwards, it always stood up again, because of the heavy lead base. Such a toy was probably available in other countries, though nowadays the lead content would be illegal because it is poisonous. I had several of them, and my playing with lead probably led to the imbecility with which I generously send my reports for free.

So most people regard Brazil as a “Hadji Yatmaz", which will quickly stand up after falling down. The problem with the toy, as with Brazil’s image, is that it was made of very cheap plastic, and it was completely hollow inside.

INFLATING THE PRESTIGE Having had two emperors (Pedro I & II) for a total period of 67 years after independence (1822-89), and contrary to Haiti (Dessalines and Faustin) and Mexico (Iturbide and Maximilian), whose flirtation with imperial status was shorter and unedifying, Brazil never recovered psychologically from losing that status. In fact, soon after a military coup sent Pedro II into exile, they sent a delegation to woo him back (which he refused to do). So the country had to make do with its own imperial size, embassies that are palatial (the one in Santiago has its own chapel), and flexing its muscle from time to time among its smaller neighbours (it shares a border with all but two of South American countries, Chile and Ecuador).

Flexing your muscle is not difficult when you are the size of an elephant. Brazil is only 11 % smaller than China (though it has less than a seventh of its population). Elephants have small brains but powerful muscles, and their mere presence is intimidating. One has to say that Brazil has used its size in a generally benign and certainly “softly softly” fashion, rather than in an openly aggressive way.

Following a long period of crises, and after thinking that their economy had been “stabilised”, the country actively embarked on making its mark on stage. This has gone into overdrive in recent years. It started modestly enough with a bid to represent Latin America in a potential permanent seat of an enlarged Security Council (a UN debate that is far from being resolved anyway). Its only likely contender, Argentina, though pretending that it is still in the running, does not appear to have much of a chance, to put it mildly.

As this matter was dragging on, Brazil thought up another role for itself, closer to home. It convinced the USA, busy killing babies in Iraq and Afghanistan, that it could be its proxy “regional stabiliser”. That was not really Brazil’s real intention. It did not want to be a proxy for anyone, but have a role for itself. So it thought up UNASUR, making sure membership was limited to countries south of the Panama Canal, and more importantly, its offshoot, the South American Defence Council (or CDS). The latter had a double purpose: give a military dimension, and provide an outlet for its growing defence industry. Massive acquisitions of modern weaponry mainly from France, at various stages of confirmation, all insisted on “technology transfer” clauses. One hopes that the quality of training in their armed forces has improved to the point of handling nuclear submarines and U$ 200 million a piece state-of-the-art combat aircraft. During WWII, the Brazilian Navy had the dubious record of a destroyer sinking itself (a badly positioned machine gun fired a “training burst” into ammunition stored on the deck below, causing an explosion from which only two crew members survived to tell the story). There is no limit to the ambitions. Vice-president Alencar recently expressed the wish that Brazil would become a “nuclear power”. Contrary to people’s attitude to Iran, not a single voice protested around the world (not even when the country’s authorities refused access to an IAEA inspection team to an army facility known as IME, where nuclear research is carried out).

Among its immediate neighbours, Brazil played godfather to the start-up Bolivian gas industry, and put pressure to stop a break-up of that country sponsored by local business interests with Israeli help. With Paraguay, after playing an unusual game of toughness and carrying out live ammunition exercises on its borders, it accepted to renegotiate iniquitous agreements on revenue from the joint Itaipu hydroelectric project, trebling the sum paid to its small neighbour.

More recently, Brazil became even more proactive in terms of diplomacy by the crucial role it is playing in trying to restore democratic rule in Honduras, having arranged for the deposed president to return in secret and take refuge in their embassy of Teguchi-galpa (as French TV called the Honduran capital, probably thinking it was a provincial town in Japan). Though the gathering was held in Venezuela, Brazil was a strong voice in the recent African-Latin American summit. It had previously flirted actively in the continent, particularly with the Portuguese-speaking former colonies like Angola and Mozambique. It has also nibbled at the Palestinian problem, the G-20 group and the Doha trade round. Last April, in another fit of panache, the country lent U$ 10 bn to the IMF.

