Saturday, November 17, 2018

Brazil, the “country of the future” is back to its past

Brazil is a country of the future..and always will be so. This used to be the teasing comment of critics who had watched the country which had promised with booms many times but followed with busts. Brazil, the largest country in Latin America and endowed with abundant natural and vibrant human resources, was closest to its Tryst with Destiny during the golden years of Lula’s Presidency in the period 2003-11. 

The election of Lula in 2002 was a historic moment for the young democracy, which had come out of the military dictatorship in the period 1964-85. The voters gave chance to Lula from a poor family and the Workers Party (PT). He had no educational qualifications nor any government or administrative experience. He was a Leftist who put workers and poor people on top of his socialist agenda. The right wing forces scared the voters saying that Lula would be a disaster for business and industry. During his campaign, Lula came across a school boy from a rich neighbourhood of Sao Paulo city who shouted “ vote for Lula”. The surprised Lula asked the boy the reason for the rich boy’s support to the pro-poor Lula. The boy replied,” My father told me that if you were elected, he would leave Brazil and move his business and family to Miami.  That’s why I pray and campaign for you to win so that I can go to Miami”. But Lula turned out to be a darling of business without compromising his pro-poor agenda. He transformed Brazil with his Brasilia Consensus model of a balanced mix of pro-poor and business-friendly policies. The Brasilia Consensus brought people from the Left and Right towards the centre, ending the traditional ideological polarisation of the society. He rescued the country out of the ‘Lost Decade’ caused by the neoliberalistic Washington Consensus and pulled out over forty million out of poverty. At the same time, Lula helped the Brazilian firms to flourish and pay more taxes which contributed to his welfare policies. He encouraged the Brazilian companies such as Petrobras, JBS and Odebrecht to become regional and global leaders with generous credit and proactive diplomatic support for their entry in other countries. Helped by the commodity boom, Brazil was becoming prosperous and optimistic. When Petrobras issued the world’s largest (at that time) IPO of 70 billion dollars in 2010, Lula crowed, “ This largest IPO was not issued in London or Frankfurt or New York. It was issued in our own Sao Paulo exchange”. When the Wall Street bankers unleashed a financial crisis on the world, not a single Brazilian bank or financial instituition collapsed. In fact, Brazil bounced back from the crisis with a 7.5 % GDP growth in 2010. Again, the irrepressible Lula blamed “ the blue eyed and blonde haired boys of the Wall Street” for causing the crisis with their unchecked greed. 

Lula became a role model for Latin America. Leaders like Mujica of Uruguay, Humala of Peru, Correa of Ecuador and Lugo of Paraguay promised to become the Lulas of their countries and the label had helped their election.

Lula gave leadership to Latin America with new initiatives for regional and subregional integration. He challenged the US hegemony of Monroe Doctrine and killed the US sponsored Free Trade Area of the Americas (FTAA) in collaboration with other leftist leaders of Latin America. When the Honduran President Manuel Zelaya was overthrown in a US-supported coup in 2009, the Brazilian embassy gave asylum to Zelaya and tried to restore him to power.  Lula reached out beyond Latin America. He opened embassies in several countries in Africa and started  dialogue between Latin America and Arab countries. He partnered with India and South Africa in IBSA and joined the BRICS story. He got the Olympics and World Cup venues for Brazil. He sought permanent membership of UN Security Council. He tried even to mediate in the issue of US sanctions on Iran. This raised alarm bells in the Deep State which started plotting to stop the rise of Lula, Brazil and the Latin American Left.
It looked as though Brazil had finally put its act together and a New Brazil had arrived in the twenty first century. Lula finished his second term with the highest approval rating. He got his chosen successor Dilma Rouseff elected as President. But she committed a series of omissions and commissions by her lack of political skills and caused the destruction of Lula, PT and the country. The leaders of the Workers Party succumbed to hubris and got caught for corruption. The crooked members of the Congress impeached President Rouseff on a flimsy charge of budget fudging, a minor, harmless and insignificant act, committed my many governments around the world routinely. This Congressional coup was complemented by a Judicial Coup lead by Sergio Mora, a US-trained judge, who put Lula in jail and prevented him from contesting the elections. In the name of anti-corruption crusade, he had systematically used and misused the judicial system to put Lula in jail ( a disproportionate punishment for having accepted the gift of an apartment by a private company) and destroyed the image of PT. The other political leaders and parties became collateral damage of Moro’s crusade.  It should be noted here that the National Security Agency of US had electronically spied in the offices of President Rouseff and Petrobras, among others. When this came out in the papers leaked by Snowden, President Rouseff cancelled her official visit to the US.  Many Brazilians believe that the Deep State had shared their intelligence with their Brazilian counterpart and the two had worked together to bring down Lula and the Left. 

The constituitional and judicial coups had succeeded in instigating anger among the public which lead to protests (some spontaneous and others sponsored) in the streets and social media in the last three years. The voters wanted to punish PT as well as the other traditional political parties and leaders. In any case, PT deserved to be put on the bench and other parties and leaders needed to be given an opportunity to govern. It is at this opportune time that the ultra rightist and anti-democractic Bolsonaro stepped into the void and harvested the voters’ disillusionment and despair.

Bolsonaro, an ex-army captain, has been a long time fringe congressman who glorified the past military dictatorship and celebrated its abductions, torture and killings of civilians. According to him the military dictatorship did not kill enough people. He has favoured dictatorship and praised Pinochet. He has said,” We are going to have a cleansing..and wipe these red thieves (workers party and other socialists and communists).. Either they leave the country or they go to jail”. Hamilton Mourao, his Vice President-elect and a retired General, has also been talking of a coup if circumstances warranted it. One of his politician sons made a statement threatening that the supreme court could be closed just with a soldier and a corporal. Bolsonaro proposes to fill the cabinet and top administrative posts with Generals. Even if he does not become a dictator, the very election of Bolsonaro with his anti-democratic and pro-dictatorship discourse is a stain on the young Brazilian democracy. 

Not surprisingly, Moro has been rewarded with a ministerial post by President Bolsonaro. Moro described Bolsonaro as a “prudent, sensible and moderate person”, while the world  sees Bolsonaro as an extremist bigot. Now Moro will continue his anti-Lula and anti-PT work officially to ensure that Lula does not come out of jail.

