• A version of this post ran on the author's blog. The views expressed are the author's own.
It is one thing to talk about El Salvador's gang truce, which celebrated its one year anniversary last weekend, in blog posts and newspaper articles. It is another thing to live in communities where crime is prevalent. How do the bulk of Salvadorans view the truce?
In polling by the University of Central America during mid-November 2012, there were high levels of skepticism about the truce. 66.4 percent of those polled believed that the truce had reduced the level of crime little or not at all. 89.4 percent of the respondents had little or no trust in the truce.
La Prensa Grafica (LPG) polling in February 2013 showed that 55.2 percent of Salvadorans had a negative opinion of the truce while only 29.7 percent had a positive view. The respondents were about evenly split over whether or not there should be negotiations with the gangs. And 70 percent said that one could not trust the gangs to fulfill their promises.
When LPG asked people for the reasons for the gang problem, 36.2 percent blamed the parents and the educational system of the country, while 30.7 percent focused on economic factors. According to LPG, respondents from the middle and upper classes were more likely to blame the breakdown of families, while persons from the lower classes were more likely to focus on economic forces behind young men joining gangs. Salvadorans are split on whether resolving the gang problem requires more iron fist policies including the death penalty, or whether there should be a focus on job creation, and re-insertion of gang members into society.
In short, the people on El Salvador's streets are uncertain about where this process is headed and whether it is even a good thing...
The governments of Central America and the Dominican Republic are planning measures to share information on criminal records and allow “hot pursuit” chases across borders, in an effort to fight transnational criminal groups.
Designed to target organized crime groups, the agreement will allow law enforcement agencies from one country to pursue suspects over the border into a neighboring country. The agreement will also see states share criminal records so suspects are prosecuted as repeat offenders for crimes they have committed in other countries.
Representatives of the governments agreed on the wording of the deal at a conference in Panama last week, reported EFE. Once the agreement is signed by justice ministers from each country, it will be taken to the mid-2013 Central American Integration System's (SICA) annual summit for signature by the presidents.
InSight Crime Analysis
Weak law enforcement cooperation between countries and lack of border controls has helped make Central America an attractive venue for organized crime with criminals able to move quickly into the next country in order to escape pursuit by the law. One example is offered by the case of Jose Natividad Luna Pereira, or “Chepe Luna,” a Salvadoran drug trafficker who in recent years has been hiding out in Honduras, where he also holds citizenship, after a series of failed police operations to capture him in El Salvador.
Those that do get caught may get away with relatively light sentences despite a long criminal history if it is their first offense in the country where they are arrested.
The Central American Parliament, which oversees SICA, has plans to expand the Central American Court of Justice to further coordinate law enforcement efforts in the region, currently a major corridor for trafficking drugs from South America up to Mexico and the United States.
The case of Facundo Cabral, an Argentine folk singer murdered in Guatemala in 2011, has also drawn attention to the importance of cooperation in the region. Costa Rican Alejandro Jimenez, alias "El Palidejo," allegedly ordered the hit, which was intended to kill Nicaraguan nightclub owner Henry Fariñas. Authorities in all three countries have been cooperating in the case, which has also led to arrests in Colombia.
– Hannah Stone is a writer for Insight – Organized Crime in the Americas, which provides research, analysis, and investigation of the criminal world throughout the region. Find all of her research here.
José “Pepe” Palacios, a leading Lesbian Gay Bisexual Transgender (LGBT) activist from Honduras, recently visited the United States at the invitation of the Honduras Solidarity Network and the Chicago Religious Leadership Network on Latin America (CRLN). Pepe is a founding member of the Diversity Movement in Resistance (MDR), created in the wake of the June 2009 coup d’état in Honduras that replaced the democratically elected government. He is also a program officer at the Swedish aid agency Diakonia. At events in Washington, DC that the Latin America Working Group helped arrange, Pepe spoke about the violence the LGBT community has faced after the coup and what they are doing to organize for change...