Brazil is not a member of the OECD, but holds observer status there since 1994, and some time ago became the first OECD country to join a trade pact norm with its members. Last but not least, Rio de Janeiro’s just became the seat of the 2016 Olympic Games, the first to be held in the region. This is despite the fact among the four finalists, it had the lowest “suitability” score in the evaluations. The honour will cost the country another U$ 5bn in investments.

POLITICS AND THE LULA PHENOMENON There is exactly a year to go until the October 3rd 2010 elections, which will mark the end of two terms of Lula presidencies. That day will also mark the renewal of all the Lower House and part of the Senate. Lula cannot stand again on this occasion, but he is said to be already eyeing the one election after next, in 2014.

In the meantime, his personal popularity still stands at an incredible 65 to 70 % or so, a score only bettered by Chile’s Ms. Bachelet, also coming to the end of her single term. What can the explanation of such popularity be, after years in power and in the midst of a severe crisis? Unassuming agreeable personalities, trying to stay above daily occurrences (”blindaje” as they call it in Chile), whilst appearing like the person next door (which in a way they both are).

The problem with such popularity is that it does not rub off on an heir, anointed or not. Lula has hand-picked his rather dour chief of cabinet Ms. Dilma Rousseff, a Bulgarian from his own PT party, as heir apparent. It did not help that soon afterwards she was diagnosed with cancer, but the fact is that, exactly a year ahead of the polls, she has only 15 % backing in the polls, running virtually in third position in a field led by the PSDB’s Jaime Serra.

One eyebrow raiser has been the formal announcement on September 30 that Central Bank president Henrique Meirelles would bid for the governorship of Goias state, in alliance with Lula’s PT party, thus putting a question mark on the real independence of the Central Bank ( a concept which in any case rarely goes beyond the theory in Latin America)..

THE DEBT OVERHANG I have often referred to the conspiracy of silence, for there is no other word, surrounding Brazil’s fiscal situation, which everyone appears to wantonly ignore, to the great joy of the authorities. Whereas it might be true that the way their finances currently look, France, Spain and the United Kingdom may declare bankruptcy sooner than Brazil, it is amazing that on September 22, Moody’s joined Fitch and S&P to give the country an “investment grade” rating.

Brazil is very good at pulling the wool over the eyes of the average analyst and journalist, concentrating on the totally irrelevant “primary balance”, and the size of the debt as a percentage of GDP. Debt is a precise figure, which your creditors can calculate down to the second decimal. GDP is a nebulous concept. A quotient of the two is meaningless. In any case, debt is not serviced with GDP (nor with trade surpluses), but with fiscal revenue over and above other needs.

With the just published fiscal results for January-August (the amazing thing is that these figures are available for anyone to see on the Central Bank’s website), we have the following results:

The treasury generated a primary surplus of U$ 23.5 bn over 8 months, but this only covered 40 % of an interest bill equal to U$ 58.5 bn (U$ 241 million in interest per calendar day, or U$ 10 million per hour). The resulting overall deficit was U$ 35 bn in 8 months, nearly SIX TIMES the figure for the same period of 2008. If that is an “investment grade”, I’d hate to see the figures for a junk bond issuer. Total debt as of August 31st stood at U$ 1,055 bn.

The most worrying aspect of this is that the deterioration of public finances took place in a context of falling interest rates, and in particular the benchmark SELIC rate at which around a third of the debt is denominated. A year ago, SELIC was at 13.75 %. It is now at 8.75 %, down by over a third in just a year, but a reversal is expected, with some local forecasters thinking it may go up by 4 points by the end of 2010.

Relax, more statistical games are planned in the cosmetics field (it is time that L’Oréal transfers its corporate headquarters to Brasilia). The authorities, having already taken out a U$ 10 million an hour interest bill from its fiscal deficit calculations, they are now pondering whether to also exclude the cost of reactivation packages.

In late July, Brazil managed to place a 28-year bond issue for U$ 500 million, with a coupon of 7.125 %. Admittedly this is more than Citibank is paying us on our time deposits, but at least these are guaranteed by Uncle Sam (why are you laughing?). There was actually demand for U$ 7 bn and the bonds were placed at 108.63, still giving a yield of 6.45 %. The question is whether they can keep up the coupon and pay the principal in 2037. Look at the past 28 years and you may find the answer.

