Tuesday, November 24, 2015

Argentina's Anti-incumbency verdict

The election of Mauricio Macri  as the President of Argentina in the elections held on Sunday, is an anti-incumbency verdict.  The Argentine economic situation had been steadily getting worse in the last five years with high inflation, shortage of foreign exchange, isolation from the global capital markets and low growth. President Cristina Fernandez de Kirchner had run out of ideas  and had been in denial mode. Her government had resorted to blatant cooking up of statistics showing single digit inflation while it had been over 20% annually in the last five years. Her antagonism to private sector business, unpredictable policies and the arbitrary restrictions on imports and foreign exchange had hurt the business and the middle class. The poor people, who form a solid vote bank of the Peronist party, were hit even harder by inflation and unemployment. Some of the Peronist voters had, therefore, switched loyalty and decided to give a chance to Macri's promise for change . 

Macri's market-friendly approach should reboot the economy and revive the industry and agricultural sectors which had remained paralyzed under the command and control approach of the outgoing regime. Macri's business family background and  his track record of competent administration during his two term Mayorship of Buenos Aires should restore investors' confidence.

Wall Street will hail Macri as the latest pro-market poster boy of  Latin America. The anti-neo liberalism brigade should, however, note that Macri will not be a worse sinner than the Peronist President Menem who got the country into the 2002 crisis with his neoliberalistic policies including unsustainable exchange rate regime and wholesale privatisations in a hurry.

Macri should be able to a turn around the economy soon, just as President Nestor Kirchner did so successfully in 2003. In fact, Macri's challenge is much smaller in comparison to what Nestor faced  after the historic crisis and collapse of the economy in 2002.  Nestor should be given full credit for rescuing the Argentine economy quickly with his unorthodox and bold policies and handing over to his wife in 2007 a reasonably sound economy with robust growth. It is a pity that she mismanaged it, taking it back almost to the brink of another crisis.

Argentina does not have any serious unsolvable fundamental problems. It is blessed with large area of fertile land, abundant water, mineral riches, hydrocarbon reserves and an educated homogeneous population of just forty two million. It is free from racial, religious and ethnic conflicts.  The current economic problems are basically short term in nature, caused by the fall in demand and prices of its commodity exports, besides incompetent management.  

The foreign policy of the country will undergo a major change under Macri. He will not be friendly to the leftist governments in the region which enjoyed close rapport with President Cristina. He will seek suspension of Venezuela from Mercosur on the ground that it does not meet the democracy clauses of the group's charter. He will extend proactive support to the Venezuelan opposition. Macri cannot afford to displease President Dilma Rouseff too much since Brazil is the largest trading partner with lot of mutual investment and stake. He will, however, shake up Mercosur which is stuck with introvert and outdated protectionist mindset. Macri promises to move closer to the countries of Pacific Alliance (Chile, Colombia, Peru and Mexico) which is perceived as a rival to the Brazil-lead Mercosur. Macri's approach to China will be more calibrated unlike President Cristina who wooed China desperately for financial help. 

Macri will open up to US with which the Kirchners had uneasy relations. The Americans had kept Argentina at arms length after Nestor Kirchner joined hands with Chavez during the 2005 Summit of the Americas and killed the American proposal to establish a hemispheric Free Trade Area of the Americas (FTAA).  President Cristina craved for a White House invitation to visit  but the Americans refused.  

Although President Cristina flaunted Argentina's G-20 membership, the country was not taken seriously  due to the huge gap between her radical rhetoric and the reality on the ground. But under Macri, the country will get a higher profile in the global stage, as it did under President Menem. 

Macri will certainly continue Cristina government's policy of friendly ties and cooperation with India. Conscious of the importance of India as a major market for Argentine exports and as an emerging global power, Macri had visited India in 2010 to get a feel of the country. He spoke warmly about India when he inaugurated the TCS global delivery centre in Buenos Aires in 2009. 

Macri is on the left side of Ramadorai

The Indian exporters and companies with investment in Argentina are excited about the opening up of the market by Macri. Argentina, which used to be India's third largest trading partner, is now relegated to the sixth rank. India's exports to Argentina is just about half of the exports to Peru, although Argentina's GDP is double that of Peru.

The Argentine verdict is inspiration to the centre-right opposition parties hoping to replace in the next elections the leftist governments in Brazil and Venezuela which are also mired in severe political and economic difficulties. Some western commentators have hastened to pronounce the end of the Left in the region. This is wishful thinking and wrong conclusion. Centre- right governments have also been voted out of power in recent years in Chile and Nicaragua where the Left is back after sitting out in the opposition for some time.The same could happen in Argentina too, if Macri does not deliver. He should remember that the previous centre-right government of Fernando de la Rua was overthrown by mass protests in December 2001 (just two years after coming to power) when it was unable to handle the economic crisis. It is performance which matters more than ideology in the Latin America of today. 

The version published by The Wire on 24 November

Monday, October 26, 2015

Guatemala shows the way to fight corruption

The people of Guatemala chose Jimmy Morales as their next President in the elections held on 25 October. They gave Morales, a former TV comedian, an overwhelming 67.44% of the votes. His opponent Sandra Torres got just 32.56%. 
The election result should be seen as a victory for the people of Guatemala in their struggle against corruption and impunity. The Guatemalans have made their voice loud and clear by choosing a political outsider and decisively rejecting the traditional political oligarchy. In fact,  this is the second victory. The people had achieved their first one in September when President Otto Perez was forced to resign and put in jail facing a trial for his involvement in the La Linea (The Line) corruption scandal. His vice president and some senior officials were imprisoned before him. The courageous and continued protests of the people for over six months from April lead to this unprecedented resignation and jailing of a sitting president.
Morales comes from a poor family unlike the previous presidents of the country who were from the oligarchy or military. Until April, when the corruption scandal surfaced, Morales had single digit ratings with no hope of win. He was trailing way behind the candidates of traditional political establishment.  The luck of Morales changed dramatically after the direct implication of President Otto Perez Molina and his vice-president. 
Although he became famous as a comedian, Morales holds University degrees in business administration as well as theology. He joined politics only in 2013 and became the secretary general of National Convergence Front, a small centre-right party. 
Sandra Torres has conceded defeat gracefully wishing the winner success in his mandate. She did not blame the loss on electoral frauds nor did she call for recount, as has happened in some countries. This is a good sign of political realism and maturity in the young democracy of Guatemala, which had suffered military dictatorship and a terrible civil war which ended in 1996.
During the 2008-11 Presidential term of her husband Alvaro Colom, she had cultivated the poor by distributing doles to them like the Argentine Evita. But the goodwill generated by this and her leftist ideology got overtaken by the disgust of the people with the corruption scandal. 