Bolonaro will bring back Washington Consensus to replace the indigenous Brasilia Consensus. His nomination of a Paulo Guedes, an economist trained in the Chicago University confirms the direction of neoliberalism. It may be noted here that the Chilean dictator Pinochet was also guided by the Chicago Boys. The Bolsonaro administration will reverse the resource nationalism of Lula and privatise public sector companies. The pro-poor policies initiated by Lula would suffer budget cuts. Bolsonaro’s solution for poverty is ‘birth control of the poor’.

Bolsonaro favours loosening of the gun laws based on his view that every honest citizen should be able to own a gun. He will give the law enforcement more powers to kill drug traffickers and criminals extrajudicially. He proposes to relax environment regulations to open up the Amazon forest for farming and mining. He has talked about pulling out of the Paris Agreement on climate change. Under his administration, the protection for indigenous people and minorities will be reduced. He is likely to implement the agenda of the evangelicals (who gave him solid support) on issues such as abortion and gays. His racist comments has inspired a Sao Paulo student who celebrated Bolsonaro victory with posting of a video (which went viral) saying that he will grab a knife or gun to shoot the reds ( Workers Party) and blacks. It should be noted here that Brazil has the largest black population outside Africa. The blacks while excelling in football and music, have the least representation in politics and business and account for most of the poor in Brazil. 

Bolsonaro’s three sons who are also into politics (with one in the Senate, another in the Lower House and the third as advisor) have already started making Bolsonaro policies like a family business just as Trump’s family does.

With his anachronistic and hate-filled agenda, Bolsonaro is set to turn the New Brazil into the Old Brazil. He will reverse the twenty first century Brazil back to the bad old country of polarisation of the last century. Women, blacks, gays and Leftists will become second class citizens and subject to military style rightist rule.

Lula had moved Brazil towards the centre by his moderate and pragmatic Leftist programmes combined with business friendly policies. But now Bolsonaro will polarise the country with his intolerant policies towards the Left and minorities.

Fortunately, Bolsonaro’s party does not have a congressional majority. His party has just 52 seats out of the total of 513 in the lower house of Congress and just 4 out of the total of 81 in the Senate. This means he needs the support of other parties to carry out any major reforms. The Congress is even more fragmented this time with representatives from 30 political parties. 

Bolsonaro, described as the Tropical Trump, admires and imitates Tumpian methods and abusive and vulgar language. In fact, the Brazilian election is a replica of the US election. The American voters had earlier created history by electing Obama but afterwards gave an anti-climax in the form of Trump. Similiarly, the Brazilian voters who showed maturity in electing Lula earlier have now gone to the other extreme by choosing Bolsonaro.

Bolsonaros’ foreign policy will move to the hard right in stark contrast to PT’s solidarity with the developing world and resistance to US hegemony.  With his Trumpian imitation “ Brazil first” Bolsonaro has ridiculed the UN as a the gathering place of Communists and threatened to pull out from UN. Like Trump, he has called for withdrawal from and minismise multilateral and global commitments and dialogues preferring bilateral deals.

Ernesto Araujo, a career diplomat nominated as the new foreign minister of Brazil, is an admirer of Trump whom he describes as one who is restoring western values. He believes climate change is part of a plot by cultural Marxists to stifle western economies and promote the interests of China. Araujo is of the view that globalism is an anti-christian ideology.

Bolsonaro will align his foreign policy with that of US. He has already promised to shift the Brazilian embassy in Tel Aviv to Jerusalem and close down the Palestine office in Brasilia. He would happily support the US attempts to change the Chavista regime in Venezuela. It may be recalled that it was thanks to the support of Lula and Brazil that Chavez had survived the 2002 coup and continued in power till his death in 2013.

Bolsonaro will pull Brazil out of or undermine the regional alliances such as UNASUR and CELAC. His finance minister designate Paulo Guedes has stated that Mercosur (customs union of Brazil, Argentina, Uruguay and Paraguay) would not be a priority for Brazil.

Bolsonaro will pay the least attention to South-South Cooperation and to Asia, Africa and Middle East.  He has already snubbed Beijing by making a trip to Taiwan during his campaign. The Chinese have invested over sixty billion dollars in Brazilian oil fields, mines and utilities. They have extended credit of more than forty billion dollars. Bolsonaro has criticised the Chinese acquisition of Brazilian assets. China is the largest trading partner and market for exports of Brazil. In 2017, Brazilian exports to China were 47 billion dollars as against 27 billion to US. In 2018 (January-October), exports to china increased by 28% accounting for 26.7% of total Brazilian exports. Brazil has always had trade surplus with China and it was a solid 20 billion dollars in 2017 which has increased to 25 billion in the first ten months of 2018. In contrast, Brazil has trade deficit with USA, which does not need the Brazilian soy beans, corn, iron ore and sugar, the top exports of Brazil. Bolsonaro cannot afford a Trumpian trade war with China which can hurt the Brazil by cutting imports, as it had punished Argentina in 2008 by stopping soy oil imports. Bolsonaro cannot afford Trumpian style China-bashing. 

The election of Bolsonaro should not be read as the end of the Workers Party, whose candidate Haddad made it to the second round of the Presidential elections.  The PT candidate got 45% of the votes which is substantial, despite the corruption scandals and the short campaign time given to Haddad after the court rejection of Lula’s candidature. PT has the largest number of deputies (56) in the lower house of the Congress while the other traditional parties got a worse beating in the elections. If Lula was allowed to contest, he might have won since he was consistently leading in the opinion polls ahead of Bolsonaro.
Nor can the victory of Bolsonaro be construed as the end of the story for the Left which swept Latin America in a Pink Tide in the first decade of this century. Uruguay, Ecuador and Bolivia are doing well under leftist rule. Mexico has joined the ranks of the South American left with the historic election of Lopez Obrador in July. In Chile, the voters have become smart by choosing alternately the Leftist and rightist coalitions in the last four elections. The socialist alliance might be returned to power in the next election. With a large population of poor people and the highest income disparity, the Left will continue to be relevant for Latin America in the years to come.

