Tag Archives: Menges Hemispheric Security Project

Implications of Cuba’s leadership change

Cuban Excerpt from the Testimony before the Committee on Foreign affairs. Sub-committee on the Western Hemisphere. United States House of Representatives.  

Submitted by: Nancy Menges*, Luis Fleischman*, and Nicole Ferrand.*

Due to his illness, Fidel Castro appointed his brother, Raul Castro acting president of Cuba in July, 2006. On February 24, 2008, Cuba’s highest governing body, The Council of State, made this appointment permanent. Though characterized as a better and more pragmatic manager, Raul, who has been Defense Minister for the past forty nine years, has been a life long communist and remains ideologically close to his brother. Therefore, many believe that though there may be some minor changes that he will not deviate significantly from the last almost half century of Castro rule. From his hospital bed, Fidel remains an important presence and continues in his post as the head of the Cuban Communist Party.

Since becoming president, Raul has promised “structural changes” and said “we have to make our government’s management more efficient”. According to recent news reports, he has acknowledged that the average Cuban salary of twelve to seventeen dollars a month is too little to live on. While Raul talks of increasing salaries and lessening government control over the economy, his actions have only been reflected in minor changes in policy. For example, the Cuban government has decentralized the production and distribution of milk and has ordered new buses from China to ease major transportation problems. However, in terms of how the majority of the Cuban population still lives, very little has changed. Food continues to be rationed by neighborhood block committees, goods such as eggs and chicken are in short supply, the monthly ration reportedly only lasts for one or two weeks, housing is limited and overcrowded, and in spite of people’s efforts to get ahead, the government taxes income earned from private initiatives or refuses to grant licenses to “businesses on the side”.

What is interesting is that after the fall of the Soviet Union and the halt in their economic support, Cuba’s economy (according to a February 23, 2008 report in the Economist) shrank by 35 percent. As a result, Castro declared a “special period” and opened the economy to tourism, foreign investment in certain sectors, farmers markets, small privately owned businesses, and legalized the use of the dollar which opened the way to hard currency via remittances from one million plus Cuban Americans.1 This special period lasted from 1989 to 1996 and was reversed even though the economy was beginning to stabilize. The reasons why it was reversed perhaps have implications for how the current leadership may react. Apparently, the reforms were stopped because Castro believed that some people in society were benefiting more than others and that “it was a threat to the regime as it undermined party control”.2 In terms of current financial support, Cuba now relies on Chinese credit and three to four billion dollars worth of free oil from Hugo Chavez as well as an additional one and a half billion dollars of additional aid from the Venezuelan president.  

While there has been a change in leadership in Cuba, there has not been a transition to any significant change in ideology, in governance, in the abysmal living conditions of most Cubans, nor in the area of human freedoms. As reported by various human rights organizations, there are approximately two hundred political prisoners incarcerated in Cuban jails. It is also important to keep in mind that the Castro brothers remain hostile to American values and principles, especially democratic governance, capitalism and free markets and that they have spent their entire adult lives fighting against our way of life. In addition, it was not that long ago that Castro met with Ahmendinejad of Iran and proclaimed, “Together, we will bring the U.S. to its knees”.

The Embargo

The United States embargo against Cuba is an economic, commercial and financial instrument enacted on February 7, 1962 after Cuba expropriated the properties of U.S. citizens and corporations. The embargo was tightened in 1963 after the Cuban Missile Crisis and was reinforced in October 1992 by the Cuban Democracy Act and in 1996 by the Cuban Liberty and Democracy Solidarity Act (known as the Helms-Burton Act). This latter measure applies to foreign companies trading with Cuba and is meant to penalize those companies that allegedly traffic in property formerly owned by US citizens but expropriated by Cuba after the revolution. In October 2000, the embargo was further altered by the Trade Sanctions, Reform and Export Enhancement Act that relaxed the sale of agricultural goods and medicines to Cuba for humanitarian reasons.

Contrary to critics’ claims, lifting of the embargo and the travel ban without meaningful changes in Cuba will have several negative repercussions. First, it will send a poor message about U.S. toleration both of Cuba’s patterns of unsavory behavior and its totalitarian system. Second, a cessation of the embargo will strengthen state enterprises since most Cuban businesses are run by the state and since the Cuban government retains a partnership interest in all foreign investment. Third, it will lead to greater domestic repression and control because the leadership fears the “subversive” effects of U.S. influence upon the Cuban people. A transition to democracy on the island will thus be delayed.

The economic impact of tourism, while providing the Castro government with much needed dollars, would be limited. Dollars will flow in small quantities to the Cuban poor; state and foreign enterprises will benefit most. We have to keep in mind that no foreign trade that is independent from the state is permitted in Cuba and workers are paid below comparable wages. Cuban leaders, in any event, would allow only enough commerce to maintain their regime.