Morales will  formally assume the charge on 14 January. In his victory speech, Morales attached top priority, understandably, to combat corruption. He also needs to tackle the rampant  gang violence which has given a bad name to the country. Besides these immediate concerns, he would have to address the long term issues of poverty, health care and education especially among the native Indians who form over fifty percent of the population. He has to find new ways to raise funds for social expenditure since Guatemala has one of the lowest tax rates and revenue collection. His job is going to be challenging since his party has just 11 members in the 158 member Congress. He has not held any electoral office before and lacks administrative experience. In his campaign speeches, he had given out eccentric suggestions that the teachers should be tagged with GPS devices to monitor their attendance in schools and that every child should get a smart phone. 
What is important is that the protests of the people, the resignation of the President, imprisonment of the President and Vice president, the interim transfer of power and now the election of a political outsider have all taken place peacefully. There was no firing on protestors nor any threat of a military coup. This is especially remarkable in view of the fact that Guatemala is a country with one of the highest rates of crimes and murders.
The success of the Guatemalan people has now become a source of inspiration for other Latin Americans fighting against corruption and impunity. It has raised the hope, confidence and optimism of Latin America which is marching towards a better future.

Saturday, October 03, 2015

cafe, cardamom and contrasts in Guatemala

The aroma of cafe and cardamom in the air has been filling my lungs, raising the heart beat and reigniting my passion for Latin America since my arrival in Guatemala early this week. I find the political discussions in the cafes hotter than coffee and spicier than cardamom.  The topic is the contrast between the two candidates for the second round of presidential election to be held on 25 October;  Jimmy Morales  a TV comedian and a political outsider vs Sandra Torres, a former First Lady and political insider. 

Jimmy Morales, who had played the role of a presidential candidate in one of his comedy shows, threw his hat in the ring, in the same way as every Tom, Dick and Trump join the Presidential race in US. He had no chance since the well-known political candidates from the traditional parties and oligarchies were leading in the opinion polls. His luck changed when the politicians got a bad name after the customs scandal which lead to the jailing of the President of the country just before the election. He got the maximum votes in the first round of the elections on 6 September. 
The Guatemalans can't stop laughing, recalling the old spicy jokes of Jimmy Morales.  At the same time, some don't know whether to laugh or cry when Morales seriously repeats his campaign slogan 'ni corrupto ni ladron" (not corrupt nor a thief). Some Guatemalans believe when Morales says, ' for twenty years I have made you laugh. Now I promise I won't let you cry'.

Sandra Torres, on the other hand, had acted out a real life political comedy in the 2011 elections. The Guatemalan constitution prohibits the immediate family members of the President of the country from contesting in the elections to prevent dynastic succession . But Sandra, the wife of the former President Alvaro Colom (2008-11) wanted to succeed her husband and divorced him to circumvent the constitution. She said, ' I am divorcing my husband but I am getting married to the people. I am the only woman to get divorce for her country'. The Guatemalan people, used to  manipulative politicians, thought that she might get her way, with the help of friendly judges. But the supreme court, in a strong show of  independence, disqualified her at that time. Now, of course, she is entitled to contest. 

Guatemala is one of the countries notorious for impunity. Political leaders and military officials have generally got away with corruption and human rights violations. So when the customs scandal involving  the President surfaced in April, many thought that the corrupt would go unpunished this time too. But the investigating agency showed a remarkable courage and made public proof of bribes shared by corrupt officials. The Congress acted swiftly by removing the Presidential immunity forcing him to resign. He was arrested and put in jail immediately.  This was unprecedented and historic. More on this in http://latinamericanaffairs.blogspot.com/2015/09/guatemalan-president-goes-to-jail.html#links
What is even more interesting is that the people have used peaceful protests to bring down the government in Guatemala, a country known for violence and has one of the highest murder rates in the world. The protestors had continued the agitation relentlessly and fearlessly for six months from April to September. When President Perez's supporters tried to prevent the entry of congressmen to vote in the resolution on presidential immunity, the agitators formed a human wall to let the entry of deputies into the Congress building. The success of the courageous Guatemalan people in bringing down a sitting President on corruption charges has made them as heroes for people in other Latin American countries who have been protesting against corrupt governments.
The investigation agencies and the agitating public got crucial support from the courts, the business community and the members of the Congress (including those belonging to President Perez's party) who passed a unanimous resolution withdrawing Presidential immunity. Such collective, united and unprecedented action against a powerful president is a lesson to others in power in the region.
While the contrasts mentioned above are recent, here is a permanent and historic one. Native Indians constitute around sixty percent of the population. But they have been systematically discriminated and kept outside political and economic power since the Spanish colonial days. Around eighty percent of them are poor. Over one hundred thousand Indians were killed and many were tortured and made to disappear during the bloody civil war from 1960 to 1996. The Guatemalan military and right wing death squads were responsible. But the criminal perpetrators have got away. The Indians are yet to get justice, democratic inclusion and opportunities for development. They have been inspired by Evo Morales, a native Indian President of Bolivia since 2006 and his success in emancipating and empowering the Indians. But Guatemala has not got so far any Indian leader of the calibre of Morales. Rigoberta Menchu, the Guatemalan Indian woman activist for the rights of Indians and who won Nobel Prize in 1992, contested the elections in 2007 and 2011 but with poor and discouraging results.
Guatemala has the biggest economy in Central America but the contrast between the rich and poor are glaring. Two percent of the population control over 75% of the cultivable land. The government collects one of the lowest taxes in the world and spends the least on poverty-alleviation, health care and education. However, since 2008 the government has initiated a conditional cash transfer programme called as " mi familia progresa' (my family progress) to provide financial handout to the poor. Sandra Torres ran this programme and used it to create a constituency of the poor, as was done by Evita of Argentina.
The small Guatemala has beaten the big India to become the largest producer and exporter of Cardamom. In 2014-15 Guatemala produced 30,000 tons against India's 20,000 tons. The Indian cardamom producers complain that they are being hurt by illegal import of low cost Guatemalan cardamom sometimes.  While India has been a cardamom exporter for several hundred years, Guatemala started production after the first world war when a German coffee planter brought the Indian seeds to Guatemala. The Guatemalans export almost all their cardamom production since the local consumption is insignificant, unlike India which consumes a major part of the production.
Here is something India, the land of many political dynasties, could learn from the young Guatemalan democracy.  Article 186 of the Guatemalan constitution prohibits the President's relatives ' within four degrees of consanguinity and second degree in-laws' from contesting for Presidential post. The Indian democracy would certainly become more inclusive and better if the constitution is amended to include this article.