Some commentators have hinted at the possibility of contagion of the region by Bolsonaro’s rightwing extremism . While US, Europe and Phillipines have radical rightist leaders and parties, there are no comparable movement or leader in Latin America other than Bolsonaro. The Presidents of Chile, Argentina and Colombia who are from the centre-right are cultured, moderate, pragmatic and respectful of opponents. 

India, which had cultivated Brazil as a strategic partner in the last two decades, should not have much expectation from Bolsonaro. This has not come as a sudden shock. Even before Bolsonaro, President Rouseff and President Temer had lowered Brazil’s international profile due to their domestic problems and had reduced proactive collaboration with India on global issues. IBSA and BRICS will not appeal to the “ Brazil First” Bolsonaro. However, India should see Brazil beyond Bolsonaro. Brazil will certainly realise and resume its logical alliance with India sooner or later. India should therefore wait and keep up the contacts.

For the moment, India should focus more on economic diplomacy. Brazil is the biggest economy in Latin America and the largest trade partner of India in the region with a bilateral trade of 8.6 billion dollars in 2017-18. With the pro-business Bolsonaro administration, the economy and the market are set to improve. Since March 2014, Brazil had remained paralysed with the Operation Car Wash corruption scandal, political crisis one after the other and economic recession. The GDP growth rate had gone into negative figures in 2015 and 16. It has started growing marginally in 2017-18 and is now poised to speed up. The stock market has already started climbing up and investors have issued bullish statements. 

Consequent to the indictment of large companies (such as Petrobras, Odebrecht and JBS) and banks (BNDES)  involved in the corruption cases, infrastructure and investment had been halted in the last four years. Now these projects have be revived and the business will start flourishing again. Recently, Indian companies such as Sterlite, Sterling and Wilson have made entry into the infrastructure sector of Brazil with project contracts of over a billion dollars. Aditya Birla Group has announced investment of 175 million dollars in 2019 to expand the capacity of its Aluminium plants in Brazil. There is going to be more business and  greater opportunities for Indian companies in Brazil in the coming years.

When the Argentine Cardinal Bergoglio became Pope Francis, the Brazilians said, “ The Pope might be Argentine but the God is Brazilian”. As part of his victory celebrations, Bolsonaro attended a worship service conducted by the celebrity evangelical pastor Silas Malafia who declared, “ God will change the fortune of Brazilians..Brazil belongs to Lord Jesus”. God save Brazil from Messias (the middle name of Bolsonaro which means Messiah), who is described by Economist magazine “as a menace to Brazil and Latin America”.

Tuesday, October 16, 2018

From Coolies to Patrons and Partners: the Chinese paradigm shift in Latin America

Latin America had imported Chinese as Coolies in the second half of the nineteenth century after the abolition of slavery. About a quarter million Chinese coolies were imported by Peru and Cuba between 1847 and 1874. The Peruvian Congress passed a law about the coolie system. It provided a subsidy of 30 pesos to be paid to the shipping company which brought in the coolies from China. The coolies had to be between the ages of 10 and 40 and were obliged to work generally for eight years, after which they were free to go back or be on their own. The Law had provisions for management of the coolie which included teaching of Bible. It specified the number of lashes to punish the coolies for disobedience or indiscipline. In practice, the employers ill-treated and exploited the coolies almost like slaves, auctioning, buying and selling them. 

The Chinese coolies worked in plantations and mines and  were made to dig up the guano pits in Peru and load them in ships for exports to US and Europe. The strong stench of guano droppings were so nauseating that the ships used for transportation could not be used for any other goods and had to be retired. Thousands of the coolies fell sick and died in the miserable conditions of their work. 

In 1874, the Chinese government signed an Agreement with the Government of Peru to enquire into the conditions of the coolies and improve them. The Commission interviewed many coolies who had related their sufferings and misery.

Mexico had imported Chinese coolies to work in the arid areas of north not only as workers but also as barbers and domestic help. After the end of their bondage, the entrepreneurial Chinese started their own businesses and flourished. But this attracted a backlash from the Mexicans who accused the Chinese of “ stealing Mexican jobs and businesses”. The anti-Chinese movement lead to harassment of the Chinese whose shops and houses were burnt.

Panama had imported Chinese coolies to work in their railway and canal project.

Descending from the coolies, today there are over a million people of Chinese living in Latin America. The Latin Americans look down on them and use the expression Cuento Chino ( Chinese tale) which means exaggeration, unbelievable and might be untrue.

The 19th century coolies have now become the twenty first century patrons and partners for Latin America. 

Today, the Chinese have become the single most important investor, creditor and the second largest trading partner for Latin America. The Chinese companies have become owners of the mines where the coolies used to work earlier. The Latin Americans have now realised that Cuento Chino is not a cuento do China… The story of China is not an exaggeration.

China is creating jobs and wealth for the Latin Americans who work hard to provide food to the Chinese people. The Latin Americans dig up deeper in the mines to supply ores and minerals to China and this helps China to continue as the Global manufacturing power. 

China’s investment in Latin America is estimated to be around 120 billion dollars. Brazil has received the bulk of the investment with 61 billion dollars followed by Peru-18 billion, Mexico-6 bn, Argentina-5 bn and Venezuela only 2 billion. 27 billion has gone into mining, 25 bn into oil and 13 billion into electricity sector. The target of investment is 250 billion dollars by 2025, as announced by the Chinese President in 2015 during his visit to Latin America.

The estimated Chinese credit to Latin America is 150 billion dollars. Of this, Venezuela has received 62 billion, Brazil-42 bn, Argentina-18 bn and Ecuador-17 bn. While the earlier credits had flowed into mining and oil, the recent credits are mostly for infrastructure and services.

The China-Latin America trade in 2017 was 257 billion dollars of which Chinese exports were 130 bn and imports 127 bn. The Chinese target is 500 billion dollars by 2025, according to the 2015 announcement by the Chinese President. China has overtaken European Union as the second largest trading partner of Latin America. China is the #1 trade partner for Brazil, Peru and Chile. 