SOME OTHER STATISTICS Brazil was the Latin American country with the largest stimulus programme, much of it unfortunately directed to consumption, with some going to housing. Credit card use is at a record level, and bank credits for that purpose are up. This will add debt accumulation to the population. Even though they are at a 14 year low, average interest rates on consumer credits are at an average of 7 % A MONTH (that is 125 % per year, unless you are a Chilean economist, and think it is actually 84 %).

In fact, one wonders where this lead in recovery that Brazil is supposed to be taking in Latin America can be seen (“The Clear leader of the region’s recovery”, as JP Morgan described the country in late July). One would have hoped that the shit they put us in over the past year would shut up all these investment bank twits. No, they still talk, write, get invited to speak at seminars and even insist on getting bonuses! Only retail sales and car sales recently showed positive growth, helped by all sorts of incentives. Passenger car sales to September rose by 5.5 %, but the lack of real investment is better reflected by the 20.2 % drop in truck sales over the same period. Industrial Production in the first 8 months was down 12.1 %, and second quarter GDP was a negative 1.2 %, after a first quarter drop of 1.8 %. Passenger car output to August was 10.7 % lower and that of trucks 34.6 % down. The August urban unemployment rate of 8.1 % was the same as in June, and 0.5 points above a year earlier.

On the external front, the 8 % rise in the January-September trade surplus (to U$ 21.28 bn), was only due to imports (-31 %) falling faster than exports (-25.9 %). Capital goods exports alone were down 46 % in January-August. This helped shrink the first semester’s Current Account deficit (- 52.5 % to U$ 9.56 bn).


External reserves as of end September were at a comfortable record of U$224 bn, so at least (thank heavens for small mercies) we do not have to fear a good old fashioned external sector crisis (which used to cause most Latin American disasters in the past, hence the fact that for many psychologically frozen analysts), Country Risk is limited to a study of the external sector.)

Inflation is also under control (under 3 % in the first 8 months, accumulating a 12-month total of 4.4%).

SAUDI ARABIAN MIRAGE? Those familiar with the works of French fabulist La Fontaine, himself inspired by older writers of morality tales going back to Greek literature, may remember the one about Perette et le Pot au Lait. In it, Perette, a carefree milkmaid, is walking with a pot of milk on her head and she starts daydreaming about how she is going to benefit from the milk she is transporting, ending up as the head of a major farming operation. Unfortunately, she fails to see an obstacle on her way, so absorbed she is in her fantasies, that she stumbles and all the milk is spilt, putting an end to her dreams.

No long ago, Brazil announced with great panache (no faltaba menos) that it had found a giant oil field under the sea bed, with such potential as to make the country a new Saudi Arabia. “A passport to our future”, described it presidential hopeful Dilma Rousseff . The money was going to go towards developing the country and eliminate poverty (why didn’t they do it when they had rubber or coffee, one wonders). Heated discussions started as to how it was going to be exploited, by whom and which proportion of earnings would the various stakeholders get. There was even talk of the “Norwegian model” in managing the bonanza.

Back in 1974, Brazil claimed similarly (soon after the first oil shock) that it had found major deposits that would make it self-sufficient in oil over the short-term. In fact, it took over 30 years and several more finds to barely reach that aim. In fact, strictly speaking, the country is not as yet self-sufficient in oil, gas and derivatives, as the sector’s trade balance in the first 8 months of 2009 was still in deficit to the tune of U$ 3.5 bn. Even if we grant the fact that the new deposits, known as “Pre-sal” exist in the quantities mentioned, there are a number of strong doubts and reservations.

-The deposits are some 5,000 metres below the sea-bed. Though the technology to extract at that depth does exist, it is very specialized and expensive.
-There is no single mega-deposit, but a series of “pockets” of oil, which have to be exploited separately. They are also spread over an area measuring 160,000 Km2. Each will need its own expensive perforation and production installations (only two companies in the world currently manufacture them), at a cost of between U$ 80 and 90 a barrel (the figures vary, and they are probably impossible to gauge until you actually get on with it.
-Due to the nature of the deposits, the recovery rate of the oil “in situ” is likely to be below 15 % of what is actually there
-There are some legal problems related to the proximity of some of the Pre-sal to existing concessions held by other firms.

Even if it is true that the new discovery doubles the size of Brazil’s oil reserves, it will require a tremendous investment and technical effort to exploit it, in order to sell at a price which may or may not be economic. Hardly a boon considering the previously described fiscal constraints, particularly as in order to keep control, the authorities seem keen that most of the work will be done by the state firm PETROBRAS.