Tuesday, September 08, 2015

Guatemalan President goes to jail

Last week, Guatemala witnessed high drama and historic change. In three days, the Perez, the President became a prisoner on corruption charges. On 1 September, the Congress passed a unanimous resolution (all the 132 deputies present in the chamber including the members of the Patriotic Party of the President) to remove the immunity from prosecution of President Otto Perez Molina. On 2 September, the Attorney General requested for an arrest warrant after which Perez  submitted his resignation at midnight. On 3 September, a judge issued an order for arrest following which Perez was taken to a court for preliminary hearing and then put in a jail on the same day. 
The Guatemalans have been protesting ever since the corruption scam called as La Linea (the line) surfaced in April in which several millions of dollars have been taken as bribes by officials who let businessmen import without customs duty. The chief of Customs and some officials were charged and detained. In May, the Vice President resigned after her name was linked to the scam. She is in jail facing trial. On 21 August, the investigators revealed the involvement of President Perez himself. Thereafter, the protests intensified with tens of thousands of youth, businessmen and indigenous people calling for the impeachment of President Perez. It was not driven by any political party. It was pure civil society in action. The organizers had used social media such as facebook extensively. The protestors were careful and did not indulge in any violence and in fact some of them wore masks in the beginning, fearing retaliation from the regime. Guatemala has a terrible human rights record. The country had gone through a deadly civil war for 36 years till 1996 in which several hundred thousands of people were killed. The indigenous people who form the majority of the population and are the poorest, bore the brunt of the military crackdown. Even now, Guatemala has one of the highest murder rates in the world.

The Guatemalans could not believe that they have brought down a powerful President by peaceful protests  in a country known for violence. They consider it as a revolution and turning point in their history. Perez was not some weak or ordinary politician. He was a General in the army and was one of the strong men of the feared military regime before the restoration of democracy. More importantly, he was also the head of the military intelligence unit. Perez was said to have been behind killings of political opponents and innocent people, although he was never formally charged.

The corruption charge against Perez is not that big by Latin American or even Indian standards. He is alleged to have received 800,000 dollars as bribe. Perez himself argued that he would not have taken the risk for such a paltry amount. He mentioned that he was offered ten times more money by 'El Chapo' Guzman, the Mexican drug mafia don when arrested by the military unit lead by Perez in Guatemala some years back.
Credit for the unprecedented and courageous investigation against the high and mighty should go to the proactive pursuit of the case by CICIG, the United Nations International Commission against Impunity in Guatemala established in 2007. The name of the Commission reveals it all. It was created to add strength to the local agencies considered weak and corrupt. Perez had reluctantly extended the tenure of the UN Commission which is a headed by a Colombian. With their support, the Guatemalan investigators had collected evidence from tapping of thousands of  phone conversations and emails exchanged between businessmen and officials spread over a year. 
Three days after jailing the President, Guatemala went ahead with the elections on 6 September as previously scheduled to elect a new President and Congress. The voters have punished the traditional politicians by voting for Jimmy Morales, a political outsider, who has emerged as the front runner with 24% votes. Morales, who is a popular TV comedy actor has told the voters" For the last twenty years I have made you laugh. If I become president, I promise I won't  make you cry". The centre-right candidate Manuel Baldizon, who was leading in the opinion polls before the scam, is tied for second position with the Leftist candidate Sandra Torres. A second round of elections will be held on 25 October between Morales and the candidate who came( this will be confirmed later this week) in second position. Until the new elected President assumes office on 14 January, the vice president Alejandro Maldonado has been sworn in as the interim President. 
The Guatemalan political leaders and officials who had taken for granted their impunity in the past have now been given an unequivocal notice. The Guatemalan people have tasted power, lost their fear and gained courage and confidence as democratic stake holders. 
It is important to note that President Perez did not use force or other means to stop the investigation or the protests. Nor did he attempt any coup. Perez himself had told the media that he could have derailed the investigations or changed the prosecutor but he did not. He had declared that he would let himself be subject to the law while claiming that he did not receive any bribe. To be fair to him, Perez was not bad as President and he did not show any authoritarian attitude. The army has remained neutral and did not try to rescue their ex-colleague in trouble. The courage of the Attorney General and the investigators in going after the very top of the government, has strengthened their offices. This is good news for the stability and institutional strength of the young democracy of the country.

