The admirable and unusual story of the abolition of army in Costa Rica

 Costa Rica abolished its army in 1948 and created history in the post-cold war era of the world. The country proclaims proudly that it spends its money on education and healthcare instead of arms. Oscar Arias, the former president and Nobel Peace Prize winner said ¨ Our children walk with books under their arms rather than guns on their shoulders. We are an unarmed people, whose children have never seen a fighter or a tank or a warship. We are a people without arms and we are fighting to continue to be a people without hunger ". 

It is, indeed, a civilizational advance. The country has managed to survive and flourish as a unique, vibrant and peaceful democracy in Central America, a politically unstable region known for military dictatorships and civil wars.

The abolition of the army was not done by an apostle of peace like Buddha or Gandhi. The man behind the idea of abolition of the army was Jose Figueres, called as Don Pepe, who lead a rebel force and defeated the government army. Even after abolishing the army in his country, he had actively supported armed revolutionary movements against the military dictators of Latin America and Caribbean.

Pepe came into politics accidentally. He was a progressive coffee grower in the interior of Costa Rica (CR), after his education in the United States. During one of his visits to the capital San Jose in July 1942, he was angry when his property in the city was damaged by a public protest and the government did not take take adequate steps to prevent or minimize the damages caused by the protestors. Figures went on a local radio and strongly criticized the government for letting the protestors go out of control. The government headed by President Rafael Calderon arrested him and a few days after detention let him go on exile to Mexico. During his exile, the angry Figueres started planning to overthrow Calderon’s government through force of arms. He collected funds and arms. But the Mexican authorities seized the weapons. Then he went to Guatemala and sought the help of the Caribbean Legion, which was a group formed by revolutionaries of the region including Guatemala and Nicaragua who wanted to overthrow the dictatorships in their countries. Pepe returned to CR in May 1944 and got into the politics of the country.

In the elections held on 8 February 1948, the opposition candidate Otilio Ulate of the Democratic Liberal Party won with 54% votes. The ruling party PRN accused that the results were falsified. Hmm ..one among the many paradoxes of Costa Rican politics. Normally it is the opposition parties who make such allegations against the ruling party. On 1 March, the Congress dominated by the ruling party decided to annul the elections. The opposition took to the streets. A few days later civil war began. This gave the opportunity for Don Pepe who was waiting to overthrow the government and take revenge on ex-president Calderon. Pepe formed a National Liberation Army and became its commander in chief. He took the support of the Caribbean Legion with revolutionaries from Nicaragua, Honduras, El Salvador and Dominican republic. His army captured three aircrafts and used them to bomb the presidential palace in the capital and also bring arms from Guatemala. Pepe’s liberation army defeated the ill prepared and poorly trained army of the government in the war which lasted for 40 days in which 2000 were killed. The national army was disarmed and dismissed.  In the Agreement signed between the warring parties on 1 May, Ulate was recognized as the winner of the elections but he would take power after a new constitution was ready. A revolutionary Junta was formed on 8 May with Pepe as its head to govern the country in the interim period. 

On1 December 1948, the interim Junta authority of Costa Rica headed by Pepe, decreed the dissolution of the National Army, declaring that a well-trained body of police was adequate for nation’s security.  Pepe  said,“ It is time for Costa Rica to return to her traditional position of having more teachers than soldiers”. He took a sledge hammer and smashed one of the walls of the Fortress Bella Vista, the barracks, as seen in the picture below: 

He handed over the key to the minister of public education with instructions to make the barracks into a national museum. The decree was incorporated in the New constitution of the country, proclaimed on 7 November 1949. Article 12 has proscribed the Army as a permanent institution.

Pepe said he was inspired to disarm Costa Rica after reading "Outline of History"by HG Wells' in 1920 while at MIT. 

The Junta nationalized the banks for democratization of credit, imposed a 10% tax on wealth, established an independent supreme electoral tribunal, removed the legal discrimination against black people, guaranteed public education for all, established a system of proper civil service for the government, gave voting rights to women and outlawed communism. These were the major reformist actions taken by the Junta besides the abolition of the army. The Junta handed over power to the President-elect Ulate in November 1949. This peaceful and graceful relinquishment of power by interim Junta is unique in the history of Latin America which is filled with dictators holding on to power by any means.