According to the company’s president, they will invest no less than U$ 111bn to develop Pre-sal by 2020, to which one has to add nearly U$ 300 bn that the private sector would have to invest as suppliers of goods and services. There are strong fears that such sums will crowd out the availability of capital for other needs in both the state and the private sectors. Before Pre-sal became the talk of the town, there was another pharaonic fantasy of building 60 nuclear power stations. Petrobras estimates that it will need 40 rigs by 2017 (there are only 80 similar ones in service today all round the world), of which it insists 28 must to be built in Brazil itself. Is it the best way to spend U$ 400 bn when the rest of the world is trying to reduce dependency on fossil fuels?

STILL AN UNDERDEVELOPED COUNTRY If Brazil wants to emulate Saudi Arabia, it might better consider a policy of cutting the hand of thieves. Even by Latin American standards, the levels of corruption and mismanagement in the public sector are abysmal, as are business manners. In the past two years, I have sent umpteen messages to various Brazilian entities ranging from the Rio Film Festival to the Defence Ministry. Not a single one has ever been answered.

The national infrastructure is seriously lacking in many ways. Ports are a big problem, and recent accidents have also turned up a disastrous situation in airports and air traffic control. Here again, the announced action is on prestige projects. The prime example is the high speed train link between Rio and Sao Paulo, originally estimated at U$ 11 bn, but now expected to cost from U$ 15 to 20 bn. If such a proven technology is difficult to cost up, imagine what can happen to the calculations for Pre-sal investment. Only a third of roads in the country are considered to be in good condition. Energy shortages also loom in the medium-term.

To that, one has to add the worst income distribution on the continent, and abject levels of poverty. Farmers, over and above the 8 % drop in output estimated for this year, have seen concentration of ownership actually worsening in the past 20 years. No less than 30 % of Brazil’s farmers are illiterate. Though some poverty-reduction programmes such as Fome Zero and Bolsa Familia have brought-in relief, rural poverty is still a huge problem.

One day, the Hadji Yatmaz may not stand up after all. If you circulate this report to third parties, I am not interested in their baseless debunking comments. This paper was very well researched, and contrary to their impressionistic opinions, is based on facts and figures, goods which are often in short supply among other scribblers. Also anyone complaining that I did not mention “the good aspects”, should remember that I am a diagnosis doctor, not a publicist.

Peru's cabinet reshuffle happens this week

Twobreakfasts this morning announced that the current band of ineffective and corrupt puppets that make up his cabinet will be changed this weekend, including the official goodbye for Yehude Simon. Speculation is now underway about who will make up the new cabinet of ineffective and corrupt puppets with "Who gets the PM job?" top of the list of chattering class questions that nobody outside Peru really cares about.

Thus, as Otto would just love to join the chattering classes one of these days, here's a list of possibles with odds and comments by your humble scribe:

Pedro Pablo Kuczynski: Most likely choice right now. PPK has made it clear he's running for Prez in 2011 and the PM job will give him the public radar he needs to launch a campaign. Architect of the economic reforms in the Toledo gov't. Rich and influential and likes reminding people of those two facts. Current odds: Even money.

Rafael Rey: The current Ambassador to Italy, Twobreakfasts met with Rey last weekend for informal talks about.....we don't know (it was off agenda). Not an APRA party member but rightwing leaning and proponent of orthodox economic measures (i.e. status quo in Peru). Member of Opus Dei. Current odds: 3/1 (but quite likely to get a cabinet job).

José Chang: Current Education Minister, APRA lapdog and Twobreakfasts sycophant. About as charismatic as a vanilla blancmange. If Twobreakfasts wants to play it neutral (unlikely) he has a squeak. Current odds: 6/1.

Mercedes Araoz: Current Minister of Foreign Commerce and the point person in the Free Trade Agreements. An honest politico (that rare breed in Peru) and generally liked (perhaps better said is 'not disliked') by both peers and citizens. May be too valuable where she already is. Current odds: 8/1.