The victory of the peaceful anti-corruption movement of the Guatemalans against all odds, is an inspiration for those protesting against corruption in Latin America and other parts of the world.

Guatemala is the largest market in Central America with a population of 15.8 million and GDP of 58.7 billion US Dollars. The macroeconomic fundamentals of the country are fairly strong with inflation under 3%, external debt at 33% of GDP and forex reserves at 7.6 billion dollars. The average annual GDP growth in the last four years is 4%. It was 4.2% in 2014 and is projected to be 4% in 2015. 
Guatemala matters to Indian business for two reasons. It has emerged as a significant market in Central America for India's exports which have been increasing steadily over the years and has almost tripled from 87 million dollars in 2009-10 to 229 million in 2014-15. Secondly, the Indian cardamom exporters keep an eye on Guatemala which plays a critical role in international prices as the largest producer and exporter of cardamom, having overtaken India in the last few decades. 
The Ministry of External Affairs is planning a Central American business summit in Guatemala city in early 2016 during the next India- SICA (Central American Integration System- the regional group of seven Central American countries) political dialogue. 

Wednesday, July 29, 2015

Remembering Simon Bolivar

Simon Bolivar's birthday on 24 July was commemorated by the new proactive Venezuelan Ambassador Augusto Montiel who organized a gathering to discuss the legacy of El Libertador (the Liberator). 

Bolivar is not just a Liberator of Venezuela. He has a special place in the history of Latin America as the hero of independence of not one country but five;  Venezuela, Colombia, Peru, Ecuador and Bolivia. In fact, Bolivia was named after him which is unique in the history of the world. He went even beyond the five countries and had a vision for Latin America as a whole. He was the first true Latin American dreamer, thinker and statesman who laid the foundation for regional unity. It is this legacy which endures to inspire Latin America even now.

Bolivar was an inspiring leader of many dimensions. He was a an audacious and exceptional military strategist who lead successful campaigns against the Spanish colonial forces. He was a revolutionary and a political thinker. Although he came from a wealthy oligarchic family, he became a reformer championing equality and abolition of slavery. He called on the governments to provide education as the fundamental duty.

Bolivar was a colorful Latino personality and had as many conquests in the camp of the opposite sex as in the battlefields. But the macho mujeriego, was himself conquered by La Libertadora del Libertador (lady liberator of the liberator) Manuelita Saenz. Her story is portrayed poignantly in a  Venezuelan film with the same title, released in 2000.

Critics point to the inconsistencies and contradictions of his personality and especially his dictatorial inclinations. While there is truth in these, they should be seen in the larger perspective in the context of the time of political instability and challenges faced by the newly liberated countries without adequate preparation to rule by themselves. 

It was Bolivar who made the first official call for Latin American integration in 1824. As president of Gran Colombia, he invited the other countries in the region to send diplomatic representatives to the proposed Congress of Panama in 1826. In this conference, a Treaty of Union, League and Perpetual Confederation was signed on 15 July by the Andean and Central American states as well as Mexico. The Treaty which consisted of 31 articles provided for common defense and resolution of territorial disputes among other things. It was an extraordinary and ambitious achievement at that time of the history of the region. Although this union did not survive, it provided inspiration to many other attempts at integration since then. The latest is the formation of  CELAC, the Community of Latin American and Caribbean States in 2011. While its goals are modest, it is a useful forum for the countries of the region to have their own identity and voice without the intrusive presence of US. Besides this larger union, the countries of the region have established several subregional groups such as Mercosur,Andean Community, SICA, ALBA and Pacific Alliance. Thanks to these groupings, there is substantial increase in intra-regional trade, cooperation and free movement of people. 

Integration is not only useful for facilitation of free movement of trade, services, capital and people. It has given collective strength and security. UNASUR, the union of the 12 South American countries formed in 2008 as an umbrella organization for security among other goals, has already set successful examples of protection of democracies and sovereignty of member countries. It had sent delegations to defuse political crisis when the democratically elected governments were challenged in Venezuela, Bolivia and Ecuador in recent times. In 1996, Mercosur had prevented a military coup by Gen Oviedo in Paraguay. But for these timely and decisive initiatives by the regional groups, the coup makers and their external patrons might have succeeded in messing up the democracies of those countries. Even now, Venezuela would have faced more external threats if it were not a member of Mercosur and Unasur. The external forces have certainly been deterred and they are now more cautious and less blatant ( as was the case in Honduras) because of the regional unity.

Bolivar was prophetic when he said' The United States appear to be destined by providence to plague Latin America with misery in the name of liberty". Latin America has been a victim of US military interventions and its support to military dictatorships and polarization of societies in the name of its anti-communist war. The latest case was the support to the coupsters in Honduras in 2009 when the democratically elected government of President Manuel Zelaya was overthrown. The war on drugs is another excuse for US intrusion into Latin American internal affairs. While the Latin Americans need to exercise constant vigilance against external threats, it does not mean that they should continue the bad habit of using external bogey to hide their internal flaws and problems. The Latin Americans need to set their own countries in order with political stability and inclusive economic growth.

Monday, July 13, 2015

'seduce me' says La India to Latin America

Hari Seshasayee cannot stop listening to 'seduceme', a salsa by Latino singer 'La India' ( her real name Linda Viera Cabellero) https://www.youtube.com/watch?v=4KDDMEuiJGI. He has let himself be seduced by salsa and Latin America. He is the the latest victim of the magic of Latin America. He has surrendered himself to the Latino charms and has even bet his career on Latin America. 
Hari from Chennai studied journalism in Mumbai. His life changed when he went to work with AISEC in Peru in 2008. He stayed there for  two years and also travelled to Brazil. He learnt Spanish and made many Peruvian friends 14 of whom attended his wedding in 2014 in Chennai. After his return to India, he taught Spanish and then covered Latin America for the Mumbai think tank Gateway House: Indian Council on Global Relations. He has written articles on the region in Indian and foreign newspapers and publications. He has just finished a masters degree in Latin America Studies at Stanford University and is going to travel for two months in Peru and Brazil on a research grant from the University. Hari is keen to work in Latin America itself for some years to deepen his knowledge and experience of the region.