There is a long term win-win complementarity in trade between China and Latin America. The top global exports of Latin America are crude oil, minerals and agro products. China is the leading importer of these items in the world and will continue to be so in the coming years. Latin America is well endowed with oil and minerals and lot of arable land with abundant water reserves. The region has the potential to increase the production and exports of oil and minerals and can increase its agricultural production which can feed another 500 million people outside the region. In contrast, China is losing millions of acres of agricultural land to urbanisation and industrialisation and faces water and pollution problems. So the Chinese see Latin America as a long term source of imports while the Latin Americans can count on China as a long term market for their exports.

In contrast to China, the market of United States for South America has become less important. The US is the principal market for Latin American crude oil exports. But thanks to the shale revolution, the US has become the largest producer of crude in the world now and has drastically reduced imports. The US has no need for so much minerals since the country has shifted its manufacturing to other less expensive countries including China. In the case of agro products the US is a competitor to soybeans and maize exports of Mercosur countries. 

In the 1980s, the US authorites and IMF had imposed the neoliberalistic “ Washington Consensus” policies on the Latin American countries which were transitioning from military dictatorships into democracies. These policies ruined the economies and pushed millions of people into poverty. The Latin Americans bitterly remember this period as the “ Lost Decade”. In contrast, the Latin Americans celebrated the first ten years of the new century as the “ Growth Decade” thanks to the prosperity resulting from the largescale Chinesedemand for commodities and the consequent high prices. The Latin American governments  had used the windfall profits for pro-poor policies with which they have pulled out 70 million people from below poverty lineinto middle class.

The US had exploited Latin America as its “backyard” since the Monroe Doctrine of 1823.  In the name of its “wars on communism, drugs, corruption and immigration’ the US has destabilised the region and undermined democracies and had created and supported military dictatorships. The drug business is a consumer driven business. Millions of Americans pay top dollars to continue their habit of drug consumption. If this is stopped, no outsider will find any profit in supplies. But the US government wrongly blames the producers of coca and the traffickers from Latin America. The US is destroying agricultural fields in Latin America with chemical sprays in the name of eradication of coca plants. On the other hand, the US is responsible for the killings of thousands of Latin Americans every day by the guns smuggled from US. The Latin Americans are frustrated with this hypocrisy and the destructive and negative agenda of US. In contrast, the Chinese agenda for Latin America is constructive and positive. The Chinese construct railways, roads, ports and power stations in the region. Latin America needs massive investment in infrastructure for its development, which China provides.  

While the Washington DC does the political destabilisation of Latin America, the Wall Street and its vulture funds cause havoc in the Latin American markets regularly and systematically. The Wall Street brings in hot money to take advantage of the high interest rates in Latin America periodically and make a quick buck. The money is pulled out suddenly and massively when the interest rate goes up in US or when other aveneues open up for higher profit margins. Such large scale withdrawals cause devaluation and foreign exchange crisis in the countries of the region which have been forced to remove capital controls by the Washington Consensus. 

The Wall Street firms encourage and advise the Latin American governments to issue dollar bonds and oversell them outside the region. When the bond issuing countries have difficulty in servicing the debt, the Wall Street and Washington DC bring in IMF as rescue. The IMF funds are used primarily to pay the creditors while the governments are forced to cut down budgets for social welfare, education and infrastructure. When Argentina rejected the IMF formula and did a successful restructuring on its own in 2002, the Wall Street and Washington DC had excommunicated Argentina from the international capital market and cut off all Fund-Bank resources. The vulture funds which held out against the debt restructuring kept harassing and blackmailing the Argentine government and even threatened to seize the bank accounts of Argentine embassies. They managed to seize  a prestigious Argentine naval vessel in Ghana through a fraudulent local court order. The naval ship was on a world good will tour and its seizure was a grave embarrassment for the country. President Cristina did not travel to US and Europe in the official Argentine plane since there was the risk of seizure of the aircraft by the vulture companies. She had to hire planes for the travels. 

The Chinese had come to the rescue of Argentina, Venezuela, Ecuador and Venezuela when the Washington-Wall Street Fund mafia blocked out international capital when these countries needed the most. The Chinese came to the rescue and provided emergency short term funds and currency swaps. But for the timely and generous Chinese rescue, these countries might have got into serious economic crisis and Venezuela might have collapsed years back.

Trump has been insulting and humiliating Mexicans and Latin Americans with his abuses. To add insult to this injury, the US has criticised El Salvador, Dominican Republic and Panama for their decision to recognise China in place of Taiwan. The US State Department has recalled its ambassadors to the three countries to show its displeasure, threatened aid cut and has advised the other countries in the region (such as Paraguay and Nicaragua) to keep up diplomatic relations with Taiwan. This has bewildered the Latin Americans since the US, UN and over 180 countries of the world have cut off diplomatic relations with Taiwan and recognised China. The Latin Americans see this as yet another attempt to make a fool of them.

Given the historic exploitation and hegemony of US, the Latin Americans welcome China as a relief to counter the US domination, to a limited extent. This is the first time in Latin American history since Monroe Doctrine that an outside power has established a massive presence challenging the US control of the region. The Latin Americans like to play the China card against US to get the best from both. The Latin American presidents who craved to be invited to the White House in the past, now  queue up to make pilgrimage to Beijing with business delegations to promote trade and investment.

Latin America is conscious of the downside and limitations of partnership with China. Firstly, they see it as a purely commercial transactional partner and nothing more. They detest the communist dictatorship of China, having come out of dictatorships themselves after terrible sufferings. They are suspicious of the non-transparent nature of Chinese activities and the overwhelming role of Chinese state companies and financial organisations. There is an enormous cultural and communication gap. They are also hurt by the flooding of less expensive Chinese products which have adversely affected domestic manufacturing sector. 

But the Latin Americans see that China is a manageable risk unlike US whose actions are beyond control. While the US has repeatedly invaded Latin American countries and changed regimes, the Chinese will never dare to do such atrocities in Latin America. The Latin Americans have the option to stop, reduce or reject Chinese credit and investment and manage the Chinese activities smartly. For example when the Chinese  looked around to buy hundreds of thousands of agricultural land, the governments of Brazil, Argentina and Uruguay changed their rules and imposed restrictions on acquisition of agricultural land by foreigners. The Chinese backed out. It may be noted here that these restrictions are only against new investors. They do not affect the ownership of hundreds of thousands of hectares of South American farmland by European and Americans who had invested before the new restrictions.

