The new brooms

SHE finally did it. Nearly a week after her intentions were trailed in the Brazilian press President Dilma Rousseff, who narrowly won re-election in October, named her new economic team yesterday. Joaquim Levy (pictured above, in focus) will be the new finance minister and Nelson Barbosa (right) the minister of planning. Alexandre Tombini (left) keeps his post at the head of the central bank. As Bello explains this week (in a column written just before the appointments were made official), they portend a big change from the course Ms Rousseff pursued during her first term.

Brazil’s GDP report today underscores just why change is needed. The economy grew a negligible 0.1% in the third quarter of 2014, half the expected rate. After two consecutive quarters of shrinking output, the growth in the third quarter ends a technical recession. But it was mainly due to a burst of pre-election spending by the government. As the new economic team tightens fiscal and monetary policy, growth is likely to fall back in the near...Continue reading



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Peace interrupted

TALKS between Colombia’s government and the leftist FARC guerrilla army have not been easy. Knotty problems, such as disarmament and reparations for victims of the 50-year-long civil war, were far from being resolved. But there had been progress and talks were set to continue. Then on Sunday FARC kidnapped an army general along with another military official and a civilian in a village close to the provincial capital of Quibdó in northwestern Colombia. The president, Juan Manuel Santos (pictured above), responded by suspending the talks, which had been due to resume in Havana on Tuesday.

Just how serious a setback this will be to the two-year-old peace process is unclear. Mr Santos provided a path back to negotiation by saying that the talks would be suspended “until these people are released.” But FARC has so far said nothing about why it nabbed the general, Rubén Darío Alzate, and his companions or what it plans to do with them. "This is the first serious crisis of the peace process," said Jorge Restrepo, director of the Conflict Analysis Resource Centre, a Bogotá think tank. "If FARC do not free the general and his companions...Continue reading



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Dilma’s doldrums

AS SHE hobnobs with the other G20 heads of state in Brisbane this weekend, Dilma Rousseff, re-elected last month to a second four-year term as Brazil’s president, will have precious little besides her (narrow) victory to boast about. Every day seems to bring more evidence of just how big a mess she has left herself. Official data released in the past three weeks have shown a bulging budget deficit, falling industrial production and rising poverty. Even the job market, until recently a rare bright spot, with unemployment near historic lows of around 5%, is beginning to falter. This week payroll numbers showed a net loss of 30,000 jobs in October, the worst result for the month since 1999 and well below the average market expectations of a gain of 56,000.

Days before a kerfuffle broke out over a bill sent to Congress that would let Ms Rousseff in effect turn a primary fiscal surplus (before interest payments) of 1.9% of GDP promised in the 2014 budget into a deficit. Since the primary balance showed a hole equal to 0.5% of GDP in the nine months to September (because of a pre-election spending splurge), the government was merely facing up to reality. The opposition leapt on the opportunity to bash Ms Rousseff for fiscal incontinence and obfuscation. Some threatened contest this budgetary meddling before the Supreme Court.

If that weren’t enough, on...Continue reading



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After the election, the reckoning

BRAZIL is not the only emerging economy facing headwinds (see article in this week’s print edition). But it is looking particularly wonky. Having narrowly won a second presidential term on October 26th, this week Dilma Rousseff returned from a spot of post-election R&R to a raft of bad news. The trade deficit widened to $1.1 billion in October, the highest-ever for the month, and $1.8 billion so far this year. Both imports and exports fell, pointing to weak activity. An expected uptick in September’s industrial production turned out instead to have been a dip; it has now shrunk for five straight quarters.