He says, " Living in Peru was amazing, and it affirmed that I will for the rest of my life continue to be engaged with that country and the people from that region. More than anything else, it is the people of Latin America, their vibrant, friendly and happy nature, that keep me interested in the region. From an economic and social perspective, I feel we have a lot of complementarities with the Latinos, and there is much scope to work together and learn from each other".

Nivedita Kashyap from Bengaluru is another young person who has hitched her destiny to Latin America. She studied IT and worked in a company for a few years, before getting a chance to go on an AIESEC exchange programme to Lima to work at an e-business startup there for a year.  She travelled all over Peru and to Ecuador, Bolivia and Brazil. Back in Bengaluru, she worked as a Spanish teacher and interpreter. Two years ago, she moved to Washington D.C to do a Master's in international affairs from Georgetown University with focus on Latin America and business diplomacy. At Georgetown, one of the experiences that stood out the most for her was working with Yoani Sanchez, a Cuban blogger, at the time the U.S announced its policy change last December. Nivedita is looking forward to a career in Latin America and India-Latin America relations.
There are other young Indians who have done studies in Latin America itself and have got into Indo- Latin American business with their Latino friends. Anish Narang from Delhi has started a consultancy for Latin America in partnership with his Brazilian MBA classmates from the prestigious FGV business school in Sao Paulo. Sonia Aroul did a bilingual MBA from Di Tella University in Buenos Aires is helping Indian companies with Latin America strategies. This is a welcome contrast to many old Indians who consider the region as too far and have an outdated and negative mindset. Most Indian scholars of Latin America are said to be either in their sixties or stuck as admirers of the Latin America of the sixties continuing to be uncritical and ideological fans of the Cuban revolution and Che Guevara. 
I tell Indian businessmen that ' the risk of doing business with Latin America is.. falling in love'. Quite a few have taken the risk and ended up with Latin American spouses besides business success. Ashok Parthiban, married to a Guatemalteca has a flourishing pharmaceutical business in Guatemala. Three Indian IT boys, who went for a IT project in Colombia,  promptly married three Colombianas ( http://businesswithlatinamerica.blogspot.in/search?q=risk+of+doing+business+with+colombia) and have set up their own company in Bogota. Rakesh Vaidyanathan, Arvind Krishnan and Nitai Panchmatia, married to Girls from Ipanema, are in Brazil doing business with India.  Vimal Menon and Somnath Naha, married to Bolivians are promoting Indian business in La Paz. Rajesh Vairon, married to a Paraguayan helps in Indo-Paraguayan business from Asuncion. Reshmi Kwatra, a pharmaceutical export executive from Delhi became Reshmi Murillo after falling in love with a Costa Rican. There are over hundred young Indian executives working in Latin America with Indian IT companies as well as MNCs. Many of them have started dancing Salsa with Latino youth while their Latino counterparts have taken to Bollywood dancing, besides yoga and 'the art of living'.
Shoban Saxena, a young Indian journalist, based in Sao Paulo and married to a Brazilian, writes on Latin America in Indian media. His reports and comments on Latin America are objective in contrast to the biased western media. Mathang Seshagiri from Bengaluru, was in Colombia teaching journalism there. He has learnt Spanish and conquered many hearts there. At present he is working with Google in Bengaluru but is itching to get back to Latin America.  
Some young Indian diplomats and their spouses too have taken Latin America to their hearts after their postings in the region. Taruna, wife of Sandeep Chakravorty, the Ambassador to Peru, is doing a PhD in Latin American literature. She had taught Spanish in Delhi University after her return from Colombia. She said, "I cried when I left Colombia. Now I am going to feel at home in Peru'. 
Over fifty young Indian entrepreneurs had gone in the last five years to Santiago to work on their new ventures, taking up the financial and other support given by the the Chilean government under their pioneering  'Start-Up Chile' programme. During their stay, they had taken Chilean interns and mentored them, as required under the contract. Some of them have stayed on beyond the six-month term under the contract and pursue ventures on their own.
The inflow of youthful energy is great news for the Indo-Latin American relations which is undergoing a paradigm shift. The young Indians blend easily and merrily with the vibrant Latino spirit. Their positive, pragmatic and future-oriented approach is laying the foundation for a new win-win cultural and business partnership.