The Latin Americans would love to see an end to the unipolar world and welcome the rise of other powers to challenge US and minimise the harm and domination of US. At the same time, they would also like to reduce their overdependence on China and diversify their economic partnerships. In this context, they welcome more trade, investment and involvement of India in the region. 

Unfortunately, India has no plan, vision or trade target for Latin America, despite the emergence of the region as a large market for its exports and the region’s contribution to India’s energy and food security through supply of petroleum, vegetable oil and pulses.  

India’s credit to the region is just under 200 million dollars in contrast to the 150 billion Chinese credit. India’s total trade with Latin America is just about the same as China’s trade with Chile which is 36 billion dollars. The Latin Americans hope that India would wake up and take advantage of the opportunities for business in the large and growing middle-income market of Latin America with 620 million people.

India could set a target of 25 billion dollars of export (from 12 billion in 2017), investment (from the current 13 billion) and credit of 5 billion ( from 200 million so far) by the year 2025. This could be announced during the visit of Prime Minister Modi to Buenos Aires in November 2018 for the G-20 summit.

The Wire published an edited version of this article in 

Sunday, July 08, 2018

It is time for President Ortega to go...

I used to be an admirer of Daniel Ortega. I liked his poem, ¨I Never Saw Managua When Miniskirts Were in Fashion¨, when he was a political prisoner at the young age of 23.  While in jail, he received visits from Rosario Murillo, a poet. The prisoner and visitor fell in love; Murillo became Ortega's wife. She has published several books of poems. One of them is called as ¨Amar es combatir ¨- to love is to combat. Ortega and his wife underwent sufferings and sacrificed a lot for Nicaragua. They are part of the noble Sandinista Revolution which became a successor to the legendary Cuban revolution. Both these revolutions liberated the countries from foreign-installed dictatorships and succeeded in surviving the illegal and destructive interventions and invasions of US. 

Ruben Dario, the most famous poet and writer of Nicaragua wrote in the beginning of the twentieth century, 

Eres los Estados Unidos,
eres el futuro invasor

You are the United States
you are the future invader

An American mercenary adventurer William Walker maneuvered to appoint himself as President of Nicaragua in 1856 and ruled for a year and even made English as the official language. Walker recruited about a thousand American and European mercenaries to invade the other four Central American nations: GuatemalaEl SalvadorHonduras, and Costa Rica. This was supported by the American tycoon Cornelius Vanderbilt who had business interests in the region. Fortunately the invasion failed and Walker was later executed.

Ortega was a hero of the Sandinista revolution which liberated Nicaragua from the notorious Somoza dictatorship, which was installed by the US.  When the Somoza dictatorship was overthrown by the Sandinistas, the US waged a ruthless Contra-War against the Sandinista government and made the country bleed.  In the name of the Contra War, the Americans destabilised the region of Central America itself, again. 

After coming to power, the Sandinistas have contributed to democratic stability, economic growth and social peace to the country, while their neighbours Guatemala, El Salvador and Honduras suffer on all three counts. You don’t hear of Nicaraguans crossing into US border illegally. When they lost the elections in 1989, the Sandinistas left the government peacefully, quietly and gracefully. They waited for their time and won the elections in 2006 and came back to power.  The Sandinista government has brought about land reforms and have made life better for the masses with their socialistic policies.

Here the good story ends..

When Ortega reached out to Catholic religious establishment and the private sector business, I thought he was becoming pragmatic, growing out of his narrow ideological boundaries. But Ortega has now compromised his ideology and principles with the only aim of hanging on to power by hook or crook. He has made the government as a family business, having given lot of power to his wife who is now the vice president. His son was the chief negotiator on the Nicaragua canal project. Many revolutionaries who were comrades of Ortega have left him disappointed and frustrated by his personal egoistic agenda.

But President Ortega has turned out to be yet another betrayer of a great revolution. He has given a bad name to socialism, by misusing it to perpetuate himself in power. His government is facing protests against his regime. Many protestors have got killed by the Nicaraguan police.

The worst is his blatant sacrifice of ideology for pure money making. He had promised to restore diplomatic relations with China and break Taiwan relations. But he still carries on with relations with Taiwan unashamedly even while centre-right governments in Latin America have recognised China.

Ortega’s announcement of the Nicaragua canal project to be done by an unknown Chinese company was simply and purely a scam.. There is no realistic possibility of building the canal at this time. 

Now Ortega is facing protests especially from students and young people. The Nicaraguans are fed up with the Ortega family dictatorship. But clearly, the protests are being supported by funds and guidance from US which has smelled yet another opportunity to overthrow a democratically elected government in Latin America.  

I wish Ortega leaves power peacefully without betraying the noble Sandinista revolution. He can call for early elections and prove that the majority is with him. Or even better, if he lets other leaders come up. I hope he does not become another Chavez under whom and his successor Venezuela has been destroyed. Chavez and Ortega should be the warning signals for Evo Morales ( I am an admirer of this first elected native Indian president in Latin American history ), who is also toying with the idea of prolonging his rule.

Tuesday, May 01, 2018

Gang violence in Central America

El Salvador, Honduras and Guatemala in Central America have the highest homicide rates in the world. Gangs, popularly known as Maras, are responsible for much of the violence and crime. Most of the killers and victims are gang members themselves in turf battles. Mara Salvatrucha, popularly known as MS-13 and the Barrio 18 (18thstreet gang) are the two dominant gangs which hold the three central American countries to ransom. The rivalry between these two became so violent at one stage in 2012, the government of El Salvador intervened and brokered a ceasefire between MS 13 and the Barrio 18. In order to bring the two sides to the negotiating table, the government relaxed conditions in the prisons in which the members of the two gangs were held. Following this peace deal, the murder rate had dropped immediately. But this truce broke down in 2014 and crime has gone up again.