Within two weeks after the abolition of the army, the country faced its first external threat. On 12 December, a small armed force of 800 men of Calderon (ex-president of CR whose party lost the civil war) attacked a border town of CR from Nicaragua.  The Nicaraguan dictator Somoza had given asylum to Calderon and supported his venture. Somoza was furious that CR had given refuge to Nicaraguan revolutionaries fighting against his regime. Without the army, CR was defenceless. The Junta sought the intervention of the newly formed Organisation of American States (OAS), whose charter was signed in April 1948. After ratification by member governments OAS officially came into existence only in1951. Despite this situation of its formative stage, OAS sent a commission to visit CR from 17 to 22 December. Based on the commission’s findings, OAS condemned Nicaragua for help to the invaders and also rebuked CR for hosting anti-Somoza guerillas. It forced CR to disband the Caribbean Legion, who then moved over to Guatemala. The rebel army withdrew and a Pact of Amity was brokered between CR and Nicaragua on 21 February.

The second threat to the armyless CR was on 2 april 1949 when there was a coup attempt by the Junta’s Minister of Public Security himself. But the coup did not get support and fizzled out. The situation was brought under control in 12 hours after six people were killed in the skirmishes.

CR faced threat for the third time on 11 Jan 1955 when an army of 500 men lead by the son of an ex-president of CR Picado invaded from Nicaragua. This invading force even had a small airforce with which they bombed some Costa Rican cities. The Venezuelan airforce planes also joined in the attack. The Venezuelan and Nicaraguan dictators were upset with the presence of revolutionaries from their countries in CR. Again, OAS intervened and asked the invading forces to vacate the territory of CR. The OAS authorized the sale of US fighter planes to CR for the defence. US sold 4 F-51 Mustang fighter aircrafts for a dollar each to CR. With the entry of the American planes for the defence of CR, the Nicaraguan and Venezulan air attacks stopped. It is interesting to note that the CIA was helping Somoza while the State Department came to the rescue of Pepe, who was the president of CR at that time.

After relinquishment as head of the Junta in November 1949, Pepe founded National Liberation Party (PLN). He was elected as president for two terms in 1953 and later in 1970.

Don Pepe from the small defenceless country of Costa Rica was a big  defender of democracy and economic justice in Latin America. He spoke for the democratic left in the May 1950 Conference in Havana to promote democracy and freedom in the region. He actively supported armed revolutionary movements against dictatorships in the region. 

Pepe’s approach to US was ambiguous. He did not share the anti-imperialist rhetoric of the Latin American leftists. In fact, he supported US in their anti-communist agenda and had collaborated even with the CIA. Both his wives were from US. He had many friends in the US Congress and influential circles. However, he was critical of US support to military dictators. He criticized the American companies which were exploiting Latin America by paying low prices for commodities and with their large monopoly investment and land holdings in the region. But he did not believe in head-on fight with  United Fruit Corporation, the powerful American corporation which owned the largest banana plantation in CR. He negotiated a new contract with UFC in June 1954 with 30% tax on profits, minimum wage and other benefits for the labour.

Don Pepe died in 1990 but he is fondly remembered and revered although he had attracted much criticism for many of his controversial actions and a few corruption cases too. 

Costa Rica is not isolating itself passively into its own peace cocoon. The country had taken the initiative and helped its neighbours to end their civil wars with peace agreements in 1987. President Arias of Costa Rica won the Nobel Prize for this. 

While many countries have war colleges, Costa Rica has established a University of Peace to educate and train students from around the world for conflict prevention and mediation through peaceful means. 

Costa Rica had abolished death penalty in 1882, very much before many other countries in the history of the world.

The country celebrates 1 December as the Day of Abolition of the Army. The world will be a better place if more countries follow the noble and bold example of Costa Rica.  

São Bernardo – Brazilian novel translated by Padma Viswanathan

São Bernardo is a novel by Graciliano Ramos (1895-1953), a famous writer from Alagoas state in the remote northeast corner of Brazil. Padma Viswanathan has translated this into English and got it published by New York Review Books in May 2020.  

