Weekly Roundup: Venezuelan Intel, a Canadian Cap-and-Trade System, and a Mercosur Invite

Venezuelan Intelligence Agencies Revamped

Venezuelan President Hugo Chavez signed a new intelligence law on May 28 that eliminates the intelligence agencies and replaces them with four specialized entities. The decree has been fiercely criticized by human rights groups, judges, and scholars who say it will coerce citizens to denounce individuals in order to avoid jail time. Blanca Rosa Mármol de León, a judge in the country’s top court, voiced judicial dissent, saying, “I have an obligation to say this, as a citizen and a judge. This is a step toward the creation of a society of informers.” The New York Times reports on disgruntled reactions from several sectors of Venezuelan society. The controversial reform draws comparisons with Cuban-style community-monitoring committees who assist on gathering intelligence on citizen activities. The government defended the measure, saying it helped support national security in the face of U.S. interference.

Presumptive Presidential Candidates on Latin America

Senator Barack Obama clinched required number of delegates needed for the Democratic nomination Tuesday. In recent weeks, as the party’s primaries drew to a close, Obama and presumptive Republican nominee outlined each of their policy proposals for U.S.-Latin American relations. Obama plans to reinstate the special envoy to the Americas position, engage Venezuela and Cuba diplomatically, amend NAFTA, revise the pending free-trade agreement (FTA) with Colombia, and establish an energy partnership with Brazil. Read his recent remarks on the region.

On the other hand, McCain vows to maintain the Cuban embargo; support the approval of the FTA with Colombia; resist dealings with Venezuela’s president; and foster closer ties with Brazil, Peru, and Chile. Read the transcript of his last speech on Latin America.

U.S.-Mexico Merida Initiative Debate

Mexican officials said they will refuse money from Washington apportioned by the Merida Initiative, a proposed anti-drug aid package, if the U.S. Congress links certain legal provisions to the funds, reports the Dallas Morning News. Both houses approved the package, but lowered its dollar value and have not yet reconciled the bills. On Tuesday, Mexican Interior Secretary Juan Camilo Mouriño said the bills, “in their present state, are unacceptable to our country.” Mouriño said México had not requested unilateral aid and said the final agreement should “guarantee full respect for the sovereignty and internal legislation of Mexico and the United States.” The Woodrow Wilson Center provides a comprehensive page of links to policy briefs, analysis, and official documents related to the Merida Initiative.

In an El País op-ed, security consultant and former Salvadoran guerilla Joaquín Villalobos takes a critical look at the role of U.S. drug consumption in Mexico’s drug war and recognizes Mexico’s deep commitment to taking back control of territory controlled by the cartels. Villalobos also warns that the drug war could push cartels to relocate into weaker Central American countries.

Mexico’s Food Subsidy Package

In addition to internal security challenges, Mexico faces possible instability as a result of rising grain prices. President Felipe Calderón announced subsidies to help Mexicans cope with the crisis. A Stratfor analysis says the economic package will cost $21 billion and says the program could put the Calderón government on shaky financial ground as it battles security and economic issues.

Read a new AS/COA analysis on how the worldwide increase in food prices affects the Americas.

Brazilian Economy Maintains Positive Outlook

Credit ratings’ agency Fitch upgraded its sovereign rating to investment grade level from BB+ to BBB-. This move follows Standard & Poor’s upgrade a month ago. According to the RGE EconoMonitor blog, this move dispels the idea that high commodity prices served to give Brazil the “good luck” of earning an improvement. The analysis also warns about Brazil’s high gross public debt, which amounts to 57 percent of its GDP.

A Brazilian Energy Model

Besides its positive economic outlook, Brazil also posseses a model for energy conservancy based on its own experience dealing with an increasing energy demand and intermittent droughts. IDB’s magazine IDBAmérica covers a Brazilian energy efficiency plan implemented in 2001, when Brazil faced a severe drought which threatened to cripple a vast portion of its hydroelectric capacity. Brazil reduced overall energy consumption by 20 percent, and new studies calculate that growth in energy demand could be cut in half if comprehensive conservation measures are quickly applied.