“June 28, 2009 we had a coup d’état. It is a really important date for the LGBT community of Honduras. June 28, 1969 was Stonewall. 40 years later we had the coup d’état and for us, the coup was our Stonewall. Prior to that date, we didn’t have a movement at all. But, on that date, we joined all the social movements in our country. We had a fight in common: we wanted democracy.
“It was really hard working together; there are 13 LGBT organizations. Before the coup, it was almost impossible to have even 2 LGBT organizations seated at the same table. There was a lot of transphobia and lesbophobia; we were just a ‘G’ organization. We called it LGBT but in reality it was not. Now, we have a common agenda. Our biggest allies are the feminists, union workers, indigenous organizations, afro-Hondurans, youth organizations, campesinos and even religious organizations, all of whom were against the coup.
“Honduran society is very conservative; there is a lot of homophobia. Being part of the resistance front doesn’t make you immune to homophobia immediately. But at least in this movement, the people are very supportive. Maybe it is because we have the same goal as them, but every time we accompany the resistance front, the people are very respectful. Others tolerate us, but they respect us. Between tolerance and respect, I prefer being respected.
“One of the things that has changed since the coup is that there is a lot of hate. In only 7 months after the coup, 26 LGBT persons were killed. In 2008, we only had 4 killed. We went from 4 to 26; that’s a big jump. From 1994-2009, we had 20 LGBT murders. After the coup, we have had 90. It went from being 1 per year to 2 per month. Why? We were living in a bubble before and if you’re invisible, you’re harmless. Since that day, the LGBT community became visible because we walked the streets protesting against the coup. Now we’re thechusma.
“The American embassy and State Department sent FBI agents to support the police and prosecutors in their investigations of these murders. Now, 18 of the 90 cases are under investigation with 2 people sentenced. The investigations have progressed because of the involvement of the FBI agents. I don’t see a possibility that the current government improves the legal system. If it wasn’t for the pressure of the American embassy and State Department, they wouldn’t do anything at all to investigate. The government excuse is that there are lots of murders occurring so why should they have to focus on these LGBT murders in particular. The government is investigating now not because they want to but because of international pressure.
“In 2011, the resistance movement decided to create a political arm in order to participate in general elections (LIBRE). We had two pre-candidates for Congress. One, Erick Martinez Avila, was nominated in April and on May 7, 2012 he was murdered. Traditionally, we have had two parties and now we have a third, and for the first time they will have real competition in an election. What I want to do here is to raise awareness because maybe many of you didn’t have any information on what’s happening in Honduras with the LGBT organizations. Also we need to have the support of human rights organizations to observe the electoral process in order to ensure it will be transparent.
“I would never ever leave my country because if I do that, I’m safe but others will still face threats. In every revolution there will be casualties, but we know we can’t stop. The positive thing is that we became visible and now we really are a movement, not a social club, not an NGO. We’re part of a movement that fights for the rights of everyone.”
- Jordan Baber is an LAWG intern.
• A version of this post ran on the author's blog, bloggingsbyboz.com. The views expressed are the author's own.
Most of Brazil's oil output benefits the states of Rio de Janeiro, Espirito Santo, and São Paulo. Brazil's Congress voted to spread an increased amount of oil royalties across all the other states, raising the amount from 7 percent to 21 percent, cutting royalties to the three states and the federal government in the process. Presidenet Dilma Rousseff issued a partial veto so that the law would only affect new production, but the Congress overturned her veto last week. The law will now go to the Supreme Court to determine if it is constitutional.
As I wrote last year, this is a different take on the local vs. national debate that is seen throughout the region. Should oil and mineral wealth go to the local communities, the federal governments, or be spread around to the entire country's population?
It's different due to the scale and importance of the regions involved. The three states mentioned above, Rio, Espirito Santo, and São Paulo, have a combined population of 60 million people.
The Rio state government has suspended all payments other than salaries in protest of the dispute. The government is making a threat, with a bit of hyperbole, that the loss of funds threatens the city's ability to complete the construction it needs to host the World Cup and Olympic games.
– James Bosworth is a freelance writer and consultant who runs Bloggings by Boz.