It is the story of Paulo Honório, a poor farm worker who becomes landlord of the farm São Bernardo but finally loses everything and writes his memoirs. Paulo,the illiterate and rough man, goes to jail for knifing a guy over a girl. In the prison, he he learns basic reading and writing. After the release from jail, he becomes an itinerant trader and makes some money. With that he buys the farm where he used to work as a daily wage labourer. He transforms the farm into a productive one with irrigation, dams, cotton crops, orchards, cattle ranch, lumber mill and a cotton gin. He becomes a wealthy landlord and gives job to others. Along the way, he manages to put down jealous and murderous rivals and makes it known that he cannot be messed with. He is a hard task master and expects productive outcome for his payment of wages. He comes to the attention of newspapers and politicians of the area. 

After having achieved a respectable status, he looks for a suitable woman to marry and get children who will inherit his property. He marries Madalena, a poor school teacher from a nearby town. Madalena is kind, gentle and generous to the families who work in her husband’s farm. She pleads with her husband to be less harsh and more humane in his treatment of the labourers. But Paulo finds it as a nuisance and interference with his farm management. With his limited vocabulary and knowledge, he does not understand the literary and political conversations of his wife with the newspaper editor, school teacher, lawyer and priest who visit his house. He is wary of their ideas of communism and revolution. He starts suspecting his wife of infidelity and is jealous of her interactions with other men. He becomes paranoid and mistreats her harshly. Eventually he talks to her openly about his suspicion. Unable to bear the suffering, the innocent Madalena commits suicide. Thereafter, the educated people who were friendly to Madalena move away from Paulo. 

Becoming a landlord with enough wealth and respected status with an educated city girl as a wife does not give Paulo peace and contentment. His success has ironically isolated him and made his life lonely and impossible. He disdains both the labour class from which he came and the wealthy elite to which he belongs now. He is harsh on the workers and always complain that they are lazy and shirk responsibilities. He is suspicious of the educated and wily city folks as exploiters.  When a city newspaper carries articles critical of him, he confronts the editor and beats him with a horsewhip. When Madalena gives birth to a son, he does not have any tender feelings even to the child which is weak and sickly. Love and affection are absent in Paulo's vocabulary.

At the end, Paulo looks back at the ‘fifty years senselessly squandered, mistreating myself and mistreating others, with the result that I’ve grown hard, so callous that no scratch could penetrate this thick hide and hurt the blunted soul inside. If I see myself in a mirror, I’m upset by my own hard mouth and hard eyes. I bet I have a tiny heart, gaps in the brain, nerves different from other men’s. Not to mention an enormous nose, enormous mouth, and enormous fingers. If this is how Madalena saw me, she must have found me unbelievably ugly”.

Reflecting on his mistakes and achievements, Paulo starts writing his story with the title “São Bernardo”, which is the name of his farm. He tells his story in the language of the class he has left behind but for the benefit of the educated class he does not like. He writes the story the way he talks. It is a simple, plain, dry and linear story without any twists, turns or suspense. There is no mention of football, carnival, samba or beaches to remind readers of the lively Brazilian culture.  There is no Latin American Magical Realism. There is no Borgesian verbal acrobatics, labyrinthian plots or intellectual inventions. There are no quotable passages or pearls of wisdom. There is no need to check wikepedia. 

The language used in the novel by Ramos is typical of the rural areas of the Alagoas state northeastern Brazil. Alagoas is one of the smallest and poorest among the twenty seven states of Brazil. In the translator’s note, Padma Viswanathan has talked about the challenges she faced in translating the local expressions used in the novel. She had to take the linguistic help of native Brazilians. 

I found this novel of Ramos similar in some respects to the those of Jorge Amado, my favourite Brazilian author. Amado is also from the northeast part of Brazil but from the culturally richer state of Bahia. Amado uses a similar style of direct narration of stories and portrayal of characters.  But Amado’s characters are more colourful, playful and lively. Amado’s novels are encyclopedias of the expressions, traditions, festivals, food and rituals of the AfroBrasilians dominant in the Bahia region.

São Bernardo was originally published in 1934. Padma’s translation in English has just been released in May 2020. 

