The Power and the Money

An admonition to Micheletti supporters and an admonition to his opponents

  In a previous post, I mentioned Mexico in 1936 and Argentina in 1945 as possible parallels for what the Honduran military was thinking when it exiled President Zelaya instead of simply arresting him.  Steven Taylor mentions a third parallel, a cautionary tale:  Colombia in 1953. 

He raises a good point:  breaking the law in order to save it is always risky and often stupid.  But the specific parallel doesn't apply.  General Gustavo Rojas Pinilla took power in 1953 and established a dictatorship that lasted four years; Roberto Micheletti ascended to the interim presidency with a vote of Congress and seems to be waiting until the November election to hand over power to either Elvin Santos or Porfirio Lobo. 

In other words, the typical historical parallels really don't apply in this situation.  An inability to recognize that is the main reason why the OAS is botching the diplomacy.  (As opposed to the U.S., which is playing it very well ...  but very much in the national interests of the United States and nothing else.)  They keep seeing Pinochet when what they've really got is an unelected Liberal government marking time until they can hand over to an elected government ... preferably also Liberal.  If the OAS diplomats can recognize that, then they can get inside the other guy's head (and his decision loop) and start brokering compromises that will allow everyone to win.

But I have my doubts that insisting on constitutional purity and making absolute demands will accomplish anything.  Demanding that some soldiers be punished, or agreeing that Zelaya should be tried while remaining titular president, those could get somewhere.  But so far that isn't the tack the OAS is taking. 

See also my comment and Steven's response here.  The short version below the fold.

Bad politics at the OAS, updated

  It strikes me that the diplomats trying to reinstall President Zelaya, particularly Secretary General José Miguel Insulza of the Organization of American States, are employing a lousy strategy.  The problem is that Honduras is a still a democracy.  The new government is conducting everything with an eye to the November elections, and unless the diplomats recognize that, they won't succeed.

You can't understand the coup in the context of a military takeover, because the military has not taken over and does not appear to be calling the shots.

The interim government needs to be persuaded that any compromise or backdown on their part will be a vote-winner.  There are a number of ways that could be accomplished.  The government could agree that Zelaya's expulsion was unconstitutional, give one of the military leaders a slap-on-the-wrist, and invite Zelaya back to reassume the presidency while facing trial.  (The same way, say, President Clinton faced trial.)  They could have Zelaya reassume the presidency after issuing a public apology for violating the Supreme Court order.  They could sit down and hammer out a third compromise.

The problem right now is that the OAS seems to have only sticks.  Getting hit with sticks, however, might just increase Liberal support at the polls in November; nationalist sentiment tends to work that way.  Delegitimization is a good prod, but Micheletti can't only be offered a choice between admitting his party is undemocratic and running out the clock, because he'll choose the latter.

Instead, we have Insulza in Tegucigalpa refusing to negotiate with anyone.  The military has admitted that it screwed up in banishing the President, and the OAS can't figure out a way to broker a compromise.  Instead, we've got a tragedy:  the death of an innocent. 

Anatomy of a coup

  The op-ed for Forbes is up. 

 I co-authored it with Steve Haber of Stanford University.  When I say we co-authored, I really mean co-authored:  Steve and I write by continuously tossing ideas past each other, dissecting them to death (and usually rejecting them) scribbling and re-scribbling versions, reading out loud to each other, and then finally finishing.  It's a lot of fun.  

The more expanded analysis is below the fold.  It takes into account some (surprisingly heated!) discussions with colleagues, Steven Taylor's blogging, and several of the comments on this blog.  I don't think I'll be dropping this issue anytime soon, so more comments and questions are highly welcome.

The importance of form

  The heat is turning up on Honduras’s new government.  Ambassadors are leaving, the borders are closed, World Bank money is gone, as are the U.S. military’s training programs.  Meanwhile, the hemisphere is united against the new government.

There would seem to be three lessons here.  (Note my weasel phrasing!  It isn’t accidental, as all three regular readers know by now.)  First, form matters.  Steven Taylor alluded to this point, and I think he’s correct.  Now, I don’t think that he’s correct about the underlying legality.  The Honduran constitution makes no provision for calling a second constitutional convention.  The Supreme Court, therefore, was completely within reason to tell Zelaya to knock it off with the referendum. 

Nor (given the facts so far) am I sure that Taylor is right as a matter of domestic political strategy.  If it was simply a matter of domestic calculus, a Supreme Court order followed by a quick bundling of the president out of the country might have been the best way to avoid worse conflict.

But Professor Taylor is completely right that hustling the President out of bed at 3am looks terrible. In retrospect, it was certain to produce a bad international reaction, even though I wouldn’t’ve predicted how bad beforehand.  (Hey, I was wrong.  Yes Bernard, I’ll get to Ecuador one of these days.) 

What the Honduran military and Supreme Court and I missed was the reverse Chávez effect.  Once Hugo (inevitably) started tub-thumping and threatening war, the best way for the United States to undercut him was to walk back its initial position and bandwagon on the international opprobrium.  And man, has the United States been successful.  Nobody seems to note that Washington was behind the international curve. 

In short, Honduras has gotten itself into a pickle.  The Supreme Court and military should have thought more about the politics.  The confused messages about resignations and drug-dealing and all the rest did not help; it was propaganda aimed at five-year olds, people who watch Glen Beck, not serious observers.  Now, it would have been damned risky for the Court to issue an order removing and arresting the President, but it would have been much better to have done that (preferably with a concurring Congressional vote ) and hope that Zelaya would be a little slow in mobilizing support, giving you time to bundle him off to Costa Rica after having crossed all the constitutional T’s ... or at least having seemed to. 

Form matters, even when the substance is uncertain and impossible to determine.  Perhaps especially so.  And that goes double in a hemisphere where electoral democracy enjoys the contradictory status of being simultaneously hegemonic and fragile. 

A lack of leverage

  The U.S. really doesn't give a whole lot of aid to Honduras.  Look at the figures, including military aid, from the USAID Greenbook:

That isn't a whole lot of leverage.  Of course, small amounts of aid may make it more likely that they'll be yanked, since such yanking won't wreck the national economy.  But that is the problem with using aid as an instrument of empire.  Contingent bribes — e.g., do good and we will give you more money — are fairly easy to administer.  Contingent threats — do what we want or the cookie jar will be taken away — are a lot harder.  You need to be giving enough money for the recipient to care, but not so much that withdrawing it would cause drastic adjustments that would reverberate back upon the donor. 

To put the above figures in perspective, remittances from the U.S. averaged 16% of GDP over the same period, peaking at 21% in 2006. 

In short, the U.S. didn't have a whole lot of leverage to keep the military-Court combo from ousting President Zelaya, even if the Obama Administration had wanted to.

(Say, should I add a “Honduras” tag to the blog?) 

A dog not barking in Honduras

  The fact that none of my posts about the Honduran coup carry the “Empire” tag is remarkable, considering the history of U.S. involvement in Latin American politics.  Even more remarkable is the idea that should events evolve in such a way as to warrant such a tag (which I consider unlikely), it will probably be either due to either direct meddling by the Alba countries or pressure from Unasur/Río Group/Brazil, not the interference of the United States.  That is quite a shift. 

Of course, the U.S. is still quite hip-joined to Honduras.  There is Soto Cano Air Base.  There is CAFTA.  There is the Millenium Challenge Account.  There are remittances.  Honduras isn’t dollarized, but it is a great case for dollarization, what with remittances above 14% of GDP, a fixed exchange rate and about 24% of all loans denominated in U.S. currency.  And we train its military. 

But Washington isn't leading events.  Sure, maybe it could, but it’s resisting temptation.  (Thank God!)  And that is a very big change. 

More on the Honduran constitution

  Hmm.  My opinion of the coup is moving back towards legal. 

