1. Top prosecutor asks to investigate Brazil president (Reuters)
    Brazil’s Vice President, Michel Temer, Won’t Face Inquiry Over Petrobras (NYT)
    Brazil's Crusading Corruption Investigation Is Winding Down (Bloomberg)

    A prosecutor is attempting to investigate Rousseff for Petrobras scandals, though no evidence has yet been presented. That same prosecutor's office says Temer won't face an inquiry due to the lack of evidence, even though several media outlets in the past have reported scandals around the vice president. Meanwhile, Judge Moro says Lava Jato investigations will wind down later this year, even with a significant number of high level politicians including members of Congress still not prosecuted.

    Rousseff's opponents, particularly politicians in the PMDB and PSDB who face their own scandals, are hopeful that voters reduce their anger on the corruption issue once the president is removed from power. Rousseff's supporters suggest that the focus on the president and the failure to focus on other parties demonstrates that this is a politically motivated prosecution that amounts to a coup.

    I think the "coup" term is inaccurate, but the combination of those three stories published in the past day plays strongly into the narrative that the current situation in Brazil is more about attacking President Rousseff and forcing her from office than it is going after corruption in general. A key question will be whether voters demand that additional investigations and prosecutions take place in the coming months or if the demands for a less corrupt political system are temporarily sated by the removal of the president.
  2. A recent USITC report had these graphics showing how lifting the embargo would impact US trade with Cuba.


    The US share of Cuba's agriculture market would more than double from 16% to 34% while the US share of the market for manufactured goods would jump from 2% to 12%. While the Cuban market is far from the largest export market in the hemisphere, that is real potential growth for US companies. It is also likely to disrupt the current market within Cuba, which suggests that the Cuban government may slow any attempts to make rapid progress on that front. There is a fair amount of risk to investing in Cuba, but there is clearly potential reward as well given the underdeveloped nature of the market there.

    In spite of the US politics still being in the air, the debate in much of the business community has moved on from whether the embargo will be lifted to when. Businesses are already talking about the details of the investments and the conditions on the ground in Cuba. Southern Pulse is hosting a Cuba Investment Forum in Ft. Lauderdale on 12 May to discuss some of the details on these investments, including port infrastructure, telecom infrastructure, energy, tourism, and the financing of investments in Cuba.

    One big question moving forward is finance. These investments require serious capital and the companies likely to provide that capital are looking for protections. That is a tough ask in a nominally Communist country known for expropriating businesses and keeping much of the labor market under government control. Even if the embargo is lifted, there are FCPA issues and worries that the Cuban government will demand some take on any investment going in.

    A second question will be how the Cuban market itself changes and expands. If the Cuban government opens up in the coming years, there is significant room for growth in the tourism, energy and infrastructure sectors and a boom in the Cuban economy could change the data that went into those charts above. Companies that take the risk to get in early would benefit. That, of course, is the optimistic scenario and why businesses are looking to get in.
  3. Sixty days after Berta Caceres's murder, Honduran police arrested four people in connection with the attack. Importantly, they didn't just round up a few random gang members, as I think many feared.
    Sergio Ramón Rodriguez, an engineer for the Agua Zarca dam being built by Desarrollos Energéticos SA (Desa), and Douglas Geovanny Bustillo, a retired military officer and the former head of Desa’s security detail, were both detained on Monday morning, according to the Honduran public prosecutor’s office.

    I was critical at the beginning of the investigation that the Honduran government was trying to pin the problem on social movements and had failed to question anyone with Agua Zarca. The most obvious suspects were those connected with Agua Zarca and Desa, the project and company against which Caceres was protesting.