Tuesday, July 07, 2015

'The sound of things falling'- novel by Juan Gabriel Vasquez, Colombian writer

'The sound of things falling' (El ruido de las cosas al caer- in Spanish) gives insights into the origin of drug production and trafficking in Colombia. The American Peace corps volunteer Elaine Fritts comes to Colombia to work for the poor as part of the idealistic "Alliance for Progress" project started by John F Kennedy. She falls in love with Ricardo Lavarde, a pilot trainee and the son of the owner of the house in which she stays in Bogota. Another peace corps volunteer Mike Barbieri gets into drug business. He encourages the farmers to grow coca which would give them more profit than the conventional agricultural crops. He advises them how to increase the yield through use of chemicals and fertilizers. He recruits Ricardo to become a pilot of a small plane to carry drugs from Colombia to Jamaica and Bahamas. Ricardo comes back from each trip with bags full of dollars. Eventually, he is caught and sent to jail for twenty years. Elaine hides this story from her only daughter Maya and tells that her father had died in a plane crash. Ricardo comes out of the jail and calls his wife to meet her. The plane in which she travels to Colombia from US crashes and she dies. Ricardo is also killed soon by the drug mafia. Maya has come to know about more about her father through his billiards acquaintance Antonio Yammara from Bogota. Antonio was also shot while walking with Ricardo but he survives. Antonio and Maya visit the ranch of the late drug baron Pablo Escobar in Medellin while sharing the story of Maya's father and mother. 
This story confirms the truth that drug trafficking started in Colombia in response to the demand-driven business from US.  According to an official US report, the value of the illegal drug retail market in US in 2010 was 110 billion dollars with a consumer base of 22 million. As long as the consumers in US as well as the Europe continue their addiction and willing to pay top dollars, there will never be an end to drug supply. It is a no-brainer, as the Americans would say. But the US government and the media have twisted the truth and made it as a problem of supplies from Colombia. The DEA gets into Colombia and forces the government to destroy coca plantations with aerial spraying of deadly chemicals which spoil the health of people and agricultural crops. Finally the US has now realized the failure of the 'war on drugs'. They could learn from the example of Uruguay which has passed laws legalizing production, distribution and consumption of marijuana.
This is the first ever book of Juan Gabriel Vasquez I have read. I enjoyed the book thoroughly and loved his ingenious way of story telling. I liked his vivid descriptions of life in the 'muddy Magdalena river', the cool Bogota and the hot and humid valleys surrounding the capital. He has given subtle and profound comments and interpretations of the history and politics of Colombia. He has given a Colombian perspective of the drug wars imposed by external consumers and enforcers. He has analyzed the psychological and social impact of violence which has come to afflict Colombia since the beginning of the second half of the last century. He says that ' fear' has overtaken the emotional space of the Colombians many of whom have lost their relatives and friends due to the violence. Bombings, murders and kidnappings had made every Colombian afraid of going out to shopping malls or public places. Fortunately, the violence has now come down significantly and the citizens are able to reclaim their streets and getting out of the fear complex.
After enjoying this book, I read two more of his books: " The Informers" and " The secret history of Costaguna". The first is a story about the arrival and settlement of German Jews and Nazis after the first world war. Some of them get detained and deported due to the pressure from US which sends a 'blacklist' to the Colombian government. Some Colombians including the father of the protagonist in the novel become informers to the government, motivated by jealousy or coveting German properties.
'The secret history of Costaguna' is more absorbing with poignant narratives of the death and destruction caused in the process of building of the Panama canal. The civil war between the Colombian conservatives and liberals add to the death toll. Taking advantage of this situation, the Americans take over the northern territory of Colombia and create a separate country Panama to build the canal. 

Juan Gabriel Vasquez is inventive like Borges and elaborative like Garcia Marquez. But Vasquez is critical of the magical realism approach and says, ' in my novel there is a disproportionate reality'. While reading ' the secret history of Costaguna' I had an intense feeling as I had felt while reading the ' War of the end of the world' by Mario Vargas Llosa. I could not read at one go. I had to pause and reflect many times. 
Juan Gabriel Vasquez has now become a delightful addition to my list of favorite Latin American writers such as Gabriel Garcia Marquez, Mario Vargas Llosa, Jorge Amado, Isabel Allende and Carlos Fuentes. Vasquez, in my opinion, is Nobel Prize material.

Tuesday, June 16, 2015

The Discreet Hero – novel by Mario Vargas Llosa

'The discreet hero' is the latest novel of Mario Vargas Llosa and the second one, after he won Nobel Prize in 2010. It has two parallel stories of two different protagonists: Don Felicito Yanaque living in a Peruvian provincial town Piura and Don Rigoberto in the capital city Lima.

Yanaque, a self-made owner of a transport company receives an extortion threat from a gang. Felicito, who sticks stubbornly to his late father's advice, "never  let anybody walk all over you", gives a defiant newspaper notice saying he would not give in to blackmail. The gang sets his company property on fire and later kidnaps his young mistress Mabel. The police investigation finds that it was one of his own disgruntled sons Miguel who is behind the criminal plot. What is worse, Miguel forces Mabel to be his lover and makes her an accomplice in the kidnap drama. After this devastating news, Felicito confirms his long-held suspicion that Miguel was not really his own son. 

The second story is that of Rigoberto, the chief of an insurance company about to retire and looking forward to pursue his passion for art. Ismael Carrera, the owner of the insurance company, comes to know after a heart attack that his two wayward twin sons are anxiously waiting for his death to inherit the company. Enraged by this, Ismael, who is a widower in his eighties, decides to marry his young live-in maid servant Armida. The couple take off to Europe on secret honeymoon, leaving behind a sensational scandal. Ismael sells his company to an Italian multinational and writes a will bequeathing his entire fortune to his wife. Ismael's sons harass Rigoberto accusing him of being  an accomplice to their father's marriage. Ismael returns to Lima and assures Rigoberto that he would sort out the problems created by his sons. But he dies of a sudden heart attack. His widow, disappears fearing assassination by Ismael's sons and lands up in the house of Felicito in Piura. She surprises Felicito saying that she is actually his wife's real sister. Eventually the sons of Ismael agree to a negotiated settlement with their stepmother. Lady Armida then moves to live in Italy and invites Felicito and her wife to be her guests there and invites Rigoberto's family too.

Rigoberto, Lucrecia and Lituma are familiar characters from Llosa's other novels. The erotic conversations between Rigoberto, the hedonist and his sensual wife Lucrecia are extensions of their fantasies in the other novels 'the notebooks of Don Rigoberto' and ' In praise of the step mother'. Police sergeant Lituma is from the earlier novels ' The Green House' and ' Death in the Andes'. Don Felicito, the discreet hero has emerged as another memorable Llosa character.  

Llosa has given a deep insight into the Peruvian society and culture through the narratives of hard working and principled men who seek pleasure from young mistress and maidservant but face painful problems from spoiled children. Especially interesting is the contrast between the sophisticated urbane art lover Rigoberto in Lima and the provincial ethos of Piurean characters such as Felicito, the police officers and Adelaida the spiritual soothsayer. The reader gets a feel of walking in the hot and humid streets of Piura and tasting the authentic Peruvian dishes in the famous restaurants in the culinary capital Lima. Rigoberto realizes that small spaces of civilization like he has created for himself with his artistic pursuits 'would never prevail against the immeasurable barbarism' around. 'When Piura was a poor city these things did not happen', laments the police sergeant referring to the violence and crime which grow with prosperity, a phenomenon, seen across Latin America. 