Then, on November 5th, it emerged that the ranks of desperately poor Brazilians, unable to afford enough calories to avoid malnutrition, swelled by 371,000 between 2012 and 2013, to 10.4m. This is the first increase since Ms Rousseff’s Workers’ Party (PT) came to power in 2003. It comes as a particular blow to the president, who spent much of the campaign boasting of how much she had done to improve the lot of the indigent. Now it appears that, as the opposition has repeatedly pointed out, social progress under Luiz Inácio Lula da Silva, who ran the country in 2003-10, has stalled under his...Continue reading



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A nail-biter

BY THE time Brazilians pick their president on October 26th they will have few nails left to bite. Three polls published on the eve of the tightest and tetchiest election Brazil has ever seen suggest the race will go to a photo-finish. After trailing Aécio Neves, of the centre-right Party of Brazilian Social Democracy (PSDB), by a whisker, the left-wing incumbent, Dilma Rousseff this week opened up a sizeable six-to-eight point lead. But on the final straight Mr Neves has picked up pace. He still trails by four and six points in surveys by two most reputable pollsters, IBOPE and Datafolha, respectively. But momentum seems once again to be with him.

Mr Neves has shown a knack for confounding expectations. As Marina Silva, a charismatic centrist, soared in the polls, he looked out of the running. Then, in an unprecedented surge days before the first round on October 5th, propelled by an assured performance in an important televised debate and the PSDB’s tireless canvassing, he leapt past Ms Silva and into the run-off. On polling day he notched up 34%, eight points less than Ms Rousseff, even though polls had him trailing by 18 on the eve of the...Continue reading



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When fear crosses oceans

An ocean away from Africa’s Ebola outbreak, a deep fear of the disease now runs through the Caribbean. The atmosphere recalls the early days of the AIDS epidemic, some 30 years ago. Trinidad and Tobago’s prime minister, Kamla Persad-Bissessar (pictured), talks dramatically of “a new darkness, Ebola.” Her government this month recalled delegates en route to a Commonwealth Parliamentary Association conference in Cameroon, a country unaffected by the current Ebola outbreak.

Her doctors and health workers are demanding quadruple pay and $1.6m insurance polices for joining an Ebola response team. There’s talk of cancelling the islands’ annual carnival. Trinidad and Tobago, along with Jamaica, St Kitts-Nevis, St Vincent, St Lucia, Suriname, Guyana and Belize this month banned all travel from African countries with an Ebola outbreak.

One reason for the level of fear is the rapid spread of chikungunya, a painful viral disease also of African origin which first reached the Caribbean last December. Anyone who has not yet been struck knows a bunch of people who have. Some islands have recorded cases in the tens of...Continue reading



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Most foul

BOUND and beaten, with multiple stab-wounds to the chest, the body of Robert Serra, a 27-year-old member of parliament for Venezuela’s ruling party, was found at his Caracas home on the night of October 1st. His female assistant, María Herrera, had also been stabbed to death. Even in a country with one of the world’s worst homicide rates, the brutal murder of Serra and Herrera caused public revulsion. But some were just as shocked that, almost before the blood was dry, many leading government spokesmen, including President Nicolás Maduro, were already attributing the crime to “hired killers” working for the opposition.

Political assassination is extremely rare in Venezuela, despite the country’s bitter political polarisation between the followers of the late President Hugo Chávez and the opposition, mainly represented by the Democratic Unity (MUD) alliance. MUD leaders immediately condemned the murders and called off a planned demonstration to avoid stirring up animosity. As evidence for its claim, the government pointed to an opposition legislator’s remark in parliament, just days before the murder, that government members’...Continue reading



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The wave has passed

IF YOU had asked a pundit three months ago to predict the first round of Brazil’s presidential election on October 5th, the response would more or less have resembled what has turned into the polling-day reality. With all 115m ballots counted (after just a few hours, thanks to a remarkably efficient electronic-voting system) Dilma Rousseff emerged on top with 42% of the vote. Trailing eight points behind the incumbent was Aécio Neves of the main centre-right opposition Party of Brazilian Social Democracy (PSDB). The candidate of the centrist Brazilian Socialist Party (PSB) finished a respectable third, with 21%. As expected back then, Ms Rousseff and Mr Neves will now battle it out in a competitive run-off on October 26th.