    While these arrests look like a positive step for the case, the Honduran government should still allow independent international investigators to look into the murder. This case has exposed a lack of trust that a significant portion of the Honduran population has with the government and its investigative capacity. The Honduran government will need to explain whether they really believe the former head of Desa security targeted Caceres without the orders or consent of those higher up in the organization. An international investigation would do a lot to find additional information that will help the prosecution of the murderers put people's doubts to rest that others may have been involved.
  4. If you suffer through Diehl's column on Washington ignoring Venezuela to the end, he does offer two specific action items requested by Venezuela's opposition for the US to do:
    The Venezuelan lawmakers had some practical and specific requests for the Obama administration, starting with the public release of the names and alleged offenses of top Venezuelan officials included on a confidential U.S. sanctions list. They’d also like help finding the $300 billion to $400 billion they estimate has been stashed in foreign bank accounts by the Chavista elite; the money is desperately needed to import food and stave off a foreign debt default.
    As part of the confirmation of Roberta Jacobson to be ambassador to Mexico, the Congress extended Venezuela sanctions for another three years. Ideally, the sanctions on Venezuela would have been judged on their own merits and not log-rolled in a broader foreign policy compromise, but it was a necessary deal in this case.

    The public release of names could antagonize the Venezuelan government. I don't think it should be done in one statement, but rather on a case-by-case basis and with clear evidence of the abuses for which the individuals are being sanctioned. It's also important to highlight the individuals who are being sanctioned as a reminder that these sanctions are against individuals who have significantly abused human rights or committed large acts of corruption. The sanctions aren't against the whole country. Still, it's not as if the Venezuelan public does not know that its government is corrupt. It is unclear how effective any further naming of sanctioned individuals would be. In contrast, holding those names privately creates some potential leverage in behind the scenes negotiations.

    Identifying money stolen via corruption should be done by the US, but it's not clear what happens when that money is identified. Does the US give that money back to the Maduro government so it can be stolen again? Hold it in an account until there is a more responsible government, which would really anger the Chavistas and appear cruel as the country suffers through food and energy shortages? Create our own parallel version of Cadivi to manage Venezuela's sovereign accounts for them? Give the money to the MUD leadership? Those last two options would have almost no legal basis, I just throw them out there to show how difficult the options are here.

    It's easy to complain about the US or others not doing enough about Venezuela, but the options for what to do are not particularly simple. The bias towards action in foreign policy suggests that we should be doing something and that there is some action that can improve the situation. The truth is that while the US should be engaged and trying to improve the situation, there are few actionable policy options the US or the hemisphere can undertake to help Venezuela right now and some actions could be counter-productive. The future of the country is in the hands of the Venezuelans.
  5. NYT:
    In recent weeks, at least 135 mayors aligned with the Workers’ Party have changed their party affiliations — about a fifth of the nation’s mayors who had been elected on the party’s ticket.
    That is a fascinating detail inside the article on Brazil President Rousseff's poor management of politics and alliances.

    Switching parties is surprisingly common for Brazil's politicians. Few politicians are punished for moving from party to party. It's hard for parties to insist their voters remain loyal when so many elected leaders appear willing to flip sides in the middle of their term.

    The fact so many mayors are jumping ship before October's municipal elections could be a sign of some very bad results coming for the PT.
  6. Once elections are postponed for any reason, even a good one, they are at risk of being postponed again and again.

    To nobody's surprise, Haiti did not hold the second round of its presidential election last weekend as scheduled. Instead, Interim President Jocelerme Privert has now installed a commission that will spend the next 30 days looking at the accuracy of the first round to determine if the two top contenders should remain in the runoff.

    That is also Privert's way of announcing that the election will not happen before his interim mandate (already a constitutionally fuzzy issue) expires on 14 May. Does he stay as president? Does the parliament hold yet another election? And how long does the next extra-constitutional interim president get to stay for? What happens if elections don't happen this year? Or in the next two years? When does the OAS finally declare that Haiti is no longer a democracy?

    That final question should be seriously considered by the international community. I understand and sympathize with the good intentions of those who want to make sure that Haiti's elections are better managed. The first round had significant irregularities according to the commission that looked in to it, though the irregularities were unlikely to have affected who came in first and second place. It is almost certain that several political parties used illegal campaign methods to boost their vote totals and Martelly's party was the worst offender. Haiti should want to get this second round correct, as well as the runoff elections for other positions that have also been postponed.

    At the same time, the current governing situation has no constitutional basis. Had Haiti's second round election occurred on schedule, Jovenel Moise would likely have won and currently be president. Instead, an interim government not defined by constitutional procedures has taken over, cancelled the rescheduled election and now has no timetable for a new election process. You don't have to be a fan of Moise or Martelly to agree that Moise is being blocked from the presidency through some fairly unconventional means.