In November 2003, the Honduran government (still under President Maduro) amended the constitution.  (You can find a history of all Honduran constitutional reforms here.)  The reason, ironically, was that they wanted to repeal the traditional absolute immunity held by high government officials in both the executive and legislative branch.  Thus, they repealed Article 205, clause 15, which had read: 

[Congress has the power] To declare if there is cause against the President, presidential delegates, Congressional deputies, Supreme Court justices, members of the National Electoral Tribunal, Chief of the Armed Forces ... and Subdirector of Administrative Probity.

They also altered Article 313, clause 2, as follows:

Original:  [The Supreme Court of Justice has the power] To begin initial proceedings against high state officials, when the National Congress has declared cause.

New:  [The Supreme Court of Justice has the power] To begin initial proceedings against high state officials and deputies.

The implication, I think, is that the Supreme Court has the power to remove officials from office when it determines that they have broken the law.  President Zelaya pretty clearly broke the law when he refused to obey an order from the Supreme Court to call off the referendum, and as I pointed out earlier, the Honduran constitution clearly (if stupidly) bans any consultatory referenda touching on presidential term limits. 

So my new version is:  Zelaya broke the law, the Supreme Court called him on it, and the military took the initiative in enforcing the Court's order.  (Maybe too much initiative.)  That interpretation will depend on how closely the armed forces and the Supreme Court cooperated in the ouster.  (The more it looks like the Court got the ball rolling, the more legal the coup will seem.)  Given the legal fog, the Obama Administration seems to be taking a pitch-perfect tone here.  Some other governments, like Brazil and Colombia, may have walked themselves into positions that they are going to regret. 

Be sure, though, to take my positions with a grain of salt.  I change them as the facts change, and as radically as necessary.  For a subtler discussion of the implications of the coup, go here.                            _{(Photo courtesy of Steven Taylor.)}

UPDATE:  The whole mess is filled with judgment calls.  Zelaya wanted to call a constitutional convention, which he publicly admitted would be intended to change the constitution to allow for re-election.  The referendum question that the Supremes kiboshed, however, only called for a convention, with no other stipulations.  So ... were the Supremes justified?

It all comes back to the problem that a constitution which declares procedural matters to be forever inalterable is a badly-written constitution.

An Andrew Jackson moment

  “The decision of the Supreme Court has fell still born, and they find that they cannot coerce Georgia to yield to its mandate.”
                                                                        —President Andrew Jackson

The common misquote of the above is much sexier:  “John Marshall has made his decision; now let him enforce it!”  Which is not a bad summary of Manuel Zelaya’s throwdown when his country’s Supreme Court told him that he could not go ahead with his planned referendum on repealing term limits.  Zelaya’s “No one will stop Sunday’s vote!” is on a par with Jackson’s aphorism.

In fact, it is worth considering what was in Zelaya’s televised speech on Sunday, after the Honduran Supremes slapped him down.  “The Court of Justice, which makes justice only for the powerful, the bankers and the rich of this country, has declared illegal the people’s participation in a legitimate and constitutional poll ... What a shame for all Hondurans, this Court of Justice!  We’re in the presence of a technical coup d’état.  It’s a swipe at Honduran democracy.  I want to appeal to the commanders of the Armed Forces, the officers and the soldiers.  They are part of the people, they should not play this game of the media elite and economic oligarchy, of a deviant bourgeoisie.”

Why is this significant?  Because Honduras could have avoided this crisis with a better constitution.  The Honduran constitution had two major flaws.  First, it took re-election off the table forever.  I mean that quite literally.  Read: 

Article 5:  Voting in advisory plebiscites is mandatory.  Projects intended to reform Article 374 of this constitution will not be objects of referenda or plebiscites.

Article 373:  The National Congress can alter this Constitution in ordinary session with two-thirds of the votes of all members. 

Article 374:  In no case can be reformed the previous article, this article, the constitutional articles that refer to the form of government, the national territory, the presidential term, the prohibition that no citizen can again be president who has carried out the role under whatever title, and the one referring to those who cannot become president of the republic for the subsequent period.

It is a bad bad idea to declare any procedural part of a constitution to be forever inviolable.  The U.S. constitution does this in respect to the apportionment of the Senate, and that is a bad idea that may yet come back to haunt us. 

The Honduran constitution then added insult to injury with its second flaw:  a complete lack of procedures by which the courts, legislature, or popular opinion could remove a sitting president for breaking the law.  The closest is Articles 321-327, which lay out the responsibility of public servants and organisms that break the law and cause civil damages to individuals, or Article 233, which lays a pretty draconian anticorruption law.  But neither really apply in this situation. 

In short:  Zelaya broke a stupid constitutional clause.  Twice, in fact, first by firing an officer who refused to administer an unconstitutional referendum and second by proceeding with the referendum anyway.  Congress could not do anything.  At that point the increasingly-angry military, acting in concert with the Supreme Court, decided to extraconstitutionally remove the president from office. 

I do not like it.  But I am also not sure that this is an abrogation of democracy either.  Judging by their statements, the Obama Administration is equally torn:  they would like Zelaya back, but they aren’t going to wade into another country’s Andrew Jackson moment. 

What do you think?

P.S.  I am not a fan of Andrew Jackson.

Coup in Honduras, updated

  It seems as though the Honduran military just deposed President Manuel Zelaya.   That said, this is not a stereotypical South American coup:  Congress appears to have ratified the Army's action, and a civilian is taking control. 

In an unsurprisingly pointless move, Hugo Chávez put his military on alert.  (Or at least he says that he did; it would not surprise me to find that no official orders have been given.)  He went on to declare, “The people of Alba are in combat, because this does not end today.”  The leaders of the Alternative Bolivariana have condemned the “coup” and its leaders will hold a summit in Nicaragua today. 

But Alba's declaration is less political than it sounds.  Unasur, the OAS, and the United States have all condemned the ouster, although the U.S. is not calling for Zelaya to be reinstated.   

I don't know why the military moved before Congress did, or why the new leaders are going through this charade of pretending that Zelaya resigned before he actually resigned.  But I do know that Zelaya ignored a Supreme Court ruling on June 25th that ordered him to reinstate the general that he had fired because the general refused to use to the Army to organize an unofficial referendum on abolishing term limits.  (I met Zelaya's predecessor about a year ago;  he didn't have a lot of good to say about his successor.)   I'll add here that Article 374 of the Honduran constitution, stupidly, declares that the ban on re-election can not be reformed in any way, no how, forever and ever.  A dumb provision, however, is still a provision. 

For what it's worth, my guess is that the coup will stand.  There is enough of a fig leaf of legality about it to allow OAS governments to walk back their condemnation.  Now, escalating street protests could force the U.S. to pressure the Honduran congress into reversing its vote.  But if I had to bet right now, based on what I've heard from Tegucigalpa, Zelaya will remain out of power.

UPDATE:  The legality of the situation is shakier than the above implies.  Hell, it seems to be blatantly illegal, a good old-fashioned coup.  Why have I changed my mind?  Well, as far as I can figure, the Honduran constitution has no provision for the congressional removal of the president.  The closest provisions are as follows:

Article 205, Section 12:  [Congress has the power to] accept the constitutional oath of office of the elected President and Vice-president of the republic, and other appointees they select; grant them permissions and accept or reject thier resignations and fill vacancies in the case of the complete absence of one of them;

Article 205, Section 20:  [Congress has the power to] approve or disapprove the admistrative conduct of the executive branch;

Article 242:  In the case of a temporary absence of the the President of the Republic, the Vice-president will carry out the functions of the President.  Should the Presidency be permanently vacant, the Vice-president will exercise the powers of the executive branch for the remainder of the constitutional term.  Should the Vice-presidency also be vacant, the powers of the executive branch will be exercised by the president of the National Congress.

Thus, the need to declare that President Zelaya had “resigned” before giving the executive powers over to Roberto Micheletti.  (The office of Vice-president is currently vacant, so having the power pass to Micheletti is kosher ... it's the whole removing of Zelaya what appears to be illegal.)  Note that while Micheletti says that everything is constitutional, this article from the Honduran press cites no clauses or precedents. 