But a rollercoaster, too, begins and ends in the same place. And from the start of campaigning on July 6th till today, Brazilians were taken for a wild ride.

As recently as two days ago Mr Neves was polling third. His status as the president’s putative challenger had been usurped by Marina Silva (pictured above), a popular former environment minister vaulted atop the PSB ticket—and then to stratospheric heights in...Continue reading



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Crunch time

IT IS hard to make predictions, the old saying goes, especially about the future. When future involves Brazil’s presidential race, the first round of which takes place on October 5th, the task is harder still. That has not stopped number-crunchers trying. Neale El-Dash of PollingData.com.br, a website, has made a valiant attempt at “tropicalising” Nate Silver, a statistician and blogger who rose to stardom during the 2012 US.

Mr Silver took polls released each week, then aggregated and weighted them to come up with a prediction, framed in terms of probability of victory for the main contenders. Our chart shows how Brazilian hopefuls’ chances, calculated in a similar fashion by Mr El-Dash, have shaped up since the campaign was upended by the tragic death in a plane crash in mid-August of Eduardo Campos, a centrist candidate.

President Dilma Rousseff’s probability of re-election went from 55% in mid-August to 25% a few weeks later. At that point Marina Silva, a popular former green activist and running-mate to Mr Campos who had vaulted to the top of the ticket, began to look like a shoo-in. But the past weeks...Continue reading



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A final splurge

THAT governments splurge in election years is a hallowed democratic tradition. True to form, Brazil’s left-wing administration, led by President Dilma Rousseff who is seeking a second term in an election on October 5th, has gone on a spending spree. Just how big became apparent on September 30th, when the treasury released its August accounts.

The primary deficit (before interest payments) reached 14.4 billion reais ($5.9 billion) in that month, the fourth in a row in which the government has failed to put aside cash to pay creditors. The consolidated primary surplus in the eight months to August stood at just 0.3% of GDP. Most of that came from the states; the central government managed just 1.5 billion reais, a piffling 0.05% of GDP and the worst result for the period since 1998. The overall budget deficit climbed to 4% of output, the highest level since Ms Rousseff’s predecessor and mentor, Luiz Inácio Lula da Silva, embarked on a huge stimulus package in 2009, as the global financial crisis took hold.



Part of the fiscal deterioration is a good sign, after a fashion. The government has at last decided to stop...Continue reading



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Puff Daddy, economic guru

OBSERVERS of the Argentine economy could do worse than listen to Puff Daddy. Ask what the gravest cost of July’s default has been, and the answer will be along the lines of “It’s all about the Benjamins”. Had the Argentine government resolved its debt situation, it might now be able to tap international markets for hard currency. Instead it is struggling to manage its meagre reserves, which currently hover at around $28 billion.

The prospect for dollar inflows looks grim. The price of soya, Argentina’s main export and the government’s main source of dollars, has plunged by nearly 35% over the past three months to four-year lows. In hopes that this trend will reverse itself or that the government will devalue the peso, farmers are stockpiling soy rather than selling it.

Meanwhile, the government cannot tighten outflows much more than it already has. Argentines have not been able freely to buy dollars through official channels since 2011, when the government plugged them in order to stem capital flight. Since January, when the government devalued the peso by 20%, Argentines earning more than about $1,000 have been able...Continue reading



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Signed, not sealed

LAST October, Stephen Harper, Canada’s prime minister, flew to Brussels to sign a trade-and-investment deal in principle between Canada and the EU. On September 26th, the two sides announced the close of negotiations. But despite the back-slapping there may still be work to be done. Sigmar Gabriel, Germany’s economy minister, objected strenuously this week to a clause in the deal that would allow companies to sue governments if they felt their rights had been infringed.

The clause is common in bilateral investment deals and initially attracted little attention in the Canada-EU negotiations. But it has become a flashpoint in another set of trade negotiations, between the EU and the United States. The European Parliament, a range of environmental and civil-society groups, and certain German politicians oppose it because they feel it gives multinational firms too much power in their dealings with government.