I was anxiously waiting to read this latest book published in 2014 and its english version in March 2015. This is not one of the best of Llosa who is among my favorite Latin American writers. I did not feel stunned as I felt after finishing ' The war of the end of the world'. But I felt entertained by this light hearted thriller-like optimistic story with funny characters and engaging twists and turns.

Can we expect more from Llosa, given his advanced age of 79? I was in for a surprise when I read his recent interview to Paris Review in which he says " My greatest fault, I think, is my lack of confidence, which torments me enormously. It takes me three or four years to write a novel—and I spend a good part of that time doubting myself. It doesn’t get any better with time; on the contrary, I think I’m getting more self-critical and less confident". 

Monday, June 08, 2015

Pacific Alliance, a new business and cultural partner of India

Mexico, Colombia, Peru and Chile, the four members of the Pacific Alliance (PA), is called by some as the Pumas of Pacific. It is the latest addition to the new power house of Asian Tigers, Indian Elephant and the Chinese Dragon.

PA is the new kid in the block in Latin America which has four other regional groups: Mercosur, Andean Community, Alba and Sica. PA stands out as distinct from the other four blocs as the most vibrant, dynamic and ambitious group while they are struggling with existential difficulties. 

The members of the PA distinguish themselves qualitatively from the other Latin American countries. 

The macroeconomic fundamentals of PA countries are stronger and more solid than the other Latin American countries. They have higher growth with lower inflation. They are projected to grow by three percent and more in 2015 while Latin America as a whole is expected to grow only by about one percent. The average inflation of PA region is less than 4% and half of the annual Latin American inflation.

The policies and tax regimes of the PA countries are more stable, transparent and predictable as well as investor-friendly. The four countries are the leaders of the region in the World Bank Ease of Doing Business Survey 2014. Their global rankings ( Colombia-34, Peru-35, Mexico-39 and Chile-41) are way ahead of India's lowly 142nd rank.

They have lower tariffs, more liberal foreign trade policies and have signed the most number of FTAs. Chile has signed FTAs with 60 countries, Peru with 50, Mexico with 44 and Colombia 30. All the four have  FTAs with US as well as European Union. Mexico, Peru and Chile are in the TPP and Colombia is also keen to join. Chile and Peru have FTAs with China and Colombia has just announced its intention to negotiate a FTA with China.

The Indian business is attracted by the large and growing market of PA which has a total population of 214 million, GDP of 2 trillion, trade of one trillion and average per capita GDP of over ten thousand dollars. 

India's trade with PA has been growing rapidly reaching 15.4 billion dollars in 2014 accounting for forty percent of the trade with Latin America. It has the potential to double to 30 billion in the next four years. Mexico, Colombia, Peru and Chile are the second, third, fourth and fifth largest destination of India's exports in Latin America. Mexico and Colombia have become regular source of crude oil while Chile and Peru are the sources of copper and gold imports for India. 

Over thirty Indian companies have invested in PA in areas such as IT, Pharmaceuticals, energy, mining and manufacturing. Ten companies from PA have invested in India. The most notable is Aje from Peru which has successfully entered the cola drinks business in the Indian market with its brand ' Big Cola'. 

What could be done to improve the win-win partnership with the Pacific Alliance? India could sign FTAs with Mexico, Colombia and Peru to enable its exports competitive vis-a-vis the products imported by PA countries from their FTA partner countries. India already has a PTA with Chile which is being widened and deepened. India should open a large line of credit of at least 500 million dollars to promote and facilitate investment and project exports of Indian companies. India has become a observer in PA since 2014. Using this status, India could engage with the group and consider participation in the next summit of the PA to be held in Peru this year.

India could learn from the Mexico Pact under which a dozen major reforms have been brought about in the last two years under an unprecedented consensus between the ruling and the opposition parties. The success of Mexico in making itself as a manufacturing hub of the Americas has lessons for the 'Make in India' campaign. The Left in India could find inspiration from the success of the leftist governments of President Michelle Bachelet of Chile and President Olanta Humala of Peru who pursue pragmatic and balanced mix of pro-poor and business-friendly policies. 

The four PA countries account for five out of the six Nobel Prizes for literature won by Latin Americans. Chile has won twice while the other countries have won one each. This includes Octavio Paz who was Mexican ambassador to India and has written essays and poems on India. His book ' Vislumbres de la India'( In the light of India) was the first major book on contemporary India by a Latin American and it was an eye opener. Satish Gujral had learnt from his apprenticeship in Mexico with Diego Rivera. Building on these, India could enhance the literary and cultural interaction with the countries of Pacific Alliance.

Saturday, May 30, 2015

Latin America has reduced hunger with proactive policies

Latin America and the Caribbean (LAC) has halved the percentage and total number of undernourished people, according to the  Food and Agricultural Organisation(FAO)'s May 2015 report 'Panorama of Food and Nutritional Insecurity in LAC 2015'. While 10.9% of the global population is undernourished, it is just 5.5% in the case of LAC. Poverty has  declined from 2002 onwards, from 44% to 28% and inequality has also reduced in the region.

The region's success story is the result of the countries' political commitment with the fight against hunger at the highest level, a process which was underpinned by a general context of macroeconomic and political stability. 21 countries in the LAC region have active conditional cash transfer and other such pro-poor policies. With this commitment and success, the region has become an example to the rest of the world. The region has also become a pioneer with its proposal to complete eradicate hunger by 2025 through the 'Hunger Free LAC Initiative'. 