The origin of these two gangs is Los Angeles.  During the civil war in Central America in the eighties, over a million people had fled to US to escape the violence. Many of them went to Los Angeles, which has been described in the official website ( of the LA Police Department, “ The County and City of Los Angeles are the “gang capital” of the nation.  There are more than 450 active gangs in the City of Los Angeles. Many of these gangs have been in existence for over 50 years. These gangs have a combined membership of over 45,000 individuals”.  Unable to fit in the social milieu, the poor and marginalised illegal immigrant youth joined the criminal gangs in LA. The Reagan administration denied refugee status to these Central American immigrants, who were forced into clandestine lives. In the nineties, the US authorities cracked down on the gangs and deported thousands of the gang members to Central America. But many of the deported, who were born or brought up in US, found it difficult to adjust in Central America and continued with their LA gang culture. They regrouped themselves locally with guns smuggled from US and scaled up their crimes, taking advantage of the weak law enforcement and justice system of these countries. The gangs have evolved a culture of tattoos, brutal rites of initiation, extortion, crime and drug trafficking. It is worth noting that both the MS-13 and Barrio-18 gangs are still active in many states of the US, even after the deportations.

The US is responsible, to a large extent, for the civil wars in Central America. To protect and promote the commercial interests of the American corporations in the region, the US administration had converted the Central American countries as ‘banana republics’ by undermining democracies and encouraging and installing right wing military dictatorships. In 1954, CIA overthrew the democratically elected leftist government of Arbenz in Guatemala and installed pro-US military dictatorship. The immediate reason for the coup was the Guatemalan government’s land reforms which affected the interests of United Fruit Company, the single largest land owner in Guatemala and which had over three million acres of land in Central America. Incidentally, Che Guavara got his anti-imperialistic revolutionary inspiration after seeing personally the destruction of the Guatemalan democracy by the US. Using the pretext of anticommunism, the US had forced the governments and security agencies of Central America to persecute leftist parties and liberals. When Sandinistas came to power in 1979 after defeating the US-supported Somoza dictatorship, the Reagan administration turned its guns against Nicaragua and involved the other Central American countries too in the dirty and illegal “ Contra War” against the Sandinista government. The US sent arms, trained local militias and waged an all out war to hurt Nicaragua and tried to bring about regime change.  While playing this US game, the right wing dictators and death squads in the region had killed hundreds of thousands of opponents of the regimes and innocent people.

The fundamental reason for the violence and crime is, of course, poverty and income disparity in the region and the indifference of the oligarchs in power to the struggle of the masses. The neoliberal economic policies forced on the Central American governments by the “Washington Consensus” had increased poverty and inequality while the oligarchs gained more wealth. The continuing crime and violence have made it more challenging for the countries to increase economic growth and job creation, causing a vicious cycle. The tax rates and revenues of the three Central American countries are very low with the result that the governments do not have enough funds for welfare programmes. On the other hand, the gangs harass and extort money from the shop keepers, transport operators and others vitiating the business atmosphere and hindering economic growth.

The security forces of the region have also become part of the problem rather than than solution. In some cases, the military and police take protection money from the gangs and even join them in extortions and killings. 

Some Central American governments resorted to harsher punitive methods against the gangs through Mano Dura (strong hand) policies. They had cracked down on the gangs with mass detentions and extra judicial killings.  US security agencies such as FBI and DEA had a hand in pushing the Central American security forces to use harsher methods.  ‘Zero tolerance’ policies were sold to Central America by  ex-policy makers and police chiefs of US. But this harsh policy had the opposite effect and became counter productive. The gang members retaliated against the government and security forces with fierce counter attacks. When the authorities filled the jails with suspected gang members along with many innocent youth, the gangs recruited the detainees and became stronger. The jails have in fact have become the command centres for the gang leaders. 

Another reason for the high homicide rates is the liberal gun laws and free availability of illegal guns smuggled from US. The gun shops in the US states bordering Mexico do big volume business of selling guns without adequate verifications. The illegally sold arms end up in Mexico and Central America. In the case of drugs, the US claims that the production and trafficking from Latin America is the main problem and wants to stop the supplies through aerial chemical spraying of fields and arrest of traffickers. But the US does not use the same supply side logic to help in stopping the killings in Mexico and Central America with the guns produced and supplied from US.  

Central America will continue to be a transit for drug trafficking and the consequent gang violence, as long as millions of Americans continue to pay billions of dollars to consume illegal drugs. The US has to admit this simple and clear truth that illegal drugs are basically a consumer driven business and has to take action within the US to stop the consumption. There will be no sellers if there are no buyers…No brainer, in American speak..

While the US is an important factor for the gang violence in Central America, one should, however, give the credit due to US for two things: the large remittances of the emigrants in US is a major source of foreign exchange revenue for Central America; Secondly, these countries benefit from the Free Trade Agreements (CAFTA) with US, which has given duty free access for Central American goods. The FTA has given rise to a sizeable maquiladora (assembly) industry in Central America for exports to US.
While the gang violence continues unabated in El Salvador, Honduras and Guatemala, their next door neighbour Nicaragua has not let the big gangs to take root.  This is interesting since Nicaragua is much poorer in comparison to the other three and had suffered worse in the Contra War waged by the US. The CIA had recruited mercenaries from Guatemala and Honduras  and armed them to attack Nicaragua in addition to instigating right wing Nicaraguan gangs to fight against the leftist Sandinista government. But the Nicaraguan authorities have prevented the emergence of gangs by their humane methods of community  policing and effective disarmament of the civil war fighters. The police department had programmes to prevent youth crimes and to rehabilitate the youth who had gone astray or were vulnerable. The socialist Sandinista government had better pro-poor policies and had distributed land to the poor. 

Another important reason why Nicaragua is spared of the big gangs is that they did not receive criminal deportees from LA. Those Nicaraguans who had emigrated illegally to US went mostly to Miami and not LA.  In Miami, the Nicaraguan immigrants were given a sympathetic treatment by the state administration (thanks to the lobby of right wing Cuban emigres who disliked the socialistic Sandinistas) which gave them refugee status and did not deport many Nicaraguans. So the Nicaraguan immigrants were less desperate in Miami which does not have the gang culture as it exists in LA.