During a debate in Germany’s Bundestag about the two sets of EU talks, Mr Gabriel said “it’s completely clear we reject these investment-protection agreements” and that the debate was not over yet. In Ottawa, Jose...Continue reading



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And don’t come back

AS WESTERN democracies struggle with how to deal with homegrown terrorists fighting abroad, the Conservative government of Canada has begun revoking the passports of its foreign fighters as well as people still in Canada planning to join them. Chris Alexander, minister for citizenship and immigration, would not say exactly how many passports have been revoked, only that it has been done multiple times against some of the estimated 130 Canadians fighting with extremists, dozens of whom are in Iraq and Syria.

Taking passports away from suspected terrorists is controversial. It gives other countries the incentive to respond in kind, and it severs the route home for those who might be having second thoughts. Human-rights advocates in Canada say the secretive process used to determine whether a person is a threat to national security, one of the criteria for having your passport revoked, allows the government to make arbitrary decisions. These can be challenged in court but only within 30 days of the decision.

The British government ran into opposition earlier this month when it contemplated confiscating the passports of its citizens...Continue reading



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Slower going

BRAZIL is, famously, one of the world’s most unequal countries. Income of the richest 10% of the population is 38 times that of the poorest tenth. The ratio in Poland, which has similar income per person, is just eight to one. But at least the left-wing Workers’ Party (PT), in power since 2003, has been able to claim that, unlike in most other places, Brazilian inequality has fallen consistently on its watch. On September 18th it seemed this trend had come to an end. Data from the annual household survey, a mini-census of 150,000 families, showed an uptick in Brazil’s Gini coefficient, from 0.499 in 2012 to 0.500 in 2013 (0 signifies everyone has an identical income and 1 means that a single household takes everything).

If this was unwelcome news for President Dilma Rousseff, who is seeking a second term in an election two weeks from now, the next day offered hope of a respite. The national statistics office (IBGE), which compiles the survey, announced that it contained “extremely serious errors”, caused by applying the wrong weights to some of Brazil’s regions. Revised figures show that the Gini in fact edged down to...Continue reading



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Fishy figures

“THE final lie” was what some Argentines called the December 2013 inflation figures published by their country’s statistics agency (INDEC). After the IMF threatened to censure the country for tampering with inflation data, in January INDEC rolled out a new consumer price index (CPINu). At last, the numbers would be more accurate.

Or so people thought. The CPINu’s August inflation figure of 1.3% is less than half the 2.65% of the CPI Congreso, a compilation of private estimates gathered by opposition members of Congress. Since the CPINu began, its figures have been on average 0.94% below those reported by Congress. This is less than the gap that existed between the old price index and the CPICongreso, which differed by an average of 1.45% a month in 2013. But it is significant.

“INDEC has returned to tinkering with its numbers,” says Miguel Kiguel of EconViews, a consultancy. Graciela Bevacqua, who directed INDEC until the government started manipulating the numbers in 2007, is harsher. “It has become clear that it was never the government’s intention to improve the credibility, clarity or transparency of its...Continue reading



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Replacing the pilot

FOR a long time, the job of being Peru’s finance minister involved taking plaudits. Thanks largely to commodities exports, the country has been Latin America’s stand-out economic performer. Growth has averaged 6.4% annually over the past decade. Alonso Segura (pictured), who was named as a replacement for his long-serving boss, Luis Miguel Castilla, on September 14th, faces a less enjoyable sojourn in the role.



The new minister began work on the same day that Peru’s GDP numbers for July were released. They showed the economy expanding by 1.2% that month compared to the same month last year—better than the dismal June figure of 0.3%, but still well below forecasts. Mr Segura, a US-trained economist who had served as chief of staff at the ministry since early 2013, admitted in his first interview with the national media that growth this year would probably be below 4% (down from an already much-trimmed official projection of 4.2%).