Hunger still affects over 34 million people and extreme poverty has risen in the last two years. 
Thanks to economic growth, increased public social spending and public policies focused on the most vulnerable, LAC has also reduced poverty and inequality.

The LAC region has more than enough food for their entire population and has become a major global food supplier.

Thursday, May 14, 2015

China's pivot to Latin America: worry for US and opportunity for India

In the China-CELAC (Community of Latin American and Caribbean States) Forum meeting held in Beijing in January  2015, the Chinese President announced that the trade with the region would double to 500 billion dollars and investment would reach 250 billion dollars in the next ten years.
The trade has already reached 275 billion dollars in 2013 from 12 billion in 2000. China has become the top trading partner for some countries (especially Brazil) and has overtaken European Union as the second largest trading partner of the region. China's share of the region's exports was 10% and imports 16% in 2013. 
China has already invested around 100 billion dollars in Latin America, much of it in oil fields and mines.
China has extended 119 billion dollars of credit to the region in the period 2005 to 2014, according to Inter American Dialogue, a US think tankIn 2010, the Chinese credit of 37 billion dollars given to the region was much more than the combined total given by World Bank, Inter American Development Bank and the US EximBank.  The largest recipient is Venezuela (56.3 bn $) followed by Brazil (22 bn), Argentina (19 bn), Ecuador (10.9 bn), Mexico( 2.4 bn) and Peru (2.3 bn) besides six  more Latin American countries.

Besides these loans to individual countries, China has also extended credit for region-wide projects in collaboration with the Inter American Development Bank, of which it is a member. The US blackballed the Chinese application for membership for a year and let them in only after extracting some back door concessions.

The Chinese banks have become the principal sources of finance for countries such as Venezuela, Ecuador and Argentina and have come to the rescue of these countries which have been spurned by the Western capital markets. China is heaven-sent for the Argentine government, harassed by the American vulture funds and blocked from western finanical sources. When Petrobras, the Brazilian company got mired in a corruption scandal recently, the American investors filed class action suits in the courts and the rating agencies downgraded the investment rating of the company. The Brazilians contrast this with the Chinese who came to their rescue quickly. The China Development Bank agreed to give a bridge loan of 3.5 billion dollars on 1 April 2015, as part of a two year cooperation agreement. The Chinese have extended currency swap facility to Argentina and Venezuela  to help them tide over foreign exchange shortage. The Chinese have opened branches of their banks in Latin America and have bought controlling stakes in local banks to facilitate the growing financial relations with the region
A Chinese company HKND has signed a contract with Nicaragua to build a canal connecting the Atlantic with Pacific ocean at a cost of 50 billion dollars. Although there is lot of skepticism within Nicaragua and outside about this project being done by the little-known Chinese firm without previous experience of large scale projects, one cannot miss the comparison and potential competition with the US-built Panama canal. In any case China has become the second largest user of the Panama canal after the US.

The Chinese are providing aid and technical assistance to the the region and are setting up Confucious Institutes to teach Chinese language and have started a number of student and academic exchange programmes. They have also started supplies and collaborations in defense, space satellites and nuclear energy.

There is a win-win complementarity between China's resource needs and surplus cash with Latin America's surplus resources and need for cash. China's arrival has coincided with the Latin American aspiration to diversify their economic partnership and reduce their dependence on their overbearing traditional partners.
The US is worried by the Chinese 'encroachment' in Latin America, considered as the 'backyard of US' since the declaration of Monroe doctrine in 1823. Recently, the Head of the U.S. Southern Command is reported to have said in his Congressional testimony that “While the Pentagon is launching its 'pivot to Asia', China is engaged in its own 'pivot to the Americas”.
The US media has articulated the concerns more openly. For example, Forbes published an article on 15 Oct 2014 " As the US sleeps, China conquers Latin America" and Business Insider wrote on 9 April 2015 "Obama lands in Latin America while China is 'running away with the gold' in the region". These reports and articles portray China as a predatory investor exploiting Latin American natural resources, dumping cheap chinese manufactured goods, damaging the Latin American industry, lending without concern for human rights and extracting natural resources without environmental safeguards. One of the motives for the US reopening of diplomatic relations with Cuba and their enthusiastic courting of the region at the April 10-11 Summit of the Americas in Panama city is to counter the growing Chinese influence in the region.

While recognizing the commercial importance of China, the Latin Americans also perceive China as a potential threat.  There is a trust deficit. They impose antidumping duties on Chinese goods and restrictions on Chinese immigration. Brazil, Argentina and Uruguay have imposed limits  on acquisition of agricultural land by foreigners after some Chinese companies scared them with proposals to buy several hundred thousand hectares. 
In contrast, the Indian firms have a good image in Latin America. The Indian IT firms which employ 25,000 young Latin Americans in their operations in the region have earned admiration and respect.  The reduction in the cost of health care for the Latin American consumers and governments after the entry of less expensive Indian generics has created goodwill. Latin Americans have a better understanding of India with their admiration for Indian culture and practice of yoga, meditation and spiritualism. India's democratic, pluralistic and open model resonates more with the Latin Americans who do not like the communist dictatorship model of China.
The Latin American firms and governments have started realizing the perils of over dependence on China and are keen to diversify relations and reach out to other large and growing markets such as India. The news that India is overtaking China in annual growth rate has caught the attention of the Latin American businessmen who have started stopping by Mumbai on the way back from Shanghai.This opens an unmissable opportunity for Indian business. 

As part of the containment of China in Latin America, the US seems to be keen to see more Indian presence in the region. This is evident from a blog of Americas Quarterly (28 January 2015) with the title,"Now is the time for India to make a move". The blog ends with the suggestive question" Is 2015, the year of India in Latin America?". It is time for Prime Minister Modi to pay closer attention and make a trip through the region, just as Chinese leaders are doing frequently, the latest being Premier Li Keqiang's visit to Brazil, Chile, Peru and Colombia from 17 to 29 May.