The whole thing looks much shakier upon skimming the text of the constitution in the light of day, or least what passes for it in this, the fourth straight week of rain in New England.  I'll go ahead and call it a “coup.”  It's chances of standing are less than I originally believed.

Bolivarianism and Mercosur

 The Bolivarian Republic is seeking to join Mercosur.  Brazil's government supports the idea, but the Congress is a bit wary.  Foreign secretary Celso Amorim defended Venezuela's accession in a stormy committee meeting the day before yesterday.  In it, Amorim had to point out, loudly, that there is no evidence that the Venezuelan government stole elections.  A few days earlier Amorim was in Caracas attempting to persuade President Chávez to eliminate Venezuelan tariffs on 500-odd products before the Brazilian senate votes on the accession treaty, so as to reduce opposition. 

The thing is, I'm having trouble understanding how any of this matters.  Mercosur has a parliament, with members appointed from national Congresses, but it doesn't do anything.  (Which isn't surprising, but Brazil hedged its bets anyway:  as of 2011, Brazil will appoint 75 of the parliament's 154 members.  That kinda makes it unlikely that the other members will want to give it any serious power.)  Mercosur has a tribunal, but it doesn't do anything either.  Private individuals, unlike in Europe, can only bring suits by acting through their national governments.    Anyway, its decisions are regularly ignored.  In fact, its first decision was ignored.  And it failed its really big test, the Argentine blockades against an Uruguayan paper mill.  There's really nothing about investor protection or property rights in the founding treaties; the decision against Argentina rested on the fact that the blockades were in fact blocking trade.

In short, Mercosur is neither much of a confederation nor an effective tool for an informal Brazilian empire.  Which explains why Chávez wants in.  Why not?  But does not fully explain why Brazil wants him in, or why Brasilia insists on effective control over a powerless parliament. 

There is something going on here that I don't understand.

UPDATE:  The picture comes from Jussi in comments.  It had to be posted.

Oh no he di’n’t

  Well.  One of the leaders of the Republican party, a former Speaker of the House, and a plausible presidential candidate, goes to the Bronx and calls Cristina Fernández a “semi-dictator.”   

No, seriously.  Chávez, though, got to be a full dictator, while poor Danny Ortega got lumped in with Cristina among the “semis.” 

Now that is funny.  Ortega, who unlike the other two has in fact engaged in election fraud, becomes the same as Fernández.  Now, it is true that about a year ago she tried and failed to make an end-run around Congress in order to impose an agricultural export tax.  But our last president tried and succeeded to make an end-run around Congress in order to detain suspects indefinitely and monitor all communications crossing the country's border ... and while George Bush the Younger was many things, a “semi-dictator” was not one of them. 

Meanwhile, I really do need to repeat that Venezuela is not a dictatorship.  Most of the anti-Chavista opposition recognizes that.  And even should Chávez turn it into one, Venezuela poses no threat to the United States.  Let him slosh money around!  He gets nothing for it.   

Still, I can understand how he makes a useful foil for American conservatives.  I've heard lefties say stupider things about President Uribe ... although never anyone as prominent as Newt Gingrich.  But making Argentina into an enemy of the United States?  Huh?  Argentina??

So I've really got to wonder.  Can somebody explain what's going on with the GOP and the crazy pills?  I'm at a loss.

I guess I must reluctantly come around to the position that it is time to eliminate the filibuster. 

Another senate

  One rather strange thing, when you think about it, is the incredible influence that the United States Constitution has had over political structures in Latin America.  None of those polities developed under similar circumstances — the Argentine Republic comes closest, and it's not very close — and none of them had similar political traditions.  So its rather strange when you realize both how universal the American presidential-bicameral model has become and how durable it's proved. 

It turns out that Bolivia also has a U.S.-style senate.  Before the recent constitutional reform, each province enjoyed three senators.  Now each one has four.  Not much of a change there, unless the system for electing those senators (still undetermined) has the result of dividing the delegations from the other provinces while united the Media Luna ones, or vice versa.  That's remotely possible:  the old system worked like Argentina, giving the election winner two senators and the runner-up one, while the new system is proportional.  Depending on the election rule chosen, the effect would be to strengthen parties with overwhelming support within their province and split delegations from provinces with more divided electorates.  But we'll need to see both what proportional rules is chosen (the constitution seems unclear on whether the provinces or the legislature will set the rules) in order to know the actual effect.

In short, in terms of the Bolivian legislature, the new and awfully-named “Plurinational Legislative Assembly” doesn't change much.  Not only is equal representation preserved in the Senate; the new reserved “indigenous” seats in the lower house are designed to insure that the Media Luna's current representation will not change. 

My opinion of the Bolivian senate, however, is very different from my opinion of the Argentine, American, and Brazilian senates.  Those are undemocratic travesties that need to be reformed.  (Here's a much more democratic way of apportioning the U.S. senate among the states.)  Inertia and the power of special interests are the only reasons to keep them. 

The Bolivian senate, on the other hand, is a necessary compromise to hold a deeply-divided country together. President Morales's original proposal for a single-house FTFP legislature with a block of reserved “indigenous” seats would most likely have served only to keep fueling the political violence that wracked Bolivia last year.  Given that it's hard to see anyone benefitting from a breakup of the nation, the undemocracy of a senate is a price worth paying. 

Wisdom

  I had a post about the Cristina-Hugo summit and all that good stuff, with two pretty cool pictures, but the damned Typepad editor crashed and the autosave appears to have failed.  Since I have two books and one case to finish, that's the end of that.  Apologies!

But here is some very sage advice about Latin America policy for the Obama Administration.  Short version:  be wary of having a Latin America policy.  My instinct tells me that the Obama-Clinton team will heed this advice.

Senates

  There is a debate going on downblog over the United States Senate. 

Let's take a brief tour of Senates around the hemisphere.  (To which we'll include the Philippines, due to its political history.)  The American example set in 1787 proved very influential, particularly for the larger nations of América.  Did their adoption of an upper house with equal representation for federal subunits make sense?  Did they keep it? 

Argentina:  The Argentine senate gives each province three senators.  That's obviously undemocratic.  Argentina, however, has a historical justification for the practice.  Like the United States, the Argentine Republic began as a federation of independent states.  Unlike the United States, the states that formed the Argentine Republic had very little autonomous political history; most had been created from city councils that simply declared independence in the wake of the political chaos that enveloped South America after 1808.  After a great deal of civil war, including the loss of Bolivia, Paraguay, and Uruguay, provincial forces decisively defeated Buenos Aires in 1852.  A convention that excluded representatives of Buenos Aires hammered out a constitution the next year.  That same constitution has remained in effect since then, at least juridically. 

The convention accepted equal provincial representation in the Senate in order to limit Buenos Aires's dominance.  It also had senators elected for nine-year terms by state legislatures and required them to be able to show a minimum annual income of 2,000 pesos.  (That's approximately US$67,000 today in terms of purchasing power.)  Thankfully, later amendments got rid of those latter features, but equal representation remains.  In short, while there isn't really any good reason to keep the apportionment of the Argentine senate, the institution has deep roots in Argentine political history.  The resemblance to the U.S. case is quite strong.

Brazil:  The senate of the Federal Republic of Brazil gives three senators to each state.  The historical roots of this institution, however, are rather shallower than in Argentina or the United States.  The 19th-century Imperial senate did not provide equal representation for the provinces.  When the empire fell to a military coup in 1889, the new leaders had to find ways to convince provincial elites to support the new government.  One of the ways that they did so was to provide the provincial governments with equal representation in the upper house, in open imitation of the American example.  (In fact, the constitution of 1891 named the country the United States of Brazil.)  Brazil has gone through multiple constitutions since then, but the institution of the Senate has remained.  Unfortunately. 