Amidst the gang violence in Central America, Costa Rica stands out as an island of peace, thanks to its enlightened political leadership which has uplifted the poor and reduced income disparity with welfare policies and focus on education and health care. The Costa Ricans have avoided military dicatorships after their abolition of armed forces in 1949. The Costa Rican government refused to be part of the Contra war of US and kept its neutrality. In fact, Oscar Arias, the Costa Rican president took the initiative to bring about ceasefire and peace through negotiations between the warring parties in the region. Arias was awarded a Nobel peace prize for this.

Both Nicaragua and Costa Rica had rejected any security assistance from US and did not allow their security and intelligence agencies to be corrupted and commandeered by the US, as it happened in the case of the other three countries.  US has a military base in Honduras which suffered, not surprisingly, a coup in 2009, the only coup in the twenty first century Latin America. Panama has learnt from Costa Rica and abolished its army in 1990. Nicaragua has reduced the size of the army which is very small, with a limited budget. The Northern Triangle countries (Guatemala, El Salvador and Honduras) have much to learn from Costa Rica and Nicaragua.

The gang violence in Central America is distinct from the experience of Mexico, Colombia and Brazil, where the big drug cartels are responsible for much of the crimes. These cartels are more powerful with money, firepower and political contacts in comparion to the Maras, described as the Mafia of the Poor. The Maras blackmail and kill low level workers such as bus and taxi drivers for small change.  While Colombia has succeeded to a large extent in liberating the country from the drug cartels and guerrillas, Mexico and Brazil have seen increase in cartel crimes. Drug trafficking has not become big in Central America since their local drug markets are small and their gangs are just minor players in comparison to the big league cartels of Mexico. While Central America is a transit route for the drugs going to US, the local gangs get only a small share of the trafficking revenue from the Mexican cartels. 

The gang violence in Central America is certainly much smaller in scale than what happened in Medellin. Pablo Escobar and the drug cartels had ruined the city which was labelled as a narco-crime capital. Escobar and the other rich traffickers had held the Colombian government to ransom with their money, clout and capacity to hurt. But today, Medellin has dramatically transformed into a peaceful and vibrant city. Businesses are flourishing and tourism is booming. It has become a silicon valley of the region with a number of tech companies and professionals including from India. Colombia had suffered much more from the guerrillas in addition to the drug traffickers and was almost branded as a failed state at one time. But the country has come out of these scourges and has become peaceful and prosperous. Central America can certainly repeat the Medellin act.. 

-“Maras: Gang violence and security in Central America” book, edited by Thomas Bruneau, Lucia Dammert and Elizabeth Skinner and published in 2011
-Congressional research paper-2016

Monday, January 22, 2018

In the Midst of Winter

In her latest novel "In the Midst of Winter”( mas alla del invierno), published in November 2017, Isabel Allende brings together a trio of tragic stories from Chile, Brazil and Guatemala. 

The three protagonists Lucia, Richard and Evelyn meet together after a minor car accident caused while driving in the snow in Brooklyn, New York. In the course of trying to solve the problem of dead body in the trunk of the car, they start telling each other their life stories which are poignant accounts of violence, dictatorship, struggles, exile and migration.

The Chilean dictatorship, disappearances and deaths are familiar themes in many novels of Allende.  Her portrayal is authentic since she herself is a victim of the Pinochet dictatorship from which she escaped to Venezuela on exile and finally migrated to the United States, where she is living since 1988. In this story, Lucia Maraz is the Chilean character, whose family is subjected to suffering by the military dictatorship. Lucia’s brother Enrique is one of the ‘disappeared’, as punishment for his left wing activism. When the secret police comes after Lucia also alleging that she is a sympathiser of guerrillas, she seeks asylum in the Venezuelan embassy. Later she goes on to live as an exile in Venezuela and Canada. She returns to Chile after the restoration of democracy. She comes as a visiting professor to New York where she gets to meet the other two characters.

Lucia is described by the author as “ blessed with the stoic character of her people, accustomed to earthquakes, floods, tsunamis and political cataclysms”. Lucia grows worried if there is no disaster within a given length of time. And disaster comes in the form of a snowstorm in the winter of 2015. Her basement apartment is freezing and it makes her feel even more lonely and insecure.  But the New York winter cannot subdue Lucia’s Latino heart which pines for the warmth of sex, romance and love. Lucia, aged sixty two, is looking for mature love, after her divorce and a few flings in her earlier life.  She fantasises about romance with her landlord Richard who lives in the house above her basement.  The car accident in the middle of winter gives her the opportunity to melt the ice cold Richard and win him over. When Richard recalls his sins and sad past, Lucia tells him, “ Enough wallowing in the sorrows of the past. The only cure for so much misfortune is love”. 

Through the story of Richard Bowmaster, the author brings out some Brazilian cultural aspects. He goes to Rio for his research work on the Brazilian dictatorship and there he falls in love with the Brazilian dance teacher Anita. Unable to adjust to Anita’s complex personality and her large extended family, he takes to drinking and drugs and runs his car over his own son killing him accidentally. He returns to US to work in the New York University as professor for Latin America studies. After Anita’s death, Richard leads an austere life in the company of his four cats named um, dois, tres and quatro in Portuguese. Lucia finds him as ‘ liviano de sangre’ a chilean expression for someone who is good natured and loveable.

Evelyn Ortega, the Guatemalan without documents, works as a nanny in the New York house of Frank Leroy who is involved in human trafficking of Latin Americans into US. Evelyn is from a small Guatemalan village Monja Blanca del Valle, which is also the name of the the national flower. Evelyn’s mother migrates to US, like many of her compatriots, to earn a safe livelihood and to escape the violence in the country. The Guatemalans who had earlier suffered the reign of terror of the right wing regimes are now traumatised by more cruelty and violence inflicted by the deadly gangs such as MS-13. Evelyn and her two brothers are brought up by their grand mother. The elder brother joins MS-13 but is killed and his body hung over a bridge when he is suspected of betrayal. In its typical way of revenge on the whole family, the gang kills the other brother also and rapes and brutalises Evelyn.  After seeing the gruesome death of her brothers and her own nightmare of rape, Evelyn loses speech and starts stammering and becoming almost like a mute. The grandmother sends her with a coyote to enter US illegally through Mexico. On the way she and her group face the Mexican gangs who torment the migrants with extortion and violence. Evelyn is lucky to reach her mother and later to get to work with the Leroy family.