• A version of this post ran on the author's blog, thehavananote.com. The views expressed are the author's own.
As Venezuelans and foreign observers examine the legacy – both the accomplishments and failures – of the charismatic and bombastic Hugo Chávez, discussion inevitably turns to the implications for allies on which he lavished generous aid and trade benefits. Perhaps none is quite so vulnerable in the wake of Chávez’s death as Cuba, an island nation of some 12 million people whose Socialist Revolution, with Chávez’s mentor Fidel Castro at the helm for more than 45 years, managed to hang on and hang on in spite of US disapproval and interference. Indeed, Socialist Cuba hung on in spite of itself, achieving inspirational heights in public health and education, and enjoying international influence far beyond its means, but never achieving the most crucial change of all: economic sustainability. In the past twenty years, Cuba has experienced one crisis after another.
After one such crisis is where Hugo Chávez came in, following the worst, broadest felt economic crisis Cubans have known, when Cuba’s ally and patron, the Soviet Union, collapsed, and the island’s economy shrank by more than one-third, and imports dropped by 85 percent. In those dark years, the Cuban people suffered crippling food shortages (and many were malnourished), extended blackouts, and all the other indignities that come from a sudden withdrawal of creature comforts and basic necessities they’d become so accustomed to. Reluctantly, Fidel Castro adopted a few limited measures – most importantly, embracing tourism – to stop the free fall, but it was his mentee, Hugo Chávez, whose increasingly generous trade and aid, who helped re-stabilize the Cuban economy at the turn of the 21st century. Cubans were no longer starving, but the vast majority would never recover the living standards they’d enjoyed before. As the cracks in the Cuban economy widened (and the gains of the Cuban Revolution slowly degenerated) Hugo Chávez filled them in with cut rate Venezuelan oil.
At the same time, it became clear to any honest observer inside or outside Cuba that the nation was headed for serious trouble; relying so singularly on the largesse of Hugo Chávez could have perilous consequences. When Raul Castro took the reins from his ailing older brother provisionally in 2006 and then formally in 2008, he focused, for the first time publicly, on the need for deep changes. The economic downturn of 2008, coming as it did with soaring world food prices and a punishing hurricane season (in which Cuba was walloped by four major storms that wiped out food stores and hundreds of thousands of homes), brought the reality starkly home.
The younger Castro’s rhetoric has been consistent and tough on economic mismanagement and corruption, but his apparent desire for consensus building (and avoiding destabilizing shocks that could jeopardize power) coupled with his inability to rein in a reluctant bureaucracy meant that Cuba’s economic restructuring has been slow and largely ineffectual – so far. Key reforms in real estate and migration, which offer many Cubans unprecedented potential economic empowerment and mobility, and also leverage an increasingly reconnected diaspora, offer hope of more and deeper reform, but other reforms, such as in expanding the non-state sector and reforming the tax code, have been too piecemeal or conservative so far.
Not unsurprisingly, many in and out of Cuba now wonder if the loss of Chávez is the death knell of the Castros’ Revolution, or, perhaps could it inject urgent momentum into Raul Castro’s reform agenda, just in the nick of time? In some ways, the loss of Hugo Chávez, on its face so devastating for Cuba, might actually be a good thing for the island. With Nicolas Maduro a favorite to win the special presidential election a month from now, Cuba will likely retain significant influence. But Maduro is no Chávez. He’ll have to focus on building up his own political capital, without the benefit of Chávez’s charisma. While he surely won’t cut Cuba off, to maintain power he will almost certainly need to respond to increasing economic pressures at home with more pragmatic and domestically focused economic policies. And that likelihood, as well as the possibility that the Venezuelan opposition could win back power either now or in the medium term, should drive Cuban leaders to speed up and bravely deepen their tenuous economic reforms on the island. And if there was any hesitancy among Cuba's leaders to open more space between the island and Chávez, they now have the opportunity to do so. Under Raul Castro, Cuba has mended and expanded foreign relations the world over. Particularly if it shows greater pragmatism in its economic policies, countries such as China will no doubt increase economic engagement of the island.