    The current situation involves an unelected government operating for an indefinite period of time making up the rules as it goes along to block scheduled elections. Even if done with the best of intentions of improving Haiti's election conditions, the current situation is a break with constitutional democracy, an unintended coup.

    The country is now stuck between two bad options: hold elections sooner whose legitimacy will be questioned by those who want to wait for better conditions or continue on with an unelected and unconstitutional government that lacks legitimacy until somehow better conditions are created.
  7. In January 2010, I posted a Venezuela government powerpoint presentation that concluded, "If the level of the Guri reservoir continues to falling, Venezuelans will confront a severe energy crisis in 120 days, leading to a collapse of the national electrical system."

    The country barely dodged that crisis in 2010. Did President Chavez and his ministers realize just how close the country’s electrical infrastructure was to collapse and decide to fix it?

    Here is what I wrote in 2013, after a series of brownouts and blackouts:
    ...the system has lived on the edge of collapse since then and the government has not made the major repairs and investments needed to do any better.

    That sentence still holds true in April 2016. The system is about 17 days away from collapse and the rainy season around Guri is about 18 days away from starting. Both of those numbers are rough estimates with large enough margins of error that this is essentially a coin flip.

    Venezuela is cutting its workweek to two days and implementing hours of rolling brownouts to attempt to avoid a complete collapse of its electrical grid. President Maduro's government may even pull it off at the cost of significant pain to an already suffering local economy.

    What is important is that analysts don’t treat this as an unexpected one-off event or the result of some rare climate pattern that nobody could have predicted. Nearly every country in the region is facing a challenging climate year, but only one country has been forced into massive rationing. The Chavistas have been in power for over 15 years, the electrical problems have been known for over a decade, and six years ago this exact scenario was predicted in a Venezuelan government document. They’ve had time to fix this problem. Their failure to do so is the result of mismanagement and corruption under Presidents Chavez and Maduro.
  8. NYT:
    The reports describe a night of confusion and terror for the students and city residents, and a seemingly clinical, coordinated harvest by Mexican law enforcement officials and other gunmen operating in and around Iguala, in Guerrero, one of Mexico’s poorest and most violent states.
    The Interdisciplinary Group of Independent Experts (GIEI) provided its report on the investigation into the disappearance of the 43 students from Ayotzinapa, Guerrero. The group, appointed by the Inter-American Commission on Human Rights, did a tough job of piecing together the evidence amid multiple challenges including a media smear campaign. Among their findings, confessions about the night were obtained after torture and bribery, which discredits much of the official narrative. More of the group's findings from NYT, Vice, WSJ, and The New Yorker.

    As a hemisphere, this is another example of an outside investigative group providing needed support and balance to the work of sovereign governments. The fact these groups are effective in publicizing credible evidence and questioning poor work done by local investigators is why they are often opposed by local governments. It is also why these sorts of efforts should be funded and expanded.
  9. Juan at Caracas Chronicles has a very smart post about the lessons that Chile President Patricio Aylwin may hold for Venezuela. The recently deceased Aylwin led a difficult transition away from Pinochet's 17 year dictatorship, making compromises with the general including leaving him as head of the military, keeping the Pinochet-written constitution, and not prosecuting abuses that occurred during the dictatorship. Given that experience, Juan asks what compromises the Venezuelan opposition may have to make in an eventual power transition and whether the country is likely to see a transitional leader who is a pragmatic centrist rather than a solid opposition figure.

    Here are three key questions raised:

    1. Are the human rights abuses and corruption of the Chavista leaders investigated and prosecuted or are they set aside to help stabilize the country and move forward? The Venezuelan opposition debated a potential amnesty law for Chavistas during the 2011 primary, with Maria Corina Machado declaring she would pass one in the opening days of her administration. One of the challenges of the analogy is that the worst of the Pinochet abuses were stacked at the beginning of his time in power while the Chavista abuses have been gradually worsening over their time in office, which will make the immediate pressure to prosecute by the citizens of the country that much greater. On this question, Aylwin's compromise of having a truth commission could be ideal. It avoids the political tension of the prosecutions while placing the facts of the abuses on paper for future generations to learn from.