Lourdes Flores: Head of the UN party and rightwing fave, Flores might accept if offered to give herself radar before 2011. Twobreakfasts would have to swallow some of the gargantuan pride to put her in a position of power, though. Coming to the end of her shelf life as a presidential candidate. Current odds: 10/1

Javier Silva Ruete: Ex-FinMin and respected figure, but probably ruled out because he's nobody's puppet. The kind of guy that's just too honest to get to the top in PeruPolitik. Current odds 10/1.

Ollanta Humala: More chance of the hole in my tush healing up than this dude getting a job under Twobreakfasts. Current odds: 100/1.

Brazil: Top quality new blog on Brazil economics to recommend

Headsup people, Vitoria Saddi has a blog!

The blog's name is "Latin America and Brazil On Economics and Politics" and is good news for people like me that don't know enough about her specialist subject and want to know more. As mentioned previously, one of the standard mail questions I get is "why not more about Brazil, Otto?", but now I can refer them over to a true expert. Vitoria is blogging in English with some Portuguese articles as well, but if you don't know who Saddi is as yet here's the biography (prepare to be impressed).

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Vitoria Saddi was senior Latin American economist at RGE monitor. Previously, she was chief economist at Queluz Asset Management and Latin American economist at Salomon Brothers in Sao Paulo. Ms. Saddi was a lecturer at the University of California at Long Beach and Ibmec Business School. She received the BNDES award for the best master dissertation in Economics in Brazil. At the University of Southern California she received the award for outstanding teaching assistant and at Ibmec the award for excellence in teaching. She holds a master in Economics from FGV-SP and a Ph.D. from the University of Southern California.

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And those, esteemed lector of IKN, are top credentials. I can also confirm that Saddi plays a seriously good game of chess.

So there's today's new blog recommendation and the savvier among you will do what I've just done and put it on your RS feed forthwith...or maybe even fifthwith. If not, you can always access her blog on the link you'll find from today over there on the right. Here's the link to her blog again, so you have no excuse.

Venezuela: The day Chavismo feared has arrived

It's the day Venezuelan opposition finally showed signs of political maturity.

Pre-Chávez, Venezuela was ruled by an oligarchic elite (and that's not an overdose of rhetoric) that never needed to explain themselves to their underlings as they never bothered to include the vast majority in the political franchise. Then along came Chávez and that has now changed forever. Since that time, the reaction from the upper and middle classes has basically been one of the petulant schoolboy stomping his feet in rage that someone dared to steal back that which he had stolen.

However, this post over at oppoblogger Quico's Caracas Chronicles site may just mark the moment when Chávez finally has something to fear from the opposition. A much-needed dose of maturity is shown by Quico as he makes it clear to his fellow oppos (much to the disgust of some of them..check the 100+ comments) that Chávez is not a dictator. In fact, he recognizes something that has been clear to non-rabid outside observers for some time; the rest of the world laughs at an oh-woe-is-me opposition that tries to lump a democratically elected, re-elected and re-re-elected President who has brought social justice to his country with the real dictators of our time (Stalin, Pinochet, Amin, Pol Pot etc etc).

So go read Quico's post, "The Dictatorship Canard", for yourself. It's linked right here. You may or may not agree with the whole thrust and political background of Quico, but that's beside the point. The overriding reason why it makes such a refreshing change from the usual drivel written by the anti-Chávez brigade can be summed up in three words: It is intelligent.

Reject and protest Bolivian mob rule now, before it's too late

The story of the week in Bolivia has been, without a doubt, the attack on the home of opposition politician Victor Hugo Cardenas by Evo Morales supporters. The best write-up I've seen on the story is (as usual) Jim Shultz over at Blog From Bolivia and it's linked for you right here. I recommend you check out Jim's words to get the nuts and bolts of what happened last weekend, his normal sharp insight also comes for free.

Mine is a commentary, no more. Firstly, I join the vast majority of voices down these parts that totally rejects, condemns and speaks out against such mob-style vigilante movements and ask that the government of Evo Morales clamps down immediately on this action and doesn't let it become a trend. Morales has talked plenty of talk about "equality for all", and now he has to show he isn't afraid of weeding out the bad ones from his own movement.

The episode reminds me that Bolivia's democracy is still in its infancy. There's a whole section of its population that have never been allowed into the democratic franchise before (about 60% of them, in fact) and now that they have some real political power the temptation to excess in the minds of some factions is clear. Morales' job now, and it's a tough job, is to get Bolivia out of the childish phase of democratic backlash and revenge-taking as quickly as possible. In a perfect world, last weekend's episode will mark the end of it. We shall see.