Raul Castro, who has at most five years – this second and final term as president - to save the fruits of the Cuban Revolution and chart a more sustainable course for the island, now has more incentive than ever to take the bull by the horns. Time will tell, perhaps sooner rather than later, whether he can.
– Anya Landau French is the editor of and a frequent contributor to the blog The Havana Note.
Plaza Bolivar in downtown Caracas quickly filled with Venezuelans Tuesday night, mourning the death of their president and commandante, Hugo Chávez. Many rushed directly from work to the spot named after Simon Bolivar, the liberator of South America and Chávez’s hero. The late president's signature red dotted the crowds. As car horns blasted, thousands waved campaign posters and cradled photos of the man who led a socialist revolution that has left both Venezuela and communities across Latin America markedly changed.
A chant rose from among the crowd: “The people united will never be defeated.”
Chavez stood at the helm of Venezuela for the past 14 years, winning his most recent reelection in October. Soon thereafter he announced that his cancer, which he had been battling for at least a year and a half, had returned. He flew to Cuba in December for treatment and surgery, and was not seen publicly again. Vice President Nicolas Maduro announced his passing on national TV this afternoon.
State television shared Twitter messages from people around the globe encouraging peace and expressing condolences to the Venezuelan people. Teary statements from neighboring leaders were aired, including words from Bolivia’s President Evo Morales. “Chavez will always be with us,” he said.
"It hurts, but we must stand united in this process of liberation, not only of Venezuela but of the whole region..." Mr. Morales said. "Chavez is now more alive than ever."
Chavez was a champion for the world’s underdogs and his country’s poor, missions bolstered by Venezuela’s vast petro-wealth. He created the Bolivarian Alliance, a bloc of leftist Latin American countries, to counter the might of international institutions like the World Bank, and poured his country’s oil wealth into neighboring nations like Bolivia, Cuba, and Nicaragua.
“Remember this is the first time within historical memory that a leftist revolution has had a big wad of dough to back it up,” says Larry Birns, director of the Council on Hemispheric Affairs.
But countries that have not always been closely allied with Chávez spoke out tonight as well. The Guardian reports:
Colombian President Jose Manuel Santos praised President Chavez's contribution to the peace process with the FARC [rebels] in Colombia. Chavez cherished the Bolivarian dream of regional unity, Santos said. He conveyed his condolences to Chavez's daughters.
The firebrand leader made a name for himself on the international stage with his distaste for the “bourgeois” and wealthy nations that he said tried to dominate countries like Venezuela. The Los Angeles Times published a story entitled “Hugo Chavez: Words that made headlines,” highlighting such incidents as the time he called former President George W. Bush the devil, or blamed capitalism for killing off life on Mars.
But even these so-called “imperialist” enemies from the US and Europe released statements tonight marking the end of a remarkable era, with British Foreign Secretary William Hague noting that Chávez had made a lasting “impression on the country and more widely.” And in a statement released this evening, former US President Jimmy Carter said:
Although we have not agreed with all of the methods followed by his government, we have never doubted Hugo Chávez's commitment to improving the lives of millions of his fellow countrymen.
President Chávez will be remembered for his bold assertion of autonomy and independence for Latin American governments and for his formidable communication skills and personal connection with supporters in his country and abroad to whom he gave hope and empowerment.
President Obama released a statement as well, just hours after the Chávez administration expelled two US embassy employees from the country:
At this challenging time of President Hugo Chávez's passing the United States reaffirms its support for the Venezuelan people and its interest in developing a constructive relationship with the Venezuelan government…. As Venezuela begins a new chapter in its history, the United States remains committed to policies that promote democratic principles, the rule of law, and respect for human rights.
According to the Constitution, the president of the National Assembly, Diosdado Cabello, will serve as interim president until emergency elections are held in 30 days. Vice President Maduro was tapped by Chávez in December to be his party’s successor, and he is expected to face off against the opposition leader Henrique Capriles.