Graciliano Ramos is called as “the Faulkner of Brazil”. While William Faulkner became world famous and won Nobel prize, Ramos is not known outside Brazil. Faulkner had sympathy for such Latin American authors and established the Ibero-American Novel Project to find and publish the best novels from every South American country. Ramos’ other novel “ Vidas Secas” (dry lives) was chosen as Brazil’s representative for the Faulkner prize in 1962.

  

Padma Viswanathan herself is a well known author of two novels: The Toss of a Lemon and The Ever After of Ashwin Rao. She is an associate professor of creative writing at the University of Arkansas in Fayetteville, US.

Padma and I share the name Viswanathan. In her case it is a surname but for me it is first name. Viswanathan is a common urban South Indian name but rare in my Tamilnadu village, which has some similiarities with the interior of Alagoas state. Having been brought up amidst farms and cattle by an illiterate uncle, I could fully understand and share the rough and dry feelings of Paulo, the farmer character of the novel. Like Paulo, my uncle was suspicious of educated people. He was against my high school and college studies based on his firm belief that a little reading was enough to manage the lands and the cattle. The only guy who had a MA degree in our village became mad. His shouts and screams used to disturb our street in the nights. This was confirmation of my uncle’s fear that too much of reading could turn the head. Every time my uncle saw a book in my hands he would remind me of the mad man.

Like Paulo, my uncle never expressed any affection or uttered a  kind, encouraging or complimentary word to me. He never asked me what I liked or needed. I had to route my requests through my aunt, the proper channel. But he was very particular about the grassy area to which I should take the cattle for grazing and the type of grass I should cut and bring for the cows. I can never forget the public thrashing he gave me one day for taking the cattle for grazing to an area different from the one which he had indicated. Of course, he himself did not seek any pleasures or comforts or luxuries for himself. He lived an austere and simple life and was confined completely to the village for his whole life. He earnestly hoped that I would follow in his footsteps. But the books really turned my head but positively. I fought after every summer vacation to get back to the studies. The education helped me to escape from the village and to experience not only the cities in India but even Brazil for a few years. 

In her translator’s note Padma says “Paulo’s actions, attitudes and language lure us into uncomfortable regions of simultaneous sympathy and disidentification”. But with my origin from a village and the experience of my uncle, I found comfortable identification and resonance in the story of São Bernardo, which brought back my own saudade (nostalgia in Portuguese language) for my village and Brazil.  

Latin America, a victim of the supply-driven debt business and demand-driven drug business of US

The Latin American debt crisis caused by the supply-side debt business of US is the theme of the book “Debt and Crisis in Latin America: The Supply Side of the Story” by  Robert Devlin.

The author blames the predatory US bankers as equally responsible for the Latin American debt crisis as much as the reckless and corrupt Latin American governments which were willing victims and had mismanaged their economies. Devlin, an American economist, who works in the Economic Commission for Latin America and Caribbean, has extensive knowledge of both the creditors and debtors. He has done in depth case studies of Peru and Bolivia. His study is focused on the decades of seventies and eighties when large debts had accumulated and lead to crises. The debt crisis combined with the impact of neoliberalistic policies forced on Latin America by the US had made eighties as a “Lost decade” with increase in poverty and inequality.  The governments of the region had to cut down the budget for education, health and poverty alleviation and they were forced to use the export earnings for repayment of external debt. 

According to Devlin, the US bankers had taken the initiative in most cases to lend indiscriminately to some Latin American countries even when there was no clear need for borrowing. The banks went on a spree of loan marketing after they received large petrodollar deposits from OPEC countries in the seventies. The banks sought the markets of developing countries since the profitability in the  domestic US market was generally flat and the depressed  OECD economies had little demand for credit after the oil shock. Also the banks found that they had more freedom in the financing of foreign governments and corporations than in the domestic market which had tight regulations. The bankers proactively encouraged the Latin American countries to issue bonds and marketed them enthusiastically to gullible investors.

The banks chose their victims carefully. They went after those Latin American countries (Brazil, Argentina, Peru, Bolivia, Venezuela, Nicaragua, Chile and Mexico) which were misgoverned by illegitimate military dictators and corrupt caudillo presidents. These characters knew that they were in power only for a short time till the next coup or election and wanted to make the most money in the least time. They borrowed huge amounts knowing that they would not be there when the time for repayment would be due.

