Weekly Roundup: Effect of U.S. Crisis, Peru Earns S&P Grade, and a LatAm Tourism Boom

The Effect of the U.S. Financial Crisis on Latin America

Latin American equities’ markets felt the ripples of the U.S. credit crunch; they closed trading session with mixed results on July 15, reflecting nervousness among investors about the uncertainty of how the American government is going to prevent more meltdowns in the financial system. Writing for the RGE EconoMonitor blog, former President of the Central Bank of Brazil Antonio Carlos Lemgruber examines the Brazilian and Swedish lessons of how the Federal Reserve should cope with the U.S. financial crisis.

Speaking at AS/COA’s annual Latin American conference in São Paulo last week, Brazil’s Central Bank President Henrique Meirelles explained that most of the emerging economies have working toward fighting inflation and controlling the high commodities’ demand triggered by the U.S. credit debacle.

Standard & Poor’s Grants Investment Grade to Peru

Following in Brazil’s footsteps, Peru earned investment grade status (BBB-) with Standard and Poors, demonstrating a vote of confidence based on low levels of inflation and strong macroeconomic performance, reports MarketWatch.

Argentina’s Senate Votes Down Agri Exports Tax

After 18 hours of deliberation Wednesday, Argentina's Senate voted against a controversial agricultural export tax imposed by the administration of President Cristina Fernández de Kirchner in March. The tax sparked protests by farmers and their supporters since March, as protesters repeatedly paralyzed the country by setting up roadblocks. In the July 16 senate vote, Kirchner's own vice president, Julio Cobos, cast the deciding vote to end the tax in what the International Herald Tribune calls "a severe political blow" to the president.

Where U.S.-Venezuelan Relations Went Wrong

In a Los Angeles Times “Dust-Up,” New America Foundation’s Andrés Martinez debates with Angelo Rivero Santos, deputy chief of mission of the Venezuelan Embassy, why U.S.-Venezuelan relations are seen to have hit a low point, even as trade between the two countries in recent years. Rivero blames the Bush administration’s foreign policy while contends that Caracas has limited influence on U.S. policy in the region, saying, “[I]t's far more likely that the nation calling the alternative shots is Brazil, not Venezuela.” 

What an Obama Victory Could Mean for Chávez

A Christian Science Monitor article posits that an electoral victory by presumptive Democratic nominee Barack Obama could harm Venezuelan President Hugo Chávez. “His anti-Bush diatribes resonate in Venezuela and have helped insulate him from growing criticism that he neglects domestic affairs,” reports Sara Miller Llana.

Petrobras: Production on Track

Despite a five-day strike in the principal area of Petrobras oil production, the Brazilian state oil firm affirmed that its production remains at normal levels. Initially, when strikers began their protest on Monday morning, they paralyzed production at 12 platforms that account for more than 20 percent of Petrobras production. By noon, Petrobras had brought production to 4 percent below normal production and normalized levels by the end of the day, according to an Infolatam report. Protesters demand that Petrobras count the day workers leave platforms to travel to the shore as a working day. Negotiations could end the strike before Friday, its scheduled conclusion date.

The Sugarcane vs. Corn Ethanol Battle

The Wall Street Journal’s Environmental Capital blog examines the U.S. congressional battle over the $0.54 per gallon import tax on Brazilian ethanol, “the archrival to U.S. ethanol makers.” As Kenneth Rapoza, reporting from São Paulo, notes Brazilian ethanol sells for $0.90 less a gallon and that corn ethanol producers are concerned about the impact on their industry should Congress reduce the import tax to lower gas prices.

Oil Reserves Found in Paraguay

An American oil drilling company called Pantera Petroleum announced the discovery of a pocket of oil in northern Paraguay with proven reserves of 129 million barrels. The discovery is significant because previous attempts since 1957 to find oil bare no fruit until now, reports AméricaEconomía.

Calderón’s Second-Year Challenges

World Politics Review takes a look at the second year in office for Mexico’s President Felipe Calderón, indicating that the honeymoon period, indicated by his high approval ratings during his first year in office, appears to be over. Public support continues for the Mexican leader, but he faces obstacles to his plans for energy reform, the challenge of weathering global market volatility, and an increasingly violent drug war.

Cantarell’s Shrinking Production

Last year, output at Mexico’s—and one of the world’s—largest oil fields plummeted by a third, reports the Financial Times. This news indicates that Mexico could lose energy self-sufficiency in the medium term. The administration of Felipe Calderón hopes this news will give weight to the argument that the country’s energy policy requires greater flexibility in service contracts between Pemex and third parties in order to attract investment. However, the reform faces an uphill battle as it undergoes a lengthy, divisive debate in Mexico’s Congress.

Read an AS/COA hemispheric update about the proposed energy reform in Mexico.

Chile’s Reconfigured Rice and the Food Crisis

The University of Pennsylvania’s Universia Knowledge takes a look at one possible way to ease the problem of the food price crisis: through creating a type of reconfigured rice through technology created by the University of Santiago in Chile (USACH). The rice is created from discarded materials left over from cutting rice. USACH experts involved in the project say that, while the profit margin remains limited at this time, demand could grow and reconfigured rice could become a Chilean export product.

Canada Returns First U.S. Deserter from Iraq War

For the first time, Canada expelled a U.S. Army deserter who fled to Canada to avoid deployment to Iraq. Roughly 200 U.S. military personnel have sought refuge in Canada since the war began. The only legal avenue for deserters to gain asylum in Canada is through a refugee claim process typically employed by asylum seekers from unstable countries.

Salvadoreans in the U.S. Wanted as Investors

The Boston Globe reports on a recent trip made by several Salvadorean officials to Massachusetts—which has a large Salvadorean population—in an effort to court their paisanos to invest in the promising tourism industry sector and eventually return to their country.

A Latin American Tourism Boom

The region had another record-breaking year in terms of tourism in 2007, reports Latin Business Chronicle.  Panama’s tourist market stands as Latin America’s fastest-growing, Uruguay commands the largest growth in receipts, and the Dominican Republic has the region’s highest rate of receipts as a percentage of GDP.