The experience of the main characters in the three countries are not much different from reality. Fortunately, Chile has now become peaceful and free from violence. But Brazil has pockets of violence in major cities where drug traffickers operate. Guatemala still continues to suffer from the gang violence along with Honduras, El Salvador and Mexico. In fact, the actual violence and crime are much worse than the fictional portrayal of Allende. 

Allende uses every opportunity to compare and contrast Latino and American cultures, based on her own experience of living in US since 1982. This is one of the recurrent themes in her novels. She briefly mentions Trump whose hate speeches have hurt the feelings and image of Latin Americans. Trump ignores the fact that it is the US which is mainly responsible for the past and present tragedies of Latin America through its consumption of and demand for drugs as well as its political destabilisation of the region on the pretext of containing communism. The CIA had the lead role in the overthrow of democratically elected governments of President Arbenz of Guatemala in 1954, President Goulart of Brazil in 1964 and President Allende of Chile in 1973 and subsequent installation of military dictatorships which were responsible for death and disappearance of hundreds of thousands of people in the three countries.

Having read most of her books, I found that the main plot of this novel is somewhat thin and less complex than her previous works. But the author’s focus on the Latin American spirit,  colours and expressions takes the readers through a virtual journey of the fascinating region .
Allende is at her best when she gives voice to the female characters in her novels. They are emotional but strong enough to survive and succeed at the end. It is for this reason that she has been described as the diva of “ Magical Feminism”. Some of her novels belong to the Latin American signature genre of “ Magical Realism”.

Allende’s inspiration for the title of her book is the following quote of Albert Camus,“ In the midst of winter, I finally found there was within me an invincible summer”. In her own winter years at the age of 75, the summer of Latino love is still shining within Isabel Allende. In one of her interviews, Allende says,”I have been in love all my life, with different men, of course. Love is beautiful and melodramatic”.  In this novel as well as in her last one “The Japanese lover”, the theme is about old people falling in love. In an essay written in November 2017, she says,” I am in my seventies and I want love, passion and romance, like any teenager, but is not for me. No one online would ever be interested in a short, bossy Latina grand mother. Now, if I get to meet a guy I like in person, well that’s different. I grab him by the neck, or whatever part of him is closest to me, and he doesn’t stand a chance. We humans are sexual and sentimental creatures to the very end of our lives, a fact that makes my grandchildren cringe. This reminds me of the advice given by my Argentine friends at my retirement party in May 2012, “ Don’t stop having fun when you are old. You become old only when you stop having fun”.

Monday, January 01, 2018

தென்னமெரிக்க தமிழர்கள் - South American Tamils

I was browsing in Amazon for books to kick off new year reading yesterday. One of the titles, "தென்னமெரிக்க தமிழர்கள்" (Thennamerica Thamizhargal-South American Tamils) struck me like a lightning. It had the effect of not only intriguing me but it also challenged my self-proclaimed Latin America expertise. How come I did not know the Tamil link to South America despite having spent twelve years in the region and read so many books on Latin America. So I ordered the book on kindle and read it immediately. It did not take much time to finish reading, since it is just 174 pages. The book, published in July 2017, is in Tamil language only. 

The author, Naveena Alexander, has tried to establish a link between ancient Tamils and the Meso Americans such as Olmecs, Aztecs and Mayas. He claims that the Tamils had discovered the American continent long before the Europeans  and much before the birth of Jesus Christ.  He believes that the Tamils had the capacity to travel long distance through the oceans, with their knowledge of the winds and ocean streams. He is of the view that the Tamils had established trade settlements in Meso American ( Mexico and the northern part of Central America) region. He has identified some similarities between the Tamil and Mesoamerican cultures. Pity..He has forgotten to mention the common role of ‘chillies’ in the spicy Mexican and Tamil food.

But the book has not done justice to the audacious title it bears. The author has given flights to his fancy based on speculations and conjectures, without any credible evidence to prove his theories. However, he has given an overview of the history and culture of Mesoamericans which is educative for the readers in Tamil language. 

I called the author who lives in Chennai. His real name is David J Praveen. I told him about my feeling about the book. He told me to wait till his next book on the Incas and other South American native Indians come out. He sees Tamil connection with the Indians of the Andean region too. He is enthusiastic about his discoveries and theories.  He recalls having read a Tamil book " South American Cholas". There is, of course, proof that the Cholas had conquered south east Asia but South America? hmm..

Praveen is a prolific writer and has authored over a dozen books on diverse topics such as artifice intelligence, e-commerce giants, Magic and Magicians,the streets of the colonial city of Madras and the mystery of Egyptian pyramids. His mission is to educate and provoke the curiosity of the readers in Tamil language. 

My curiosity, triggered by his book, took me to google for information on Tamil link to South America. I was not disappointed. A historian and General Secretary of Kanyakumari Historical and Cultural Centre, Mr S Padmanabhan has found striking similarities between South Indian and Mayan culture. He claims that the ‘Padala Logo’ ruled by Mahabali, as described by the Puranas, is actually Mexico. The Professor had found evidence to this theory during his field trips in Mexico. In a lecture in 2010, he has claimed that there is influence of Dravidian culture, particularly Keralite culture in Mayan architecture, domestic equipment and social and religious practices. He has called for research into the submerged Kumari continent and the Mayans.

Am I puzzled and confused after reading these? Not at all. In fact I see a clear and solid similarity between the South Indians and Latin Americans. That similarity is ‘Magical Realism”, the signature genre of Latin American literature. Magical realism blurs the line between imagination and reality. In fact, some Malayalee scholars have claimed that magical Realism was invented by O V Vijayan in ‘Khasakkinte Itihasam’, much before Gabriel Garcia Marquez. No wonder that the book “ one hundred years of solitude” was the best seller in Kerala at one time. More on this in my earlier blog

Perhaps the theory of Magical Realism explains why the Tamils vote for actors to become chief ministers. They don’t seem to distinguish between the filmy magic and the political reality. 

In any case, the South India-South American link of Magical Realism promises to be an interesting area for research..