When Hugo Chavez urged Venezuelans in December to vote for Vice President Nicolas Maduro if Mr. Chavez became too ill to continue in office, the former bus driver and union negotiator was characterized as a committed Chavista, but decidedly more quiet and pragmatic than the boisterous and polarizing leader who was at the helm for the past 14 years.
But in the final months of Chavez's life, this soft-spoken politician made some indisputably "Chavezesque” moves in an effort to show the public that he's up to filling the iconic, polarizing leader's shoes. In the next month, ahead of a Venezuelan emergency election to pick a new president, a convincing rendition of the "I am Chavez" show will probably be delivered by Mr. Maduro to keep other Chavez stalwarts onside. Most observers believe that the politically dominant United Socialist Party of Venezuela (PSUV), founded by Chavez, will decide the winner of the election.
“He needs to show that he is … faithful to the Chavez tradition and style and that means being confrontational publicly,” said Michael Shifter, director of the Inter-American Dialogue, shortly before the announcement of Chavez's passing on Tuesday afternoon. Shifter says that Maduro has likely been trying to consolidate his support within the Chavez movement in recent months. “He has to show the base that he’s a hardcore Chavista and that he’s tough.”
On that front, Maduro has already been hard at work.
From announcing that the government was tracking opposition leader Henrique Capriles (who Maduro dubbed “the prince of Manhattan, the prince of New York” in a classic anti-imperialist jab) while Mr. Capriles traveled in the United States last week, to expelling two US Embassy officials today for reportedly attempting to destabilize Venezuela, Maduro’s actions are familiar. (The US denies that any staff is plotting against the Venezuelan government.)
"They're trying to do here what they were doing in Bolivia," Chavez said, accusing Washington of trying to oust him.
"That's enough ... from you, Yankees," Chavez said, using an expletive. Waving his fists in the air, he added: "I hold the government of the United States responsible for being behind all the conspiracies against our nations!"
Today, Maduro announced that Chavez was infected with cancer by “imperialist” enemies, something the president himself alleged last year. "We have no doubt that commander Chavez was attacked with this illness," Maduro said, noting that someday there will be scientific evidence to prove it.
When Chavez tapped Maduro as his vice president last fall there was a lot of talk about what kind of leader he would be. Javier Corrales, a political science professor at Amherst College, wrote in America’s Quarterly that Maduro was simultaneously everything that “Chavez represents, as well as its opposite.”
He is the revolution's most two-faced character. On the one hand, he is one of the most leftist and anti-imperialist figures in the PSUV – the architect of some of Venezuela's most radical foreign decisions such as close ties to Libya, Syria and Iran. On the other hand, he can be soft-spoken and conciliatory. He is the architect of the remarkable turnaround of relations with Colombia in the last two years and is the third longest-serving foreign relations minister in the Americas. He has acquired experience, and might have even learned, on the job, the importance of pragmatism. He also has a good relationship with the military, but unlike Chávez, he is not one of them.
Already the opposition has dubbed Maduro a “poor copy” of Chavez: He speaks regularly on TV, and can be longwinded. He trumpets public works projects and has been known to fire up his supporters by verbally attacking the wealthy and “bourgeois.”
Maduro publicly reveled in the opposition's poor showing in regional elections in December. In response, the opposition Democratic Unity coalition party put out a statement:
“Mr. Maduro, the country expects better from you than a bad imitation of your boss.... In his rhetoric, Maduro hides the leadership crisis in government given President Chavez's absence. He hides his weakness with shouts and threats,” the statement said. "Don't waste the opportunity to create a wide national consensus."
Mr. Shifter says that although Maduro is being publicly confrontational, in private he is quite approachable. “What is different is that he’s someone you can talk to and with Chavez that [was] impossible…. [He’ll be accessible] within the party, to the opposition, and the US."
“Maduro's a hard-liner and a man of the left, there are no doubts about that,” Shifter says. “But he’s a politician …The signs are that change is very close and he’s now positioning himself.”
• Iñaki Sagarzazu is a contributor of WOLA’s blog: Venezuelan Politics and Human Rights. The views expressed are the author's own.