Mexico:  The constitutions of 1824, 1857, and 1917 all granted equal senate representation to each state.  There was never much historical justification for doing so, other than imitation of the United States.  (Mexican states gained much autonomy during the 19th century, and several declared independence, but that came about after the end of Spanish rule.)  Since the country's governments rarely ruled by the constitution, however, legal stipulations didn't matter.  Under Porfirio Díaz, for example, all legislative votes were unanimous after 1893.  Nor did senators necessarily come from their putative state.  Under those circumstances, the number of senators per state didn't make a difference.  The Revolution didn't change that.  Under President Álvaro Obregón, for example, recalcitrant legislators were often shot.  Then came the creation of the PRI, with its iron-lock over politics, and ‘nuff said.  Constitutional stipulations didn't become more important than party rules until the 1997 midterm election. 

Mexico, however, is now ruled by a democratic government, and the constitutional rules matter a lot.  As part of the transition to democracy, Mexican politicians amended the constitution in 1993 and 1996.  In theory, the reforms granted each state four senators, up from two.  In practice, the reforms created an upper house selected by a weak form of proportional representation.  The winning party in each state receives two seats.  The runner-up receives one.  The remaining 25% of senate seats are then allocated to each party in proportion to their popular vote share.  In effect, the Mexico's current senate keeps the form of equal representation for each state while abandoning much (but not quite all) of the substance. 

The Philippines:  The Philippine Autonomy Act of 1916 created a 24-person senate.  The act grouped the country's 50 provinces into 12 districts, each of which received two senators.  The 1935 constitution of the Philippine Commonwealth dumped that crazy system, but selected something even crazier in its place:   at-large Senate elections.  That is, every voter writes in 12 names.  The top 12 vote-getters then become senators for six years.  The exercise is repeated every three years, making for a total of 24 senators.  The 1987 constitution of the Philippine Republic retains the feature.

The only polity that I can imagine justifiably imitating the United States, Argentine Republic, and Federal Republic of Brazil in the 21st century is the European Union.  Then again, I may suffer from a lack of imagination.

The empire's demise has been prematurely reported

  The United States just announced that the the Millenium Challenge Corporation will suspend $60 million in grants to the government of Nicaragua.  The reason?  Rigged local elections.  Now, I don't expect the aid suspension to accomplish much.  It's important to bear in mind that the U.S. still provides more aid than the Bolivarian Republic to most putative members of the Bolivarian alliance. 

In other Revolutionary news, the Bolivarian summit in Caracas announced that the alliance would consider establishing a common currency.  That is rather weak brew, and I will be very (albeit pleasantly) surprised if it happens.  Why pleasantly?  Well, a common currency spanning Venezuela, Nicaragua, Cuba, Honduras, Bolivia, Dominica and possibly Ecuador would be a fascinating monetary experiment to watch.  Sadly, I feel pretty confident that it isn't going to happen. 

Around the Revolution

  “You know, I’ve always wondered what South America would look like if no one gave a damn about coca or Communism.  It’s always impressed me the way you boys have carved this place up.”

“I’ll take that as a compliment, coming from a Brit.” 

Now that the U.S. election is over and James Bond is officially a friend of Evo Morales, it's time to take a trip around the Bolivarian Revolution.  How is the red banner faring around the continent? 

Imperialism can pay

There's a debate out there about imperialism.  Did it pay?  The consensus answer is:  no, it did not.  The British spent far more in defense than they earned from imperial investments; in fact, by the 1880s, the profitability of imperial investments had fallen below domestic and non-imperial ones.  The French believed that their empire after WW2 helped them maintain their balance-of-payments; the numbers don't support that idea either.  The big counterexamples involve the Nazi conquest of France, and the Soviet occupation of Eastern Europe after 1945 ... but after 1970 or so the balance on the Soviet empire hinges on how much you believe control of the Warsaw Pact armies was worth to Moscow. 

But there is a case of imperialism paying, and paying quite well:  Panama in 1903. 

Canals and Costa Rica

Peter asks about past Nicaragua canal plans; Randy asks about the environment and Costa Rica.

Nicaragua was in fact considered for a trans-Isthmian canal.  Only one project got past vaporware:  between 1887 and 1893, the Maritime Canal Company excavated 1½ miles of canal and built 11½ miles of railroad in pursuit of the project.  Their planned route to the Atlantic followed the dashed line above.  Meanwhile, their plan to avoid the rapids and shallows of the San Juan River east of its junction with the San Carlos River was brilliant in its simplicity, if not in its feasibility:  build a giant dam at Ochoa and flood everything all the way to Lake Nicaragua.

Nicaragua dreaming

Somehow I just don't think that this is going to happen.  I mean, it's nice that Managua recognized South Ossetia and Abkhazia, but Russia just doesn't have the money right now.  No, if you're going to reward your faraway friend (although I'm at a loss as to why Moscow would want to) this seems like the way to do it.

And much as Nicaragua is a full-up member of the Alternativa Bolivariana, Venezuela doesn't have the money to toss away on such a megaproject right now.  Astoundingly enough, Caracas is going to have to cut back spending if oil goes below $90, a level of fiscal irresponsibility to rival Washington. 

Still, for a guy who proposes transcontinental railways and really likes to build stuff, I'm surprised that a Nicaraguan canal hasn't caught his eye. 

A new constitution

Rafael Correa is the president of Ecuador.  He has a Ph.D. in economics from the University of Illinois.  Anti-Chávez well-educated high-earning professional Venezuelan women told me on multiple occasions that they consider him very attractive.

That, however, is not why he's in the news.  He's in the news because Ecuadorean voters approved a new constitution today.  Opponents call it “Bolivarian.”  Even non-opponents have called it “socialist.” Both are silly.  Correa is far from Bolivarian.  (Update:  It has been pointed out in comments that he declared himself Bolivarian in 2006, although he is generally considered to have distanced himself from Venezuela.)  Those same professionals who called Correa handsome also called him sensible, and I tend to agree.  Correa is relatively radical.  But he's also sensible and clearly a democrat. 

Which doesn't mean that the new constitution is a good thing for Ecuador.  More below.   

Postmodern commentary

Here is some excellent commentary on recent commentary on the events in Bolivia:

Two different takes on Bolivia’s political crisis, one from Larry Birns and Jessica Bryant, and the other from Marcela Sánchez. The first argues that the escalating tension is a result of a pattern of American disrespect to Latin American democracy. The second argues that Latin America showed a great deal of maturity in resolving the problem themselves, neither waiting for Washington nor using the crisis as a pretext to take pot shots at the Bush administration. I find Sánchez’s argument about ten million times more convincing.

Not everyone who blames the U.S. at every moment should be accused of blaming America first, but Birns and Bryant certainly seem predisposed to pointing the finger at Washington. Evo Morales kicks Ambassador Philip Goldberg out of La Paz, and its Goldberg’s own fault because “he failed to be helpful.” That’s a pretty high standard. Why is it in incumbent on a foreign ambassador to help in an internal political crisis? Any time there is a crisis in a foreign capital, should the American ambassador be tossed if he fails to be helpful? Also, how could the U.S. help by inserting itself into a complex and longstanding local political issue? Hasn’t that usually been a recipe for problems? Short of endorsing Morales, what could Washington do to satisfy Birns and Bryant? It essentially avoided stepping on Morales’ toes publically, which shows admirable restraint, given the number of times Morales has thumbed Washington in the eye, and that Washington is ideologically more closely aligned with the opposition than with Morales. At the risk of supporting W, it seems like the U.S. played this one right. It’s better to let Latin America solve its own problems without U.S. mediation.

The Birns-Bryant piece is also needlessly (and bizarrely) wordy. For instance, the phrase “the baleful consequences of the inherent disrespect the U.S. historically has exhibited toward the region” has about a third more words than necessary. Later, they refer to the need to “architect a new relationship with the region that can be deemed credible.” Architect as a verb? Why, when the Queen’s English offers us build, construct, create, develop, erect, carve out, and many other possibilities that are, in fact, verbs?