    2. How much power do the Chavistas keep in a transition? What is done to de-Chavez the country's institutions? The Chavistas have inserted themselves into every institution in the country, even those that are supposed to be non-partisan. Even if the opposition takes power, the Chavistas will still be the power-holders in the judiciary, PDVSA and the military. Certainly, the leadership of these institutions will need to be overhauled to undo some of the damage done and improve the country. There are three challenges to this:

    a) The Chavistas are going to fight to hold on to power wherever they have it. The same way Pinochet demanded to hold on to the military in exchange for the transition, the Chavistas are going to use their control of institutions as negotiating leverage and some compromises will have to be made.

    b) Some institutions, such as the military, require a long time to bring leaders up. It's not as if you can just hire new generals. They have to be promoted through the ranks over the course of years, and the current officer corps is all Chavista. Similarly, sacking the entirety of PDVSA's workforce and other government agencies again isn't going to help the country overcome its energy production and electrical generation problems. There is a certain level of institutional expertise that needs to be maintained. These institutions need at least a decade to rebuild.

    c) Even if they lose in a democratic transition, the Chavistas still represent some base of the citizens in the country. They should be represented in some ways in the country's institutions (even if they often didn't provide that to the opposition). Failing to give them representation isn't just bad democratic practice, it is a stability risk in that it pushes those former power brokers to find non-institutional ways to oppose the new government.

    3) What sort of leader is the first post-Chavista leader? Aylwin opposed Allende and supported the coup in its opening days before transitioning to become a leader of the opposition to Pinochet. For Venezuela's opposition to win, they need former Chavista voters and politicians within their coalition. The idea of bringing former Chavistas in to be part of the cabinet or the legislative majority, or even as a potential transitional president, are going to be very hard pills for Venezuela's hardline opposition. However, that sort of willingness to work with previous opponents may be necessary to pull off the messy compromises that rebuilding the country will take.
  10. In 2009, I wrote about how most Latin American leaders and Latin American public opinion were against drug legalization or decriminalization.

    In 2012, I wrote how three leaders who were proposing decriminalization were among the most hawkish on military, security and defense issues.

    I thought about those two posts when I looked at this map in the Washington Post about drug decriminalization in the hemisphere. What strikes me in 2016 is how the hemisphere's trade policies line up with marijuana decriminalization efforts.

    Three out of four Pacific Alliance Countries are taking steps to decriminalize. So are three out of three NAFTA countries. Only one out of eleven ALBA countries and one out of five Mercosur countries are marked on the map.

    And so, I ask more than half-jokingly, why does neoliberalism correlate with decriminalization while socialism favor prohibition? What makes countries with real free trade alliances more likely to decriminalize?

    There is plenty you can pick apart with those questions. I'm not intending them to be a real framework for analysis. Yet, it's undeniable that the Pacific Alliance is moving towards decriminalization while the governments of Venezuela, Brazil and Cuba remain among the strongest supporters of prohibition in the hemisphere. Going back to the 2009 Latin American Commission on Drugs and Democracy that recommended decriminalization, it was led by former presidents Fernando Henrique Cardoso (Brazil), Cesar Gaviria (Colombia) and Ernesto Zedillo (Mexico), all free trade promoters. Today, the leaders of Mexico and Colombia are the ones making news supporting decriminalization at UNGASS, not exactly the allies that most legalization supporters in the DC thinktank circuit expected a decade ago.

    I still think we are seeing a militarized decriminalization and the fact that military hawks are implementing drug policy reform in some of the hemisphere's most important countries has important implications. At the same time, I think there is something to be said for free trade alliances playing a role in this hemispheric growing push for drug policy reform. Economic integration has increased the impact of Latin America's experiments with drug policy reform in the US as well as the influence of US states' experiments in the region. While Uruguay's marijuana experiment could occur in relative isolation, Mexico's and Colombia's and Colorado's and California's can't. The success of drug policy reforms build on each other across borders more quickly in a free trade environment.
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