The Petrobras Powerhouse

An analysis by the University of Pennsylvania’s Universia Konowledge@Wharton, new discoveries and rising investment have helped make Brazilian Petrobras well-prepared to withstand a global oil crisis. This company’s strong performance has catapulted it into the top 10 biggest oil firms in the world and made it a powerhouse in terms of state-of-the-art technology for deepwater exploration.

Argentina’s Farmers Renew Protests

Agricultural leaders in Argentina restarted demonstrations this week in protest of grain export taxes imposed in March despite a government pledge to lower the export tax rate. Newsweek’s Why It Matters blog examines the months-long standoff between the farmers and the new administration of Cristina Fernández de Kirchner, noting that 68 percent of Argentines support the protesting farmers. “The middle-class is once again alert—and angry,” according the analysis.

Canadian Provinces Compromise on Global Warming

Ontario and Quebec agreed on a cap-and-trade system with the goal of reducing harmful emissions that cause global warming. The system should be operational early 2010. The Globe and Mail reports that the political move is designed to push Ottawa into finally tackling the environmental threat.  In response, Canadian Environmental Minister John Baird criticized the plan because its lack of clear emissions’ reduction targets.

Central America’s Climate Change Struggle

Climate change disproportionately affect Central America, a region that  produces less than 0.5 percent of global carbon dioxide output. The Economic Commission for Latin America and the Caribbean (ECLAC) announced a new study aiming to raise awareness about regional and national initiatives necessary to offset economic losses due to higher temperatures, rising sea levels, and changes in rain patterns.

SICA Invited to Join Mercosur

In his most recent visit to San Salvador, Brazil’s President Luiz Inácio Lula da Silva called for the Central American Integration System (SICA) to join with Mercosur, who also campaigned for the use of Brazilian ethanol as a fuel alternative Central America. Trade between the two blocks rose from $594 millions in 2003 up to $1.7 billion in 2007.

President Alan García’s Second Chance

AméricaEconomia profiles Peruvian President Alan García and his much improved performance in his second term as head of state. Perú experienced a surprising comeback from almost insurmountable hyperinflation in the early 1990s into a dynamic financial system with growth rates around 8 percent and one of the lowest inflation rates of the region. But inequality remains the prime obstacle for García’s administration in terms of moving forward with development programs.

A recent article by COA Vice President Eric Farnsworth examines how Peru has successfully repositioned itself in the global economy.

During a recent AS/COA event on the Andean region, JPMorgan’s Luis Oganes discussed high levels of foreign investment in Peru and Colombia as signs of growing confidence in both countries’ economies. Listen to the audio of the round table.

Colombian Peso Revaluation Raises Concern

Bloomberg reports on what appears to be Colombia’s peso nine-year high against U.S. dollar. The peso reached 1,725.25, a mark not seen since June 30, 1999. Colombian Finance Minister Oscar Ivan Zuluaga called it “catastrophic” and said that the Central Bank is committed to continue raising the key interest rate as a measure to stop the revaluation and stem inflation.

More Bolivian Regional Autonomy Votes

The Beni and Pando provinces of Bolivia voted overwhelmingly in favor of greater regional autonomy from the central government on June 1. Following exit-poll results that showed that more than 80 percent of voters supported the “si” ballot, President Evo Morales convened a close-door emergency meeting without an announced agenda. These votes came less than a month after Santa Cruz province voted overwhelmingly in favor of autonomy. According to IPS News, Interior Minister Alfredo Rada denounced that the referendum as unconstitutional and illegal. Another referendum is scheduled on June 22 at the Tarija region. The Morales administration called an August 10 recall vote for the offices of president, vice president, and all nine region prefects.