By the way, after the scare from the marches, it looks like things are calming down in Bolivia.  Evo deserves props for putting his constitution on the table and agreeing to sit down and talk with the opposition governors about the new constitution. 

(Semantic note:  the Bolivian title is in fact “prefect.”  A symbol of the crisis was, in fact, the self-promotion of the Santa Cruz “prefect” to “governor.”  That said, they've already got more power than the English “prefect” implies, so I'll be sticking with “governor” as my translation of “prefecto” until convinced otherwise.  I'll also stick with “province” as my translation of “departamento” because it sounds way way better and less confusing than “departament” in American English.)            

Going south?

Cooler heads may not have prevailed in Bolivia.  I'm not sure what to make of this report from Pronto, but is sounds doubleplusungood:

From email from my parents (who live in Santa Cruz): Evo has just announced an alleged a coup plot between Goldberg (the US ambassador expelled a few days ago), Costas (the Santa Cruz prefect), and a number of high-ranking military officers. Meanwhile, reports from Pando suggest that five of the bodies were Venezuelan soldiers, who are being repatriated. Costas has also asked Evo to call of the MAS protests who are still marching towards the city of Santa Cruz; he’s also called for a suspension of labor & a public assembly in the main plaza for a cabildo (a “popular assembly”) to decide what to do. (FYI: The last Santa Cruz cabildo proclaimed Costas “governor” & demanded regional autonomy.) Also, as of now, the 24 de Septiembre celebrations are cancelled — the first time that has happened in more than 50 years. This doesn’t look good at all.

The part about “Venezuelan soldiers” is particularly perplexing.

   

The good news is that it seems as though Evo agreed with Costas and got the marchers to stop.  So sanity still might prevail.      

Old news from Santa Cruz

So Hugo declared on September 12th that he was prepared to intervene militarily if Bolivia's constitutional government came under threat.  The reaction in Santa Cruz?

As a patriotic American, I can't tell you how much it warms my heart to see demonstrators burn somebody else's flag.

UPDATE:  It gets better!  When the commander of the Bolivan troops sent to Pando arrived at the Cobija airport, he had to insist to an angry mob that he was not heading a Venezuelan invasion force.

No, it gets much better.  Chile's foreign minister, Alejando Foxley, publicly complained that President Chávez's antics nearly wrecked the Unasur summit.

Thankfully, Evo realized that Caracas wasn't helping him, albeit belatedly, and told his defense minister to reject Venezuelan overtures.  (It obviously would have been a bad idea for Evo to have done it himself.)  So far, negotiations with the Media Luna provinces seem to be going well.  Here's hoping. 

Cooler heads prevail

  An agreement has been reached to settle the conflict in Bolivia, at least for the time being.  The “Great National Agreement” is, IMHO, a thing of great beauty.  Basically, everyone involved realized that they were all going to lose if the violence escalated and decided to take a deep breath and calm down. 

Judge for yourself.  The text is below the fold.

Full moon rising?

Cooler heads may be prevailing in Bolivia.  The Army has taken control of Cobija, the capital of Pando province.  Governor Leopoldo Fernández has fled, accused of masterminding a massacre of government supporters.  Meanwhile, the National Democratic Council, which consists of the five governors of the Media Luna provinces (including Chuquisaca), announced that it will call off the roadblocks, although their supporters still occupy government offices outside Pando. 

Council representatives met throughout last night with Vice-President Álvaro García and the Vice-minister for Decentralization, Fabián Yaksic.  They seem to have arrived at an accord, which while not a resolution of the dispute, is at least an agreement to sit down and talk about it. 

Hugo Chávez, unfortunately, is being his own typically helpful self.  He's declared that Venezuela will intervene if Morales falls.  He's hurled accusations of treason at the head of the Bolivian armed forces, General Luis Trigo.  “I am willing to die for Bolivia,” said the President of the Bolivarian Republic. 

The president of Uruguay, Luis Alberto Lacalle, had an interesting response.  “Careful.  We've got Chávez, who suffers from verbal incontinence.  It could occur to him tomorrow to send a soldier to Bolivia, and that could cause a horrible conflict in the region.” 

Half moon at bay

The consequences of persistent inequality are with us today.  They appear to be pushing Bolivia towards civil war in slow motion.  Today there was a brief flutter of news about the situation because Evo expelled the American ambassador, and the U.S. followed suit, but in general you've got media silence in America.  The split is between the central government and “autonomists” in the “Media Luna,” which is marked off in dark green in this map taken from Mark Weisbrot: 

Things are bad.  How bad?  American Airlines just stopped flying to the country.  Autonomists in Santa Cruz have seized control of most federal offices in the province.  Tarija — which produces 60% of Bolivia's natural gas — experienced bloody riots yesterday, where autonomists seized the customshouses and airport and federalistas (my term, not a Bolivian one) blew up the governor's parking garage.  Meanwhile, the nightmare that my Brazilian and Bolivian colleagues discussed in Venezuela?  Well, it came true for about 12 hours. 

Brasilia is reacting in a manner that could best be described as confused, but understandably so.  On Tuesday, the Brazilian foreign minister committed a Kinsley, when he stated that if Morales can't secure the pipeline, then his government will be forced to open relations with the Media Luna.  Today, however, the Brazilian national security advisor reiterated Brazil's position that Bolivia has but one government and intimated that his government might send troops to support Evo. 

So what's it all about?  I'm sure you all can guess, but a rough overview is below the fold. 

Inequality and history

I present to you new never-before-known knowledge about Latin America:

This simple chart masks a heroic effort at data collection that took the author to at least seven different countries and ate up a year of her life tirelessly searching through badly-organized archives.  We now have systematic data on nominal wages and land rents in Latin America where before we had just conjecture and guesswork.  More importantly, we now have more understanding as to why Latin America developed such high and persistent levels of inequality.   

More here.  Questions and comments?  The author reads this blog.

There really was a revolution

My previous post on the Bolivian hydrocarbon nationalization of 2006 made it seem like nothing changed.  And in terms of the security of supply (in price or quantity), not much did.  Ditto, the industry wasn't really nationalized.  Rather, the decree gave Bolivia's state hydrocarbon company, YPFB, a mandated 32% share of the output of the San Alberto and San Antonio fields, on top of a 2005 law that cancelled the preferential tax treatment the previous law had granted new gasfields.  Thus, Brazil's equanimity in the face of “nationalization.”

In other words, the nationalization was in fact a tax hike, and a rather large one.  According to work by Luis Carlos Jemio, the state's take of gross revenues jumped from 28% in 2004 to 41% in 2005 and 65% in 2006. 

How high is that?  Well, I just spent more time than I should have estimating the total value of taxes (including corporate income taxes) paid to the federal and state governments by oil and gas companies operating in Alaska.  The result?  In 2006, they paid 25% of their gross revenues (or 50% of their declared profits) in taxes and royalties.  Now, these estimates do not include gasoline taxes, or any other taxes on refined products ... because the Bolivian figures don't either.  They also do not include the tax hikes that the Palin administration just pushed through, but those hikes will only up the figure on gross revenues to 26%.

In other words, Bolivian tax revenues went from around the level found in Alaska to almost 2½ times that level.  There really was a revolution.  (And now you understand why the gas-producing provinces in the east are so damn upset.)

Was it a good idea?  I'm undecided.  Investment in exploration boomed in 1996, with the passage of the law favoring new fields, but started declining in 1999 and was down two-thirds by the time 2005 rolled around.  If one makes the assumption that geology drove that decline, then Morales hiked taxes at just about the right time.  If no more investment is coming anyway, why worry about discouraging it?

To be fair, foreign direct investment in exploitation (not exploration) did collapse in 2006.  That said, Bolivia could potentially make up for that via service contracts and the like.