One country where the bankers did not succeed until 1980, was Colombia, which had a responsible policy of resisting the  bankers' overtures. The country had gained a reputation in financial circles as the "prickliest" borrower  in the developing world. The frustration of the banks to break into the Colombian market was so much that  the banks made the rare concession of not insisting on the waiver of sovereign immunity  by the government.

Bankers, by profession, are expected to be conservative, risk-conscious and prudent. They are supposed to do rigorous due diligence about the capacity of the borrower to repay. But the big brash US bankers did not care for such professional and traditional norms. They lent money freely for non-productive purposes. For example, in the case of Peru, 49 percent of the lending was to refinance old loans, 28 percent was of free disposition (totally untied), and  only 15 percent was directly linked to projects or capital goods imports.  In Bolivia, 18 percent of the lending went to refinance loans, 43 percent  were of free disposition, and 33 percent were linked to projects or capital goods imports.  The free-disposition loans  gave the freedom for the corrupt rulers to fill their Swiss Bank accounts or use it for personal and family business. 

Questioned on the environment in Lima during the development of the credit cycle in the early 1970s, one local banker remarked, "Foreign bankers wanted to give us the money  before we asked for it." An official from COFIDE, the Peruvian state development bank mandated to contract foreign loans for the public sector, has commented that during the 1970s, "the banks were  eager to lend and would lend for anything." 

Foreign borrowing was the way the Peruvian dictator Velasco maintained his position.  Ministries were the fiefdoms of the generals who headed them. Each  general did whatever he wanted. There was a lot of borrowing for corruption's sake: the generals wanted their kickbacks. They received their percentage from the contract regardless of the merits of  the project, so they borrowed for anything. Generals got rich from  the projects and banks wanted to lend; the merits of the project were  unimportant.

Some banks trapped the debtor countries in ponzi schemes. They made the countries dependent desperately on new loans to pay interest on the old ones and repay the instalment of the principal. 

The big bankers were careful not to take the risk by putting up their own money. They preferred to raise syndicated loans with contributions from dozens of other banks including a number of smaller banks from Europe and Japan. Big banks such as Citibank and Bank of America, who had presence and networking in the debtor countries, took the lead in raising syndicated loans. Typically they would put up ten percent or even less and raise the rest from other banks. The smaller banks in the consortium had less knowledge of the debtor countries and relied on the expertise and contacts of the lead banks. True to the herd mentality, banks did not want to be left out and rushed to join the big syndicated loans.

One immediate advantage for the lead bank was that one-fifth of its own return on the loan came from fees that were paid up front and risk free.  This provided an incentive to churn large loan volumes. Bigger the loan, larger was the fees. In 1973 to 1974 Peru's loan syndications were frequently oversubscribed, meaning that more money was generated and pumped into the country than the government needed.

Secondly, syndication spread the risk among so many other banks. If the client did not behave, the banks would gang up and use their collective strength to bully and bargain. It was also a clever way of political insurance. If the debtor country were to default, the governments of Europe and Japan whose banks were part of the consortium, could be counted on to put political pressure on the debtors. The lenders could also count on the clout of these countries in IMF and World Bank to turn the screws on the debtor country. So, the debtor is trapped and faces punishment and isolation from the entire western capital market. This actually happened in the case of Argentina after the country restructured its debt in 2002 on its own terms defying IMF and the governments of US and Europe. Argentina was thereafter shut from access to all bilateral, multilateral and private finances in the western world.

After the Wall Street bankers killed and took the best part of the meat of the hunt, the vulture funds from US descended on the left over corpses to feast on the left overs. They bought the Latin American bonds for pennies and forced the governments to pay the full value plus interest and made obscenely enormous profits. They did this with help from the US Congress, government and judiciary. For example, NML capital of New York paid 49 million dollars for Argentine bonds worth 832 million dollars. They harassed and blackmailed Argentine government and forced them to pay over a billion dollars as settlement. More on this https://latinamericanaffairs.blogspot.com/search?q=vulture+funds

Many Latin American governments had learnt lessons from the past debt experience and have now become more prudent in taking external debts. But a few continue to repeat the past mistakes. Argentina has been trapped yet again in a debt crisis now, after having come out victorious in the fight against the greedy bank creditors and vulture funds in 2002. 

