Venezuela is falling apart (May 17, 2016)

Venezuela is falling apart, is pretty much the main theme in foreign press coverage of the country these days. An insightful article in the Atlantic by Moisés Naím and Francisco Toro attempts to give a broader picture of the magnitude of the situation, beyond the now-common stories of chronic shortages, lines and protests. (See yesterday's post.)

"Developing countries, like teenagers, are prone to accidents. One pretty much expects them to suffer an economic crash, a political crisis, or both, with some regularity. The news coming from Venezuela—including shortages as well as, most recently, riots over blackouts; the imposition of a two-day workweek for government employees, supposedly aimed at saving electricity; and an accelerating drive to recall the president—is dire, but also easy to dismiss as representing just one more of these recurrent episodes.

"That would be a mistake. What our country is going through is monstrously unique: It’s nothing less than the collapse of a large, wealthy, seemingly modern, seemingly democratic nation just a few hours' flight from the United States."

They blame chavismo, and share some powerful vignettes of life with medical shortages, increasing crime and a spreading Zika epidemic.

Venezuela's crisis is becoming untenable, and "the threats Venezuelans face today are not the result of foreign or domestic conspiracies, but [President Nicolás] Maduro's disastrous leadership," argues a forceful New York Times editorial. The piece criticizes Venezuela's government for avoiding long-term economic solutions, such as seeking IMF funding.

"Over the past decade and a half, Mr. Chávez and Mr. Maduro made spending on welfare benefits their top priority to keep their base loyal, while neglecting institutional reforms that would have diversified the country’s revenue sources and made lasting improvements to the education and health systems." 

Yet Maduro could still make it through his term, Inter-American Dialogue president Michael Shifter told the Latin American Advisor. "The opposition remains relatively weak and divided, unable to capitalize on its majority in the national assembly to drive the country’s political dynamics and policy agenda."

Perhaps international invasion will be the only means of ousting Maduro. Former Colombian President Álvaro Uribe proposes military intervention, reports TeleSur.

In the meantime, Venezuela's government says it has reached a deal with China to improve the conditions of an oil-for-loans deal, giving the country lee-way ahead of heavy debt payments, reports Reuters. (See yesterday's post.)

The government is also trying to invite multinational corporations back to the country's mining industry -- but up to 100,000 illegal miners and armed gangs, some of whom appear to have a good working relationship with local military commanders, severely complicate the situation, reports the Wall Street Journal.

News Briefs

• Gang violence in Latin America has become the main challenge for aid agencies working in slum neighborhoods, reports Reuters. Next week at the first World Humanitarian Summit, a Global Alliance for Urban Crises will be launched, bringing together U.N. agencies, international aid groups, the private sector and researchers. A key issue at the summit will be the need for aid groups to adapt to fast-changing realities in growing cities in the developing world.

• The U.S. Drug Enforcement Administration (DEA) is investigating a case related to the secret recording in which a top Peruvian politician states that he laundered US$15 million for leading presidential candidate Keiko Fujimori in a previous campaign, reports InSight Crime. Fujimori says the allegations are part of a smear campaign, three weeks ahead of the runoff election in which she will face off against Pedro Pablo Kuczynski, reports Reuters.

• U.S. and Colombian labor unions filed a complaint with the U.S. Labor department, saying Colombia has failed to enforce worker protections in a free trade agreement with the United States, reports Reuters. The complaint says that nearly 100 Colombian workers and worker advocates have been killed trying to exercise their rights since the U.S.-Colombian trade deal took effect in 2011. The action raises questions about similar provisions in the massive Trans-Pacific Partnership trade deal, according to Reuters.

• Acting Brazilian President Michel Temer has high hopes for his legacy: he does not plan to run for office again, he told Brazilian media, but instead aims to leave as his administration's legacy "reduction of unemployment in the first place. Second, see a pacified country, with no more divergences across the country," reports the Wall Street Journal.