The reason that I'm undecided is that I don't know how much of the exploration decline was due to geology, and how much was due to the increasing political instability in Bolivia.

But I'm not that undecided.  In this case, I think a massive tax hike on the industry was fully justified, and probably the best thing for the people of Bolivia.  Now if only they can figure out how to divvy up the new revenues without blockading roads or shooting at each other ...   

ICSID v Chávez

So, President Chávez nationalized the cement industry the other day.  Venezuela agreed to buy 89 per cent of Lafarge for $267m and 85 per cent of Holcim for $552m, but Cemex requested $1,300m.  Venezuela sent in troops to take over Cemex's installation, and then offered $650m.  Chávez called the Mexicans “disrespectful.”  After accusing Cemex of tax evasion and excessive pollution, he went on say, “They're as Latin as we are, but they feel closer to el Norte.”  President Calderón of Mexico was not happy, but there was not a lot that Mexico could do about it. 

But there is someone who can ... ICSID.  I've mentioned it before.  ICSID is powerful.  When lefties blather on about "empire" or whatever, things like ICSID are what they mean, even if they don't know it.  ICSID can cause pain.  In fact, Venezuela's nationalizations have consistently (so far Exxon and Conoco are the only exceptions) given the nationalized companies everything that they want. 

Of course, it costs a lot to go to ICSID, and it costs even more to get national courts to actually order attachments after a ruling, so companies usually don't start an arbitration unless they think that they can win.

Cemex appears to think it can win.

And it seems that the Venezuelan government agrees with Cemex.  Right after Cemex announced that it was going to take the Bolivarian Republic to ICSID, Venezuelan officials announced that hey, yo, don't get all upset about the troops thing, let's talk.  Sixty more days, okay?  At which point President Chávez told the world that he has a secret letter from President Calderón that will help resolve everything.  “We asked the Mexican government to give us one more chance with Cemex's executives to see if we can come to a mutual understanding,” he said. 

My money is on Cemex getting something close to the $1.3 billion that it wants.  But it will be interesting to watch.  Even if you're a Cemex shareholder.

    

Bolivia versus Brazil

  On May Day, 2006, Bolivian troops occupied the country's natural gas facilities.   

Petrobras, Brazil's national oil company, owned the largest stake in the fields and Brazilian industries depended on Bolivian gas.  Yet Brasilia reacted quite calmly.  Why?

Simply because Bolivia had no leverage.  The “nationalization” raised taxes on the gas companies (Petrobras, Repsol, British Gas, and Total), but changed nothing else.  Brazil wasn't happy about losing the profits, of course (the Federal Republic of Brazil owns a 55.7% stake in Petrobras), but all Brasilia really cared about was retaining access to the gas at a reasonable price.  And that's what they got:  the red line shows the date of the nationalization:  the big run-up in price preceeded it.

Petrobras and Bolivia had a “take-or-pay” contract, in which Petrobras promised to purchase no less than 65% of Bolivia's daily capacity, even if they couldn't use it, at rates based on this (get ready for it):

The price per million BTUs, PGt = 0.475 × [0.5 × (FO1t-1/FO10) + 0.25 × (FO2t-1/FO20) + 0.25 × (FO3t-1/FO30)] + 0.5 × PGt-1, where FO1 is the price in $/ton of fuel oil with a 3.5% sulphur content (aka, “Cargoes FOB Med Basin Italy”), and FO2 and FO3 are the price of fuel oil with a 1.0% sulphur context (aka, “U.S. Gulf Coast Waterborne” and “Cargoes FOB NEW.”

Another way of putting it is that the contract stipulated that if oil prices doubled, it would take two years for Bolivian gas prices to increase 97 percent.  Which doesn't quite seem to have been what happened, since crude oil prices don't quite track fuel oil and Brazil sometimes needed to overpay when it couldn't use all the gas on offer, but close enough.

In other words, the revolution turned out to be something of a dud.  Petrobras kept its assets and its contract.  Bolivia did get more revenues but a tax hike didn't require troops.  Political theater, it was.

Of course, whether it was good theater depends on your seat.  Investment in the gas industry has collapsed, and Petrobras now prefers to access higher-cost gas deposits at home ... not because of the taxes, but because of the uncertainty.  Similarly, the dramatic way in which the tax hikes were guised as a nationalization meant tossing out the old revenue-sharing agreements with the provinces, and thus the current autonomy crisis.

It's not clear where the country goes from here.  I had lunch with a Bolivian and a Brazilian who joked about civil war.  The Brazilian was sanguine until the Bolivian suggested that eastern rebels might cut off the taps.

“No, you can't have a war,” joked the Brazilian, “until we get the other gas projects going. Then we will happily sell you weapons.”      

Bolivarians and Bolivians

Another thing that I didn't quite realize until I got to Venezuela is just how important the international dimension of the Bolivarian Revolution is to President Chávez. 

The above photo is of a speeding red jeep, of the sort that Chávez has distributed to various functionaries, with “Viva Bolivia libre” painted on the back window.  We were up in the “Country Club” neighborhood, a wealthy part of town where the government planned to build public housing until Chavista supporters started buying homes in the area.  Those plans, mysteriously, now seem to be on hold.

It was a Saturday, the day before Bolivia's recall referendum.  Chávez is deeply vested in Evo's success, and so he organized mass demonstrations in support of Evo Morales here in Caracas.  Parts of the city were a sea of red, gold, and green, and Evo supporters could be seen everywhere.  It formed a decent counterpoint to the opposition demonstration held on the same day. 

Bolivia is a member of the Alternativa Bolivariana para las Américas (aka, ALBA), along with Nicaragua, Dominica, and Cuba.  Honduras is on the verge of joining.  It isn't entirely clear what ALBA does (there's not a lot of institutional heft to it) but the Venezuelan government has vested a lot of rhetoric.  It also seems to have invested no small amount of money.  A back-of-envelope calculation from data in this Miami Herald article implies that subsidies to Cuba alone are worth around one billion dollars a year.  Information in this Reuters piece implies an even higher cost:  34 million barrels a year, worth around $4 billion, in exchange for Cuban doctors.  Chávez has given aid to Bolivia and Nicaragua under ALBA, purchased billions and billions of Argentine debt in support of the Kirchners, and finances oil purchases in the circum-Caribbean.

There are two mysteries to Chavista internationalism.  First, what's its extent?  How many resources has Caracas put into spreading Bolivarianism?  Second, what does President Chávez get out of it?  Neither one has a clear answer, but I'll take a very superficial stab at one below the fold.

Sensitivities and censorship

Every country has their sensibilities, their things that they can criticize and satirize, but that others had best stay away from. 

www.lnteve.com

Result?  Cries for censorship! Can't let the good name of ... ah ... Juan Perón be besmirched.  After all, he didn't disappear people.  That was his second wife. 

Quoth an Argentine:  “As much as I would like to make (yet another) comment about American ignorance of world history, I am not sure this event qualifies. Reducing Argentina to Perón and the disappeared doesn't sound that far away from a summarized version of contemporary Argentine history.”

The Fernández Administration has recently reintroduced a program called the “Media Discrimination Watch.”  It isn't censorship, exactly.  Rather, it's an official program through which the dean of social sciences at the University of Buenos Aires can highlight media bias. 

The country’s journalism association responded with, “It seems that the Argentine government has decided that the press is an enemy to be defeated.”

I don’t know what to make of this.  My instinct is that it is a tempest in a teapot, and won’t have any long-term effect.  But I don’t know.  Argentine economic policy is a growing mess, and opposition is getting ugly.  It all seems solvable ... but that might have been said at many points in Argentine history.

On the Beach

The coast of Hispaniola around Santo Domingo is, well, different. 

No, wait, that doesn't quite capture it.  This captures it.

It's not just the city proper; the coast looks like a crumbling plate from the air.  Can anyone explain what causes it?  Is this an intermediate stage between seafront cliffs and a real beach, or something else?