Drug business

In contrast to the supply-driven debt business, the drug business is demand-driven by the US consumers. Millions of Americans pay billions of dollars for the Latin American supply of cocaine. According to a study by Rand Corporation the business of Cocaine was valued at 28 billion dollars in 2012. This is part of the total US business of over 100 billion dollars Including heroine and other drugs. Here is the share of the stake holders in the drug business according to the Netflix documentary “The business of Drugs”: 

The Colombian coca leaf producer gets 500 dollars for a ton of leaves from which 1 kg of cocaine is made. The Cartels which process them into cocaine get 5000 dollars for a kilo. When it reaches Mexico its value increases to 12,000 dollars. And finally, the American consumer pays 100,000 dollars for a kilo or 100 dollars per gram. This means out of every 100 dollars of cocaine business, the Colombian farmers get just 50 cents while the Colombian cartels get 5 dollars and their Mexican counterparts 7 dollars. This means that 88 dollars out of 100 dollars in cocaine business is within the US itself. So, if the US wants to stop the use of cocaine it has to cut off the 88 dollar link. But the US government covers up this reality and maligns the Colombians and Mexicans. This is not just unfair but egregiously wicked. The US has changed the narrative and mislead the world with its so-called drug war in which Latin America is portrayed as villain, as in the Netflix serial “Narcos”. My blog post on this https://latinamericanaffairs.blogspot.com/search?q=narcos

In any case, if Latin America stops supply, it is not such a big deal for the US consumers. They have other options: heroine, synthetic drugs and opioids from other external as well as internal sources.  

The drug war spawns yet another business for US. The counterdrug funding is $35.7 billion in the US 2021 budget. The US Drug Enforcement Authority (DEA) gives billions of dollars of contracts for supply of surveillance helicopters, aircrafts, patrol boats, x-ray and other equipments to detect cocaine shipments in airports and ports. Besides selling to US ports, airports and DEA, the US government forces these items down the throat of the Latin American governments in the name of drug war cooperation. There is a huge US business lobby with a vested interest in the continuation of the multibillion dollar drug war.

While the drugs come into US from Latin America, there is a reverse trafficking of guns worth millions of dollars into Latin America from US. According to a study of University of San Diego, over 200,000 guns are smuggled from US to Mexico every year. On average, there are more than three US gun dealers for every mile of the 1,970-mile border between the countries. A significant proportion of the US gun sellers depend on the illegal demand from Mexico. It has been reported that over three fourth of the guns used in the fights between the gangs in El Salvador are of US origin. The illegal American guns kill more Latin Americans than the number of Americans killed by cocaine. 

Also there is illegal transfer of billions of cash dollars from US to Latin America in exchange for the drugs. American banks have been caught in the drug money laundering of the Latin Americans

The US government does nothing much about the trafficking of guns and dollars and makes noise only about the drug trafficking. 

Addiction to drugs and debt

Both the drug and debt businesses have resulted in addiction. The Americans have got addicted to Latin American drugs and the US bankers have made the Latin Americans get addicted to debt. 

While there are prospects for the Latin Americans to come out of the debt addiction, there does not seem to be any hope for end of the US addiction to drugs in the near future.



India’s exports to Latin America at 13.2 billion dollars in 2019-20, the highest in the last five years

India’s exports reached 13.2 billion dollars in 2019-20 (April-March) from 10 billion in 2015-16, according to the figures just released by the Commerce Ministry of India.

Brazil came back this year to claim its position as the # 1 destination of India’s exports to the region, with 3.97 billion dollars, overtaking Mexico.

The other major destinations were: 

Mexico 3.62 billion dollars, 

Colombia 1.04 billion, 

Chile 793 million, 

Peru 764 m 

Argentina 763 m. 