Following on from that, I'm also reminded at the way the Central European Jewish community took their revenge on many members of the Nazi party in the period just after WWII. Of course this example is more extreme than the situation in Bolivia today. Of course it doesn't condone the attack on Cardenas' home. That said, authorities ostensibly rejected the summary executions by Jewish vengeance-seekers at that time but also, deep down, understood. Governments of countries all over the region stood back and watched the bloodlettings. To be quite honest, after what the Jewish people went through in the years previous I would have stood back and done nothing afterwards, too. The act of revenge for past ills is a primitive emotion and is not one confined to Bolivia 2009. Again and to emphasize, the indigenous Bolivian's plight isn't anything as dire as the Jewish shoah but it has stirred the same underlying emotions amongst its more extreme militants. Evo Morales needs to show, quickly and firmly, that his pacifist and reconciliatory message is good for all sides, not just eastern criollo white versus western indigenous brown. President Morales, impose the rule of law now, before it's too late.

Finally, the roaring silence on this from the progressive English language blogs that cover Bolivia (you know who you are) does no service to the free and open dialogue that you say you want about the other bits of Bolivia 2009...all the coca leaf, racism, self-rule, new democracy, constitution-for-all etc etc. I've waited patiently all week and, Schultz at BFB aside, there has been nothing from the blogs that should cover the bigger Bolivian stories and inform the wider world about the real Bolivia. If it's a big story that doesn't fit with your vision of the shiny, new and wholly healthy Bolivia you cannot ignore the story out of convenience. Nuff said.

From a Porteño viewpoint: Eduardo Duhalde

This week, El Porteño brings us an inside look at Eduardo Duhalde. Neither a hit-piece or a note from a Duhalde fan club, he brings us some excellent insight on this most important of Argentine political players. It's a pleasure to have such a great voice on Argentina as a regular guest blogger. All yours, Porteño:

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I still recall the year 2002 when Eduardo "The Godfather" Duhalde took over the presidency (after the infamous period of five Presidents in one week). They were Kafkaesque times and it was the worst crisis in our modern history. Somebody was needed to do the dirty work and Duhalde it was who was chosen to "pesificate" debt (ottonote, turn debt held in dollars into Argentine Pesos), especially of the large companies. I myself went out into the streets, banging my casserole and demanding that a delinquent such as he should resign. Later, Duhalde had to call snap elections after the police killed two young protestors in a demonstration and thus Nestor Kirchner arrived on the scene with the support of Duhalde, but later they fell out.

At that time I remember public opinion saying that Duhalde could never return to politics, but he said, "In the next crisis they'll come looking for me. I'm a good fireman and brave enough to make unpopular decisions". He was right.

Today everybody knows that only Duhalde can tame the disparate politics in Buenos Aires Province (ottonote; economic powerhouse region of Argentina and key state for all politicians). He has a close relationship with the five or six big owners of Argentina and with Nestor losing power and influence the opposition is looking to take advantage. Duhalde knows he cannot be a candidate himself but he is gathering all the conservative opposition around him, uniting the right-wing Peronists, the liberals, the oligarchy and the powerful rural landowners. Macri, Solá and Francisco de Narvaez are his candidates.

Obviously none of them can publicly declare they are 'employees' of Duhalde, but we all know that 'The Godfather' is the power behind this alliance. It's difficult to explain to those not versed in Peronist history, but the typical oligarchic power in Argentina needs Duhalde like a mafia capo to manage the common people and make the economic decisions that those powers need.

I only ask that all who vote for Macri realize that in fact they are voting for Eduardo Duhalde.

Firma y sello, El Porteño

Find all the "El Porteño" guest blogs here
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From a Porteño viewpoint: Macri

It's been a long time, August in fact, since we had one of these. But better late than never, I suppose. The Porteño (resident of Buenos Aires city) in question happens to be a very close friend and we're always passing mails and commenting between ourselves.

So when Porteño (we'll use that moniker) saw the Mauricio Macri video in the preceding post this morning he sent me a mail with his views on Macri and entourage that's well worth putting through the Ottotrans™ and sharing on the blog (permission has been granted). As mentioned already today, Macri is one of these "love him or hate him" characters down there. Enjoy.