Why I was in the Dominican Republic

To gather historical data obtainable only in the Archivo General de la Nación.

If there's interest, I'll discuss what the project is about in a later post.  Right now, I'll say that the Archivo was a great place to work.  The staff is incredibly helpful, and the reading room is rather pleasant, although the air-conditioning system was one of the loudest I've ever run across.  Thankfully, the Archivo has its own backup power system, and therefore was only hit with one brownout while I was working there. 

There was one pleasant mustacchioed old fellow there, quite garrulous.  I think he was a professor or former professor:  he was always nattily-dressed in jacket-and-tie, and he was usually assisted by some rather younger women.  At one point he turned to me and asked, "Are you from here?"  I smiled and said no.  He nodded, and asked if I were from Mexico or the U.S.  I lied, of course, at which point he said to me, and this was as weird as it sounds, "In the time of Trujillo, things were orderly." 

I later got the opportunity to glance at the 1940s-era newspapers that he was reviewing.  I'm fairly certain that he wasn't looking at the ads, but I found this one too striking not to record for posterity.

Extranjero vecino, indeed.

Dolarización y pesificación en el extranjero vecino

The Dominican Republic, like much of the extranjero vecino, is economically-married to the United States.  Far more so, in fact, that any of the Russian Federation’s near abroad.  The U.S. absorbs 72% of the country’s exports and provides 48% of its imports.  Americans and Dominicans resident in the United States make up 38% of all tourist arrivals.  Finally, and most strikingly, the huge hole in the Dominican Republic’s trade balance left after export sales and tourism receipts is plugged by remittances from Dominican workers living in the United States — an amount equal to 7 percent of the country’s GDP last year. 

The relationship goes beyond mere commercial convenience:  under CAFTA, Washington effectively sets Santo Domingo’s investor protections, labor standards, and environmental regulations.  Eat yer heart out, Vlad.

Still, there is one way in which the United States is conspicuously absent from Dominican life — the main currency is the “gold peso,” not the greenback.  That also wasn’t always true:  between 1905 and 1946, the Dominican Republic used the dollar as its currency, and if anything, the economic relationship is closer now than it was then.  This brings up three obvious questions, of course.  Why did the D.R. reintroduce its own currency?  What effects did that have?  And should it go back to the dollar? 

I’ll try to take a stab at all three below the fold.

Mas sabiduría del occidente para los griegos

This is not a joke.  But it is nonetheless very very funny.

I love it!  Now, again, please get over the whole name thing.  Please.

Hat tip:  Ross Douthat.  Commentary worth clicking the link.  And me say that I myself want to see a map where Canada includes all the West Indies, call it Absolut Caribe.  Anyone have their own irredentisms (or reverse irredentisms) that they'd like to see on a bus stop billboard for an alcoholic drink?  Suggestions in comments, please.

Movin’ on up

Here’s a brief primer on Dominican politics.  Leonel Fernández took over in 2004 in the wake of a severe economic collapse.  (More about that below the fold, with pictures.)  After cleaning up the mess Hipólito Mejía left behind, he’s presided over a fairly strong economic recovery.  He built a lot of infrastructure — most prominently, that subway line — and created programs to attract a boatload of foreign investment, particularly into tourism.  He also hiked taxes and privatized the phone company, pulling out a fiscal surplus in 2007.  Finally, he created Vamo’ Arriba — which quite literally translates into “Movin’ on Up,” presumably to a departamento de lujo en el cielo — a Dominican version of Roosevelt’s WPA that pays roughly $87 a month for three months in exchange for community service, cleaning out canals and the like, after which the recipient qualifies for a small business loan from a program called “Promipyme.”   

Fernández is currently tipped to win in the first round of the election on May 16th.  His opponent, Manuel Vargas of the Dominican Revolutionary Party (PRD), is popularly thought to have links to organized crime.  The PRD has struck back by accusing Fernández of using Vamo’ Arriba to buy votes and spending government money on his campaign.  In addition, the government faces strikes from doctors, teachers, and transport workers.  A demonstration on March 12th met water cannons, and teachers in the town of Bani have walked off the job claiming that they haven’t been paid in a year.

The graffito calls for a strike on April 9th.  More below the fold.

Santo Domingo

This is a great city.  It’s also a horrible city.  Neither should be a surprise.

Sadly, I’ve been mostly limited to the central area this trip.  I’m here for work, not play.  The same was true of Puerto Rico, of course, but there I had more time to work in a more-organized and less-interesting archive. 

Central Santo Domingo — the Zona Colonial and Gazcué — have no areas of truly concentrated desperation that I could find tucked away within them.  Nor do they appear to have any areas of concentrated nice, the kind of wealth amid poverty that makes you want to don a Ché Guevara T-shirt and start hollering, “¡Hasta la victoria siempre!”

Traffic is chaotic, and it’s not helped by the guaguas, private minibuses that ply most of the city’s routes despite an attempt to establish a municipal bus system.  Nor is it helped by the paucity of signage — you need to navigate by vector in most parts of this town.  I do not know whether that is the cause of the effect of the fact that Dominicans appear to pay even less attention to speed limits, posted signage (when it exists), or traffic lights than Mexicans. 

Bienvenidos al extranjero vecino

I got into Santo Domingo at night, after a two-hour flight and a three-hour wait on the tarmac at Miami International.  Tornado alert.  No s**t — tornados.  In South Florida.  Not that they told us that — just anodyne “weather conditions” — but in this age of cellphones I could surreptiously call my brother and ask him what was up.  He told me “tornado alert” in about the same tone of voice that he’d use to say “alien invasion” or “Argentine hip-hop.”

The air conditioning on the plane was iffy, and the flight was packed, but otherwise it wasn’t bad as waits go.  One of the few advantages of being short is that coach seats on American Airlines aren’t as uncomfortable as they otherwise might be.  There were lots of kids (not babies, not toddler, kids) on the flight, maybe a full quarter of the coach passengers, and I found the resulting roar to be strangely soothing.  When they first announced the delay everyone stood up and started milling about, but once the slightly annoyed stewardess asked everyone to sit down I was surprised by the alacrity with which everyone took their seats and remained in them for the remaining two-a-half-hours of our wait.

The Aeropuerto Internacional de las Américas isn’t bad.  As with so many Latin American airports — albeit not Mexico’s not anymore — foreigners speed through faster than the locals.  There was a fellow at the front of the line guiding people to the immigration booths … but, strangely, he didn’t seem to speak any English.  I wound up translating for the woman ahead of me; he wound up letting us all go through without getting our ten-dollar tourist cards.  Here’s hoping I don’t regret that when I try to leave.

Customs, exit into a foyer filled with fast-food restaurants and ATM machines, and onto the taxi stands.  The fellow who drove me into town was fairly taciturn, although he did ask me if I was from Mexico. 

My accent options in Spanish are:  (1) generic unidentified foreign type, usually pegged as French for reasons I don’t pretend to understand; (2) gringo — or on a good day Costa Rican, the only Spanish-speakers that I know of who pronounce the “r” in a mushy American-English way and sometimes elid the Spanish “e” to something more like the “i”; or (3) exaggeratedly stereotypically laughably Mexican.  Which one I adopt depends upon neurological and biochemical factors beyond my control. 

The highway downtown seemed rather nice, but it was night.  We crossed over the Río Ozama and pulled off the cloverleaf onto the riverfront road, and we passed a sight that brought home that No Estamos en Puerto Rico …

Sabiduría del occidente para los griegos

Doug recently wrote in A Fistful of Euros, “The Macedonia name issue is so stupid that it’s almost physically painful to write about it.”  I have to agree.  I made the mistake of scrolling down the comments thread.  Jee-sus.