Surprisingy, exports to Venezuela doubled to 340 m doubling from 165 m in 2018-19

Exports to Mercosur was 5005 million, Pacific Alliance 6223 m, CAFTA (Central America + DR) 1200 m and others 754 m

Major exports

Vehicles     3231 million dollars

Chemicals 2576 

Machinery 1426

Textiles     1058

Diesel         1049

Pharma     962

Cotton.     359

Plastics.    386

Iron and steel 394

Aluminium products 342

Rubberproducts 264

Car exports

Latin America accounted for 28% of India’s global car exports of 6.7 bn dollars. Mexico was the second largest global market for Indian cars after US.

Other major destinations: Chile 178 m, Peru 139 m, Paraguay 44m,  Bolivia 42 m, Colombia 37 m and Guatemala 31 m.

Motorcycles

India was the second largest supplier of motorcycles to Latin America with 458 million dollars. This is 22% of India’s global exports of 2.1 bn.

Major destinations were Colombia 228 million dollars,  Mexico 69 m, Guatemala 54 m and Peru 20 m. Colombia was the second largest global market for Indian motorcycles after Nigeria. Indian brands are market leaders in Colombia and Guatemala. Hero Motors has invested 80 million dollars in a production plant in Cali, Colombia.

Pharmaceuticals

India is the fifth largest supplier of pharmaceuticals to Latin America. Major destination of India’s pharma exports:  Brazil 297 million dollars, Chile 93 m, Peru 69 m, Colombia 65 m, Mexico 64 m, Guatemala 44 m, Venezuela 39 m, Dominican Republic 39 m and Ecuador 30 m.

India’s exports to Latin American countries in comparison to neighbours and traditional trading partners

India’s exports to some of the distant Latin American countries were more than the exports to neighbouring countries or traditional trade partners with same or more population.

Examples:

- 213 million dollars to the Dominican Republic (population 11 million) vs 188 m to Cambodia (population- 16 m)

-253 m to Ecuador ( pop-18 m)  vs 202 m to Kazhakstan (pop- 19 m)

-185 m to Honduras (pop 10 m) vs 180 m to Uzbekistan (pop 33 m)

-1043 m to Colombia (pop 50 m) more than the exports of 933 m to the neighbouring Myanmar (pop 53 m)

-3.97 bn to Brazil and 3.6 bn to Mexico vs  exports to Russia (3.02 bn), Nigeria (3.61 bn), Egypt (2.5 bn), and Canada (2.85 bn)

India exported more motorcycles (228 million) to Colombia than to neighbouring markets such as Sri Lanka (176 m), Nepal (198 m) and Bangladesh (156 m). 

India’s car exports to Chile at 178 million dollars are more than the exports to Nepal (107 m), Bangladesh (72 m), Sri Lanka (40 m) and Myanmar (15 m).

Service Exports

TCS had an annual turnover of 700 million dollars in 2019 in Latin America. This includes services to local clients as well as to those in North America and Europe. TCS employs 17560 Latin American staff in the region. 

The annual turnover of all the two dozen Indian IT, BPO and KPO firms in Latin America should be around 1.5 billion dollars.

Indian manufacturing companies in Latin America

UPL has an annual turnover of over 2 billion dollars with its plants making agrochemicals and development of new seed varieties in Brazil, Argentina and Colombia. UPL, the largest Indian agrochemical firm, has a larger business turnover in Brazil (1.2 billion dollars) than its business in India.

Aditya Birla’s group company Novellis has Aluminium and carbon black plants in Brazil with an annual turnover of 2 billion dollars.

Mothersons Group, the autoparts major with a worldwide revenue of 11 billion dollars has over a dozen plants in Mexico and Brazil generating 9.2 % of its global revenue, which amounts to about a billion dollars.

There are a number of other Indian companies operating in the region in energy, pharma, tyres and other sectors. 

The annual revenue of the Indian manufacturing companies in Latin America should be around 6 billion dollars. 

Imports

As in the past two decades, Venezuela continued to be the main sources of imports in the region with 6.06 billion dollars. Other main sources: Mexico 4.3 billion, Brazil 3.07 bn, Argentina 2.33 bn, Peru 1.58 bn, Chile 1.18 bn, Bolivia 846 m and Colombia 811 m.