Every day that passes we seem closer to the calling of new presidential elections. Here I take advantage of the recent release of polling data from Hinterlaces’ February Monitor Pais to provide an overview of possible future electoral scenarios.
According to this poll the government’s candidate—Vice President Nicolas Maduro— received 50 percent of respondents’ support; the former candidate for the opposition coalition—Miranda’s governor Henrique Capriles—received 36 percent of the vote, leaving 14 percent of respondents up in the air.
If we take Hinterlaces’ numbers and place them in a polarized scenario, where the remaining 14 percent either does not vote or is split proportionally, then we would have 58 percent support for the government’s candidate and 42 percent for the opposition candidate. This would mean that Maduro would get a percentage of votes higher than what President Chavez obtained in the 2012 elections. However, if we consider the bias that Hinterlaces had in the last election (around 3 percentage points in favor of the government, which can be found here) then we see that Hinterlaces’ scenario is a repetition of the 2012 election where they estimated that the government candidate would have received 54 percent of the vote and the opposition 45 percent. You can see the numbers in the table [in the original blog post, here].
This means that almost five months after the October presidential elections both voting blocs remain relatively similar. This is not particularly shocking given that there have been no big or surprising events that might have destabilized perceptions since October 2012.
However, there are lessons here for each side.
For the government it should be welcome news that despite the absence of President Chávez from the political stage, their candidate remains at a good starting point. However, it also shows that the recent attacks on the opposition have not diminished support for the opposition. For the government it is a problem that the opposition’s hard base of support seems to have reached 45 percent.
For the opposition it should be welcome news that the two electoral defeats – and the “corruption cases” presented against Primero Justicia in the National Assembly – have not put a dent in their support. As a result they are in a much better starting position than they were for the 2012 presidential elections. On the other hand, they are still a minority and 10 points below the government’s candidate; in a quick election with a high degree of emotion it would be hard to turn that around.
Based on this initial scenario the political actors should consider the following strategies.
The government controls the deck of cards as they are the only ones with the knowledge of when elections will be held. The current role for government officials is limited to keeping emotions high in their ranks to avoid losing supporters to disenchantment. It is important to highlight that time is both in favor of and against Maduro. Taking some time will help him to solidify his leadership and make him look presidential works in his favor; however, it also makes him a target for disgruntled voters. This is important because while Chávez was able to avoid negative evaluations by deflecting them towards his governing team, Maduro is actually part of that governing team and therefore not impervious to criticism. As a result, a prolonged stay in power could generate negative evaluations.
The opposition basically finds itself awaiting the call for new elections. Given the short time frame this means they need to be proactive instead of reactive. The opposition’s candidate (whether they decide that it should be Capriles or they name a new one) needs to become fully invested in an officially non-existent campaign.
It might give the wrong impression to launch a full-on campaign while the president is still hospitalized. The opposition’s goals are, on the one hand to keep the support of its voters, while on the other, to try and discourage wavering government supporters (i.e. those who either do not trust Maduro or in the efficacy of the government without Chavez at the helm) from supporting the Maduro. In order to do this the opposition must control its radicals because this group of politicians only scares potentially moderate opposition supporters, and pushes them into supporting the government. If we look at Anthony Downs’ median voter theorem we can see that the space that needs to be conquered is the center, not the extremes. In this sense the opposition’s campaign strategy for the 2012 presidential elections was effective. Its failures came in not generating sufficient doubts among wavering government supporters.
Of all the numbers that demonstrate Mexico’s persistent inequality, the digital divide is one of the more surprising.
There are fewer than 41 million Internet users in Mexico, a country of more than 112 million people. That’s a connectivity rate of just 36 percent in Latin America’s second-largest economy.
Barely 17 percent have Internet access at home, according to the latest figures of the Americas Barometer, a survey by Vanderbilt University’s Latin American Public Opinion. Although the digital divide – the gap between those who can afford access and those who can’t – has narrowed in recent years, progress has been slow and Mexico still finds itself well below its peers.
More than 40 percent of Chileans have Internet at home, according to the barometer. Brazil ranks second with a home connectivity rate above 38 percent. Sixteen Latin American countries fare better than Mexico, including all of Central America.