Viewed from the extranjero vecino, the whole thing is incomprehensible.  Let me recap.  A smaller weaker country on the northern border of another has the same name as a province of the latter.  The larger stronger country fears that as long as its neighbor claims that name, it might also claim the province.  How the whole smaller-weaker versus stronger-larger thing would be overcome is left unexplained.

Somebody from the Spanish-speaking part of this hemisphere needs to take a Greek minister aside at a U.N. meeting and say something like:  “Listen, buddy, I understand your problem with northern neighbors and names.  We have a larger stronger northern neighbor that claims our entire continent in its name.  And, you know, periodically invades.  Like, recently, not umpty-scrump centuries ago.  But you don’t see us making a public fuss about it, so will you get over yourself already?”

Conversely, they could just go with Alta and Baja Macedonia.  Don’t even translate “Alta” and “Baja,” just transliterate ‘em.  I’m sure they sound fine in Greek, exotic like.  Be good for tourism. 

Doug, can it really be about the name?

El estado dominicano

My muse has left me for this trip.  Literally.  Amma had to take an exam on Tuesday, and then she needed to be in Philadelphia on Thursday.  So I’m here in Santo Domingo by myself, trying to think of something to blog about when I should be getting some sleep.

The Dominican Republic and the United States have a very long and tight relationship.  The relationship is so tight, in fact, that I’m not sure that the country really fits into the typical American conception of “foreign.”  The Russians have a phrase for the former territories of the Soviet Union: the “near abroad.”  Well, America has its own extranjero vecino, and this country is part of it.  Which makes the United States, of course, the vecino extrajero of the Dominican Republic.  (Or maybe just the vecino extraño.) 

You see the relationship right at immigration, where a giant sign cajoles overseas Dominicans to register to vote.  Dominican-Americans form a key electoral bloc in this country, which is why the major Dominican political parties have offices in San Juan, Miami, and New York. 

The current president, Leonel Fernández, is running for re-election to his third (non-consecutive) term.  Below is a 1996 interview with Fernández from the Charlie Rose show, right after he won the first time.  He says interesting things, but the most interesting thing is the accent in which he says them.

I’m telling you, he could win election anywhere between New Haven and Trenton with that voice.   

Orgulloso de ser argentino 2

A long time ago, Doug and I had an interesting discussion about what it meant to say that a nation was in the "First World."  The exchange seems to have been lost in the interstices of the Internets, but a lot of our conclusion boiled down to, "Appearances are deceptive."

Which makes this very interesting:

Why would people think that Cuba is doing better than northern Mexico, when the opposite is true? And more broadly, why do rich countries like Iceland and Korea feel much poorer than they are, while the opposite is true in countries like the Czech Republic?

The general rule is that countries that are historically poor, but become richer in a short span still don't have much accumulated wealth, and thus look poor to our eyes.  In contrast, previously rich places that are struggling still have the lingering wealth accumulation. Cuba fits this pattern. As does much of Europe.

I'd add that this effect has very real repercussions, well beyond touristic attitudes. My favorite example is Argentina during the 1990s, which went on a debt-fuelled spending spree. Every week one investment banker or other would fly down to Buenos Aires, put his team up at the Alvear Palace hotel, eat great food, drink great wine, enjoy a lively and vibrant culture, and pitch the finance ministry on a new bond issue. BA felt so prosperous and European (and, it must be said, white) that people ended up believing the evidence of their own eyes rather than the numbers in front of them.

In fact, large swathes of Argentina - and even of Buenos Aires, outside the parts visited by foreigners - were desperately poor all along. And eventually Argentina ended up defaulting on a hundred billion dollars or so of foreign debt. If Buenos Aires had looked more like Sao Paulo or Manila, I doubt that Wall Street would have been willing or able to finance the unsustainable boom for as long as it did.

In other words, becaues Argentina used to be incredibly wealthy, back at the turn of the century, it still felt wealthy at the end of the century. Which sowed the seeds of the disastrous crash of 2001-2.

Thoughts? 

Gunboats and Vultures

“When people ask me what I mean by stable government,” said General Leonard Wood of the United States Army, “I tell them, ‘money at six percent.’”

Carlos asked for an explanation of the squiggles in my last post, “America's Dream of EMPIRE!!!!”  Well, they’re from a working paper by Laura Álfaro, Noel Maurer, and Faisal Ahmed, the findings of which will in turn form part of a book tentatively entitled Imperial Experiments. 

So, the graphs.  The question behind the first graph is pretty simple:  did Leonard Wood succeed?  The colored lines measure the premium on Latin American sovereign debt over British consols.   The higher their value, the riskier investors believe Latin American bonds to be.  The vertical lines represent American interventions, starting with the bombardment of Dominican ports in February 1904. 

These interventions were all about insuring that governments continued to “pay their obligations,” e.g., their debts.  Gunboat-style debt enforcement went out of style for many reasons, but mostly because the Depression hit Latin economies so badly that Washington decided that sanctioning these governments would be a bit like kneecapping a paraplegic. 

Today a kinder and gentler way of enforcing sovereign debt has emerged.  “Vulture funds” go around buying up the debt of countries in default.  They then sue those countries in European and American courts.  The courts proceed to enforce their decisions by attaching any payments that clear through the developed world.  The vultures go after VAT and landing fees paid to Nicaragua by U.S. airlines, or privatization revenues from the sale of Panama’s telecoms, or Congo’s oil sales.
   
Deny the government revenue or otherwise muck up its economy.  Same effect, in theory, as a gunboat in the harbor.  Call it a virtual blockade. 

And as you can imagine, the vultures have triggered a huge debate (bigger in Europe than in the U.S., unsurprisingly) over whether their activities are good or bad for poor countries.  One thing is absent in that debate, though:  does vulturing work? 

America's Dream of EMPIRE!!!!

Now these results aren't as nice as the ones Carlos posted earlier, but they are nice.

These ones down here, though, not so much. 

So much for kinder, gentler imperialism.  Ni modo.   

Adelante, Juan Carlos, Adelante

I am not a fan of monarchy in general.  And with grandparents who fought on the losing side of the Spanish civil war, I certainly find it difficult to be much of a fan of the Spanish monarchy in particular.  Similarly, and for much more concrete reasons, I am no fan of José María Aznar. 

But I am a fan of José Luis Zapatero.  And King Juan Carlos did good facing down that coup back in '81. So much as I enjoy Hugo Chávez's bluster, I gotta give props to the King here.  It might almost be enough to make me a monarchist, were I not just so bloody American at heart. 

Dude, Where’s My Island?

Did you know that if you click on the pictures, a bigger sharper version will pop up in a new window?  I didn't.  FYI.

Above is a view of Santurce.  Or Miramar.  I'm fuzzy on the boundary.  Anyway, the moral of the picture seems to be, "buy now, if you can." 

Or not.  Did the Fed really directly purchase mortgage-backed securities yesterday?  Not a good time to invest in any sort of real estate.  Armageddon is a step closer.  Then again, socialism, in the form of central banks, will probably save us. 

But that's not the point of today's missive.  Today's missive is about why the Dominican Revolutionary Party has an office in San Juan.

It turns out that Santurce is ground zero for Dominican immigrants to Puerto Rico.  There are 33,000 Dominicans in San Juan, and an additional 28,000 in the rest of the Free State.   Since overseas Dominicans can vote, the PRD maintains a presence here.  The PRD got crushed in the 2004 election, so it needs all the support it can get, but in point of fact the Liberation Party and the Social Christians also have overseas offices here and on the mainland.   

The U.S. and the Dominican Republic have deep links, all the way back to President Buenaventura Báez's almost-successful attempt to sell his country to the U.S.  We invaded the place as recently as 1965.  (Foreign occupations never succeed?   You sure about that?)  And nowadays CAFTA has granted the U.S. almost total control over the D.R.'s trade and investment policies.  Combine the D.R.-U.S. relationship with Puerto Rico's geographic location, and the presence of a growing Dominican community on the island shouldn't surprise anyone.