Main import items

Crude oil  11009 million dollars

Gold.         3743

Veg oil.     2188

Copper.    1079

Machinery 612

Chemicals 426

Wood        349

Iron&steel 332

Raw Sugar 249

Plastics.     162

Fruits& veg 158

Pharma.     86

Sources of crude oil imports: Venezuela 6.03 billion dollars, Mexico 3.3 bn, Brazil 1.1 bn, Colombia 290 m and Ecuador 254 m.

Gold import sourcing: Peru 1424 million dollars, Bolivia 843 m, Colombia 420 m, Brazil 369 m, Dom Republic 339 m and Argentina 190 m.

Argentina was the second largest (overtaking Malaysia) source of edible oil in the world with 1.95 billion dollars after Indonesia. 

Trade 2019-20

Country	exports	imports	Total trade
Mexico	3623	4297	7920
Brazil	3967	3072	7039
Venezuela	340	6057	6397
Argentina	763	2327	3090
Peru	764	1575	2339
Chile	793	1176	1969
Colombia	1043	811	1854
Bolivia	113	846	959
Ecuador	253	362	615
Dom Republic	213	361	574
Panama	239	76	315
Guatemala	291	23	314
Uruguay	148	57	205
Honduras	185	19	204
Costa Rica	127	49	176
Paraguay	127	25	152
El Salvador	79	3	82
Nicaragua	66	4	70
Cuba	48	4	52
Total	13182	20669	33851

Decade of trade from 2010-11 to 2019-20

India’s exports had increased from 10.04 billion dollars in the beginning of the decade to 13.7 bn in 2014-15. But the Latin American recession and economic difficulties caused a dip in India’s exports in 2015-16. Since then the exports have increased steadily to 13.18 bn in 2019-20.

India’s exports reached a peak of 31.38 billion dollars in 2012-13 due to the high crude oil prices and large volume of India’s imports from Venezuela. But since then, the oil prices have come down and due to US sanctions, the volume of imports from Venezuela has also reduced. Reliance, the main importer of Venezuelan oil had suspended Venezuelan oil imports in the second quarter of 2020. But it has resumed imports in July 2020.

The annual India-Latin America trade had reached a peak of 44.08 billion dollars in 2013-14 due to the high oil prices and large crude imports from Venezuela.

Year	exports	imports	Total trade
2019-20	13.18	20.67	33.85
2018-19	13.16	25.7	38.89
2017-18	12.1	24.4	36.45
2016-17	10.4	19.6	30
2015-16	10	19.7	29.7
2014-15	13.7	29.3	43
2013-14	12.77	31.31	44.08
2012-13	12.48	31.38	43.86
2011-12	11.33	18.42	29.75
2010-11	10.04	14.01	24.05

Market

Latin America, the region of 19 countries, has a total population of 620 million and GDP of 5.6 Trilion dollars. The region’s imports were 1.07 trillion dollars and exports 1.06 tn in 2019. 
Mexico was the top trader with imports of 467 bn and exports of 472 bn. 
Brazil's imports were 177 bn and exports 223 bn. 
Surprisingly, Chile is the third largest trader with imports of 65 bn and exports of 64 bn. Argentina's imports were 65 bn and exports 49 bn
Peru imports 42 bn and exports 45 bn
Colombia imports 40 bn and exports 42 bn. 

There is potential for India to increase its exports to about 20 billion dollars in the next five years if the Indian exporters and government intensify their export promotion seriously and systematically. Although the region’s imports will decrease by over 10% due to the 9.1% GDP contraction forecast for 2020, India can certainly increase its share in the region’s imports. 

For example, India can double its pharma exports to 2 billion to Latin America whose annual global imports are around 25 billion dollars. Motorcycle demand is going up in the region, consequent to the need for social distancing after the corona pandemic. This provides an opportunity to take India’s exports to a billion soon.

At this time of austerity, Latin Americans look for affordable products from less expensive sources. Although China fits this expectation, the Latin Americans seek to reduce their overdependence on China with which there is growing trust deficit especially after the Corona virus which originated from Wuhan.

The Latin Americans appreciate the fact that India was the seventh largest destination for Latin America's global exports in 2019 and the third largest in 2018. India is the #1 market for their exports of vegetable oil, #3 for crude oil and #4 for gold. They perceive India as a large growing and transparent market and as the trusted and respected land of yoga, meditation and Gurus at this stressful time of the Wuhan virus.