Mr Segura nonetheless struck an optimistic tone, maintaining the ministry’s assessment that growth will return to 6% in 2015 and endorsing the economic policies of Mr Castilla, who was the last...Continue reading



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From irritation to threat

RESIDENTS of Santiago have become somewhat immune to the bomb attacks that have dogged their city for the past decade. There have been about 200 of them, but most of the devices have been small and have exploded at night when the streets are empty. Santiaguiños have regarded them as a nuisance rather than a serious security threat.

But the bomb of September 8th was different. It went off at lunchtime in a packed underground food hall at a busy metro station. It injured 14 people, some seriously. One woman had her fingers amputated. Investigators say the device was made from gunpowder packed into a fire extinguisher and detonated with a timer. It was placed in a rubbish bin. The police are looking for two suspects caught on CCTV cameras.

The attack has shocked the residents of what is arguably the safest capital city in Latin America. But the signs were there that this might happen. On July 15th, a bomb was planted on a metro train as it sat in a station. The police evacuated the station before it went off. Other devices have targeted banks, police stations, army barracks, churches, embassies, the headquarters of political parties,...Continue reading



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Prentice steps up

THE Progressive Conservatives have governed the energy-rich western province of Alberta since 1971, back when Richard Nixon was still in the White House. They have maintained their hold on power by being a “big tent” party with room for a broad range of views and by ditching their leader whenever popular support sags.

The latest to be ousted was Alison Redford, who was forced by her caucus to step down as premier in March and left politics altogether in August following reports that her staff had booked false passengers on government planes so that Ms Redford and her entourage could travel alone. On September 6th party members selected Jim Prentice, a former federal cabinet minister and latterly a vice-chairman of one of Canada’s big banks, to be their next leader and the next premier of Alberta.

Mr Prentice is taking over at a difficult time for the province and the party. The provincial economy is still among the most robust in Canada. It grew by 3.9% last year, compared with the national rate of 2.0%, and the unemployment rate is an enviable 4.9% compared with a national rate of 7.0%. But the economy is dominated by the...Continue reading



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The Petrobras affair

“IF I talk, there won’t be an election,” Paulo Roberto Costa, a former executive at Petrobras, was supposed to have warned. Now Mr Costa (pictured), arrested in March in a money-laundering probe involving Brazil’s state-controlled oil giant, has started talking. Polling day in Brazil, now less than a month away, will not be cancelled. But if what he says is true, it could affect the outcome.

According to revelations published in Veja, a leading weekly, and Estado de São Paulo, a newspaper, Mr Costa, who ran Petrobras’s refining division from 2004 to 2012, has accused more than 40 politicians of involvement in a vast kickback scheme. The list reportedly includes a minister, three state governors, six senators and dozens of congressmen from President Dilma Rousseff’s Workers’ Party (PT) and several coalition allies. The beneficiaries are alleged to have pocketed 3% of the value of contracts signed with Petrobras in return for supporting the government in congressional votes.

The federal police, who have been taking Mr Costa’s testimony since August 29th, have yet to confirm or deny the press...Continue reading



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The death of pragmatism

IT WAS billed as a “big shake-up”. With Venezuela immersed in its most severe economic crisis since 2003, President Nicolás Maduro´s announcement of a major restructuring of his government raised hopes that he might have a plan to tackle the problem. Instead, on September 2nd Mr Maduro ruled out any “capitalist” solution, declared his economic policy “successful” and sidelined the only cabinet member proposing substantial change.

Rafael Ramírez, chairman of the state oil corporation and vice-president for the economy, had argued for a unified exchange rate, reducing the money supply and raising the domestic price of petrol. After months of dithering, the president finally gave his answer by moving Mr Ramírez to the foreign ministry and splitting his super-portfolio into three separate jobs, none of them in the hands of a political heavyweight.

Venezuela is in trouble. Such trouble, in fact, that the central bank (BCV) has not published GDP figures since the beginning of the year and is two months behind with inflation figures. Leaks from inside the BCV suggest annual inflation is now well over 60% and that GDP fell...Continue reading



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