• Temer's government nominated MIT-trained economist Ilan Goldfajn to head the Central Bank, a move aimed at increasing investor confidence in Brazil, reports the Wall Street Journal. Heading off criticism about his all-male cabinet, Temer will replace the head of the government's giant development bank, BNDES, with a female economist, Maria Silvia Bastos Marques, reports the Wall Street Journal separately.

• The suspension of Brazilian President Dilma Rousseff is causing some diplomatic waves in the region from leftist governments who are refusing to recognize the interim government, including Venezuela, Cuba, Bolivia and El Salvador, reports Reuters.

• The head of Brazil's largest steelmaker, Gerdau SA, has been accused by police of of corruption-related offenses. His firm allegedly participated in a scheme to evade $428.6 million in taxes, reports the Wall Street Journal.
• Former Argentine President Cristina Fernández de Kirchner is facing a series of criminal allegations that could mean jail time if she is found guilty. At the very least, it means years of court cases that could hurt her chances of eventually running for office again, reports the Wall Street Journal. Kirchner dismisses the probes as politically motivated. (See yesterday's briefs.)

• Current Argentine President Mauricio Macri is under investigation for alleged ties to offshore companies. The prosecutor on the case said he will open up a new line of investigation in the case to follow up on reports in the media over the weekend that the firms are still active — despite the president’s repeated declarations that they were shuttered years ago, reports the Buenos Aires Herald.

• There's a regional trend of judicialized politics, argues Pablo Stefanoni in Le Monde Diplomatique. He analyzes the cases of Guatemala, Brazil and Bolivia. 

• The last three Mexican soldiers accused of homicide in the so-called "Tlatlaya Massacre" were were absolved of charges of homicide, cover-up and alteration of evidence. The 2014 case, in which at least a dozen suspected gang members were killed after surrendering, is seen as an emblematic case of human rights abuses by security forces in Mexico, reports the Associated Press. (See posts for Oct. 6 and July 2, 2015.)

• The governor of Mexico's Nuevo León state, Jaime Rodríguez, is challenging a large portion of the incentives promised by the previous state government to woo a $2.5 billion new assembly plant by South Korean Kia Motors firm, reports the Wall Street Journal. Officials say the incentive package amounts to nearly 28 percent of the investment by Kia and its suppliers. Manufacturing executives and federal officials are worried about how the face-off could affect the auto industry.

• Teachers in the Mexican states of Oaxaca and Chiapas will start an indefinite strike next Sunday, in rejection of education reform and demanding the rehiring of teachers laid off for refusing to take part in performance evaluations, reports Prensa Latina.

• A second Mexican judge has ruled that the extradition of drug kingpin Joaquín "El Chapo" Guzmán to the U.S. could move forward, reports the Associated Press. Cartel telenovela viewers shouldn't get excited yet though. Check out Alejandro Hope's El Daily Post column from last week explaining why these judicial decisions don't mean any immediate action. (See May 10's briefs.)

• Why is criminal violence on a sharp upward trend in Mexico? Alejandro Hope analyzes some potential causes, such as accelerated gang fragmentation, the U.S. heroin epidemic, too many emergencies spreading federal troops thin over the country, and a decline in 2011-2014 violence statistics that was more about local dynamics than national.

• A pioneering deal between two private companies will export wind-generated electricity from Uruguay to Argentina, reports Wind Power Monthly.

• A toxic algal bloom in Chile has affected thousands of fishermen's livelihoods, and poisoned dozens of people, in what is being described as the country's worst environmental crisis in recent years, reports the Guardian. The "red tide" is attributed to warm waters caused by the El Niño weather phenomenon, but may have been exacerbated by salmon industry practices, including the dumping of rotting salmon in the open ocean and pileups of salmon feces and food on the seafloor.

• Not strictly Latin America news, but former Greek Finance Minister Yanis Varoufakis has an interesting opinion piece in Nueva Sociedad, arguing for a new Bretton Woods type agreement to help regulate sovereign debt payments.