Weekly Roundup: Quito Defaults, Uribe's Reelection, and a LatAm Summit

Ecuador Defaults on Debt

President Rafael Correa of Ecuador announced Friday that his country will default on its foreign debt for the second time in a decade. Speaking at this week’s Latin American conference in Brazil, Correa also said he plans to sue bondholders should they reject Quito’s proposal to restructure global bonds, reports El Comercio. As the Washington Post reports, Correa’s decision to default for ideological reasons (he called lenders “monsters”) has some worried that the move could inspire other countries to take similar steps or scare off emerging market investors. But others note the Andean country’s $3.9 billion in global bonds is relatively small. Correa’s decision means Ecuador likely will end use of the dollar as its currency, reports Bloomberg.

Felix Simon blogs for Portfolio that Correa’s decision could lead to Quito’s loss of access to U.S. markets through the Andean Trade Promotion and Drug Eradication Act, given that Ecuador is “refusing to pay what it owes not because it can't pay but just because it wants to score political points.” Washington may be further displeased by Correa’s increasingly cozy relationship with Iran.

Brazil Leads at Latin American Summit; U.S. Absent

Presidents from more than 30 Latin American countries met this week in Salvador de Bahia this week for a summit aimed at deepening integration. As the host, Brazil shone as a regional leader, sending the Brazilian air force to transport presidents from poorer countries, reported the New York Times. Infolatam reports that President Luiz Inácio Lula da Silva, speaking at this first Cumbre de América Latina y el Caribe (CALC) called for Latin America to serve as protagonists rather than “mere spectators” in international decision-making fora about the global economy.

While Washington was not included in CALC, Cuban President Raúl Castro was present and on his first foreign official travel since assuming power. Leaders used the occasion of the summit to call for an end of the U.S. embargo against Cuba, with Bolivian President Evo Morales suggesting that all Latin American nations should expel U.S. ambassadors until the United States agrees to lift the blockade. Cuba was also accepted as a member in the Rio Group.

Read more about Castro’s first foreign travels as president as well as what a new U.S. administration could mean for relations with Cuba.

UNASUR Delays Leadership Choice

On the sidelines of the summit in Brazil, the Union of South American Nations pushed off its choice for a secretary general and ratification of a multilateral treaty until the end of April next year. Although former Argentine President Nestor Kirchner commands a majority of support from member countries, Uruguay objects to his nomination. Montevideo’s reluctance likely stems from an ongoing dispute over a paper mill on the Uruguayan side of the border river between the two countries.

The Cuban Revolution: Five Decades Later

The Miami Herald offers an interactive look at Cuba and U.S.-Cuban relations in the half century since the island’s revolution. The 10-part series will include interviews, videos, and photos on topic ranging from U.S.-sponsored refugee resettlement to the role played by Afro-Cubans to female political prisoners known as “plantadas.”

Argentina Unveils Massive Stimulus Package

Financial Times reports on Argentina’s plan to invest nearly $33 billion in public works to boost the economy. That amount represents an increase over the $20 billion proposed by the Fernández de Kirchner government last month and will support infrastructure and energy projects.

Argentina does not stand alone in its efforts to head off the global financial crisis through stimulus plans; the Los Angeles Times reports about similar measures undertaken in Brazil, Mexico, and Peru to avoid the erasing of economic gains made in recent years.

Buenos Aires to Nationalize Aerolíneas Argentinas

Argentina’s Senate approved legislation Wednesday allowing for a government takeover of Aerolíneas Argentinas, now owned by Madrid-based Grupo Marsans. The Spanish firm may protest the nationalization; while Grupo Marsans said the airline is worth $440 million, the Argentine government plans to pay one Argentine peso, saying the Aerolíneas Argentinas—troubled by strikes and cancellations—has run up a debt of nearly $900 million.

Colombian Congress Weighs in on Uribe Reelection

Colombia’s lower house of Congress convened for a special session that lasted into the early morning hours on Wednesday to approve a bill allowing President Álvaro Uribe to run for a third term, but not until 2014. However, hours later, Interior Minister Fabio Valencia said the text of the bill could be changed to allow Uribe to run for a third consecutive term in 2010, reports El Espectador.

The Kidnap of a Kidnapping Expert in Mexico

An American anti-kidnapping expert was himself kidnapped in the Mexican border state of Coahuila. Felix Batista, a consultant from a Houston-based firm, has worked for 20 years as a security consultant in Latin America and helped negotiate the release of almost 100 kidnapping victims, including in Colombia and Mexico. Ana Maria Salaza, host of Imagen News, includes in her blog “Mexico Today” her interview with Batista with tips to avoid getting kidnapped.

Negotiating with Drug Cartels: A Means to an End?

On the heels of news that murders related to drug trafficking in Mexico doubled this year over last, the Harvard International Review blogger Jason Lakin proposes direct negotiations with cartels to end the war. He suggests that, without drug decriminalization and should more aggressive military action fail, talks with the cartels may be an option. “Negotiating a ‘live and let live’ accord with the drug lords would allow the cartels access to what they want (secure drug routes) and reduce the need for violent confrontation,” writes Lakin.

A recent analysis featured on openDemocracy.net examines prospects and possibilities for drug decriminalization in Mexico, as well as in other Latin America countries plagued by the drug trade and related violence.

Bill Richardson’s New Post

In a blog post for the Americas Quarterly website, AS/COA’s Christopher Sabatini writes about President-elect Barack Obama’s choice of New Mexico Governor Bill Richardson for the role of U.S. Commerce Secretary. Obama has appointed a team that has “committed publicly to free trade and (in the case of Governor Richardson) hemispheric integration,” writes Sabatini.

Chile High, Cuba Low in Democracy Transparency Ranking

Buenos Aires-based Centro para la Apertura y el Desarollo de América Latina released its annual “Democracy, Market, and Transparency” report, which ranks countries’ development based on those three areas. New Zealand ranked first, Myanmar last. Chile led Latin America in spot 17 while Venezuela, Haiti, and Cuba ranked low.

Corruption’s Effect on Business: U.S. vs. Latin America

James G. Tillen and J. Matteson Ellis of Miller & Chevalier Chartered write in RGE’s Latin America EconoMonitor that, despite media frenzies over U.S. corruption scandals involving Alaskan Senator Ted Stevens and Illinois Governor Rod Blagojevich, few business people are concerned about corruption on a day-to-day basis in the United States compared with in Latin America. According to their firm’s survey, nearly half of the respondents believe corruption hinders business operations in Latin America and nearly 60 percent feel they have likely lost business to competitors as a result. On a brighter note, two-thirds say fighting corruption has become a top priority in their firms during recent years. Tillen and Ellis argue that companies working in the region can safeguard against corruption by adopting and following laws to fight bribery.

LatAm IT Firms Take Financial Hit, Find Ways to Cope

A feature in AméricaEconomía takes a hard look at how the global financial has dealt a blow to Latin American information technology (IT) industries, which, until recently, were growing at accelerated rates on the back of regional growth. But the article also suggests that, even as IT firms from Mexico to Brazil lower sales estimates for next year, opportunities abound in a region that attracted the world’s fastest growth in IT investment in the past few years.

Pack Your Suitcases

Condé Nast Traveler released its list of the Americas’ top 10 cities to visit, based on readers’ choices. Buenos Aires topped the list—as it did last year—while Vancouver and Quebec City took the silver and bronze. All told, five Canadian cities made the top 10.