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Lord, how these people make me angry. I hate him (Macri). I'd even say that I hate him more than Menem. At least Carlos had charisma. This guy has less charisma than a Korean's fringe (Ottonote; translated directly just for fun. All he's trying to say in a true Porteño tone is that Macri has no personality), he's more boring than De La Rua*. Macri is a total product of political marketing. With some small discourse and big-spending campaign he can even position his friend De Narváez** as a political candidate. The mainstream media fully support him; Clarín, La Nación, TN are always promoting Mauricio Macri and Francisco de Narváez.

Speaking of De Narváez, five or six years ago he bought Juan Perón's personal library and still hasn't read one of the books. He said it himself, no kidding.

But back to Mauricio: I still don't understand how nobody realizes that the guy is a packaged product. But he's also a dangerous package. Up to now all that he's done is:

• Raised Buenos Aires property taxes an average of 300%
• Increased road tolls
• Increased the number of parking meters and their charges
• Attempted to cut gross salaries.
• Added stamp duty to house sales
• Added tax to credit cards
• Sold construction materials to out-of-city centre residential projects (known as "countrys")
• Stopped education grants and scholarships
• Cut health spending
• Destroyed the Colon Opera House
• Created a disaster in the hospitals system
• Sacked local gov't people that protest and ignored the corrupt
• His government functionaries are resigning en masse
• His execution of the city budget plans is the worst in 30 years

The saddest thing of all is that he appears in the media six hours a day transmitting an image of direction and management. I'm telling you that even Telerman (Ottonote, the previous mayor of Buenos Aires, known for his relaxed attitude) did more than him. At least Telerman fixed pavements and gave out domestic refuse containers without raising taxes.

I could go on and on about this idiot but I'd get boring. The Duhalde/Macri/De Narvaez association scares me, frankly, but it looks like it's going to be the future.

Firma y sello, El Porteño

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*President at the time of the 2001 crisis. Famous for being dust dry.

**Explanation from Porteño himself: "Francisco de Narváez is a businessman who made his fortune in the 1990s. After the 2002 crisis he started in politics with a discourse based on crime/security. In the same way as Mauricio he spends a lot of money on propaganda and has smart people as political advisors. His slogan is very good; "Knowledge brings safety". Thus he pushes his "grand project, the "safety map". His speeches are aimed at the typical scared middle class."

Susana Villarán on Peru's New PM, Yehude Simon

Susana Villarán and Yehude Simon

Susana Villarán is an IKN blogfriend (check out the interview we did here) and an all round good egg. So it's good to see her interviewed tonight by El Comercio, Peru's newspaper of record, on the appointment of Yehude Simon as Cabinet Chief and new Prime Minister.

The interview is linked here for you Spanish speakers, and below is the full text in OttoTranslation. Well worth reading to see how things might change in the Peruvian scene (though I have to say I'm more pessimistic than Villarán after watching 10 of the "resigned" ministers get their jobs back yesterday, even though Simon today said that two or three of them won't make it to Christmas).

Here's the translation of the Villarán interview. Enjoy.

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Simon Is One of the New Leaders of the Democratic and Modern Left

The ex-Minister of Women and Social Development, Susana Villarán, today said that the new Head of Ministers, Yehude Simon, will ad more weight to the fight against poverty, and was confident that this politician has become one of the new leaders of the new, modern left-wing of Peru.

"We greet Simon as new Prime Minister. He is a decentralizer and we believe that with him (in charge) this issue will be important in the government agenda. Simon will also add great weight in the issue of the fight against poverty and exclusion", Villarán told elcomercio.com.pe.

She laso said that other issues that must be tackled by debates in this government are the eradication of extreme poverty, the absence of political manipulation in social programs as well as the unrestricted respect for human rights.

She emphasized that before the resignation of ex-premier Jorge Del Castillo, the government had not looked for multi-sector agreement to fight poverty, but had rather looked to politicize social programs. "This is very dangerous", she commented.

Villarán said that inside the new democratic left Simon had taken a role of leader, alongside other figures such as Vladimiro Huaroc (president of the Junín region) or Jesús Coronel (president of the Cajamarca region). "It's good that the democratic left is not lacking leadership", she said.

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Related Post
An interview with Susana Villarán

Other Sites
Link to Susana Villarán's blog