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Many observers blame the high cost of broadband in Mexico – and the telecommunications dominance of billionaire Carlos Slim. (Yesterday, Mr. Slim was named Forbes' richest man in the world for the fourth consecutive year.) His companies, including Telmex, control nearly three-quarters of Mexico’s broadband connections, according to Jeffrey Puryear, vice president for social policy at the Inter-American Dialogue. Fast access in Mexico costs almost twice as much as it does in Chile.
Earlier this year, Slim announced he would invest $300 million in connectivity, digital libraries, and equipment for schools, as well as translations of Khan Academy online courses into Spanish. Telmex says its digital libraries will “create opportunities for development and education,” giving needy students access to 21st century tools.
The libraries mimic the free “cyber centers” Mexico City provides in metro stations as well as the work of nonprofits like Fundación Proacceso, whose network of “innovation and learning centers” offers access and free courses in marginalized communities.
Many have lauded Slim’s gift, but Mr. Puryear notes that the high cost still remains the heart of the issue.
“The most effective step that Carlos Slim could take to give poor children greater access to online courses would be to share his near-monopoly in telecommunications,” Puryear said in a recent Inter-American Dialogue newsletter.
The digital divide in Mexico has far-reaching consequences for education, too. As Mexico struggles to overhaul its education system – beginning with a major constitutional reform last week – it will be hard-pressed to close inequality gaps as long as only some students have access to digital tools.
The digital divide did narrow in recent years in Mexico, if only slightly. The number of users rose 14 percent between 2010 and 2011, according to the latest figures from the Mexican Internet Association, or AMIPCI. Connectivity has been bolstered by a boom in smartphones, whose use doubled over the same period.
Still, Mexico has a long way to go if it wants to catch up to the rest of Latin America – and not get left behind in the Information Age.
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• A version of this post ran on the author's blog. The views expressed are the author's own.
Honduras is broke.
It can't pay government employees, contractors, or suppliers. Its not unusual for teachers to go six months between paychecks under Porfirio Lobo Sosa. Road construction has stopped again due to government debts to the construction companies. It stopped paying the IHSS, the government health provider, the fees it collected from government employees to pay for their health care, prompting IHSS to threaten to cut off government employees.
So what does a bankrupt government do?
Honduras is now seeking to privately place over $750 million in bonds. In that private placement, it is using Barclays and Deutsche Bank as its agents. These two banking firms have been hired by the government of Honduras to set up meetings with potential investors. Meetings have now been set up in London (March 4), New York (March 6), Boston (March 6) and Los Angeles (March 7).
But there's a last minute hitch. Congress, which had to vote to allow the issuance of these bonds, changed the term from 8 years to 10 years. This increases the amount the government of Honduras will have to pay out to investors by prolonging interest payments for two more years.
If that wasn't enough, both Moody's and Standard and Poor's dropped Honduras's bond rating this week because of what they called the risk of investing in a country where there the government cannot pay its existing debts. Moody's also changed their outlook from "stable" to "negative". This in turn will raise the interest rate that Honduras will have to pay on the bonds. Moody's indicated that the downgrade was caused by
a worsening in the external finances of the country's economy, reflected in an increase of the deficit which is only partially covered by foreign direct investment. The public debt in Honduras, according to Moody's, is about 35 percent of its gross domestic product, which is moderate.
But that is not the whole story. Because of the temporary cessation of international funding under the de facto regime that ruled in 2009 following the June coup d'etat, the country had to rely on internal credit markets, which were costlier, raising the government's debt payment burden. Debt service (principal and interest payments) was about 10 percent of the budget last year, up from 3 percent of the budget in 2008. Much of this increase is due to the debt shift from external to internal credit markets under the seven month de facto regime. Both Moody's and Standard and Poor's cited the increased costs from using internal credit markets in their downgrades.
So off to market with $750 million dollars in bonds with a newly downgraded credit rating and an extended term of payment, just a week before the private placement meetings kick off in Europe and North America. Not the kind of bargaining position anyone would like to be in.