Investments will be directed and approved by the Cuban government. The Cuban government is unlikely to create a level plain field for American companies, allowing some to invest while discriminating capriciously against others. It is illegal for foreign companies to hire or fire Cuban workers directly and hiring is done by the Ministry of Labor. Foreign companies must pay the wages owed to their employees directly to the Cuban government in hard currency. The Cuban government then pays out to the Cuban workers in Cuban pesos, which are worth 1/20 of a U.S. dollar, pocketing 90 percent of every dollar it receives.3

The lifting of the embargo would allow the Castro’s to borrow from international organizations: such as the IMF, the World Bank, etc. Since Cuba owes billions of dollars to the former Soviet Union, to the Club of Paris, and to others, and has refused in the past to acknowledge or pay these debts, new loans will be wasted by Castro’s inefficient and wasteful system, and will be uncollectible. The reason Castro has been unable to pay back loans is not because of the U.S. embargo, but because his economic system stifles productivity and he continues to spend on the military, on adventures abroad, and on supporting a bankrupt welfare system on the island.4

Opponents to the embargo cite US trade with China as a reason for ending the Cuban embargo; but this example merely illustrates that American policy has been inconsistent. Trade with China, if it shows anything, demonstrates that there is little correlation between commerce and political liberalization, at least over the short term. After all, the Chinese Communist Party has, in the last two decades, managed to increase both trade and political repression. So far, commerce has strengthened the hands of communists in China.5

The embargo should only be lifted when Cuba changes its current system and develops a democratic society. U.S. policy towards Cuba is not anachronistic but is rather aimed at the legitimate goal of a free Cuba; the lifting of the embargo now will be an important psychological victory for Castro and would be interpreted as a defeat for U.S. policy. There is also no indication that negotiation and incentives can influence Cuba, which has ignored such “carrot and stick” approaches in the past. Without major internal reforms in Cuba, the Castro government – not the Cuban people – will be the main beneficiary of the lifting of the embargo, since it will use this newly-acquired wealth to strengthen its hold on the Cuban people, to rebuild its military apparatus, and to engage again in supporting anti-American terrorist and violent groups in Latin America and elsewhere.6

The reason for Cuba’s economic suffering is a Marxist system that discourages incentives. As in Eastern Europe under Communism, the failed Communist system is the cause of the economic suffering of the Cubans, not the U.S. embargo.7

The embargo was never established to overthrow the Castro government. The embargo was established to punish the Castro government for the confiscation of American properties and to pressure it to slow down its move into the Communist camp. The embargo has been maintained to show that Marxist-Leninism does not work as an economic or political system and to use it as a tool to extract human rights, economic and political concessions from the current or future Cuban government.

Hugo Chavez plays a crucial role in providing life-oxygen to the Cuban regime. In this time of history it is Hugo Chavez who represents the main threat to regional stability and geo-political security in the western hemisphere and perhaps beyond. 

Nancy Menges, Editor in Chief of the Americas Report. Mrs. Menges, the co-founder of the Menges Hemispheric Security Project, is in charge of the weekly edition of CSP’s Americas Report. Fluent in Spanish, she holds a degree in International Relations from the University of Wisconsin-Madison and has studied at the University of the Americas in Mexico City. Her postgraduate degree has been earned from the University of Maryland. She has testified in Congress and submitted CSP’s statement regarding US-Colombian relations to the House Subcommittee on the Western Hemisphere.

Dr. Luis Fleischman is an advisor to the Menges Hemispheric Security Project at the Center for Security Policy in Washington DC. He is also an adjunct professor of Political Science and Sociology at Wilkes Honor College at Florida Atlantic University.

Nicole M. Ferrand is a research analyst and editor of “The Americas Report” of the Menges Hemispheric Security Project at the Center for Security Policy in Washington DC. (www.centerforsecuritypolicy.org). She is a graduate of Columbia University in Economics and Political Science with a background in Law from Peruvian University, UNIFE and in Corporate Finance from Georgetown University.

  1. The Economist, Feb 23, 2008. The Commandante’s Last Move.
  2. The Economist, Feb 23, 2008. The Commandante’s Last Move
  3. Cuban Communism. By Irving Louis Horowitz, Jaime Suchlicki
  4. What lifting embargo on Cuba would really mean. By Georgie Ann Geyer. July 20, 2000
  5. In Defense of the Cuban Embargo. Gordon G. Chang. February 20, 2008
  6. In Defense of the Cuban Embargo. Gordon G. Chang. February 20, 2008
  7. Why the Cuban Trade Embargo Should Be Maintained. November 10, 1994. The Heritage Foundation.

Main News:

  • NEWS FLASH: BARACK OBAMA MENTIONED IN SEIZED FARC DOCUMENTS.
  • Summary of the meeting with President Correa’s Envoy with the FARC found in Reyes’ laptop.
  • ANDEAN CONFLICT: No. 2 FARC Commander Reyes Killed in Gunfight . Chávez’s call to Reyes revealed location of FARC camp. Colombia discloses documents linking Chávez to the FARC. Seized Laptop Shows Chavez’s – Correa Rebel Ties. Colombia Worried FARC Seek Uranium . The Washington Post: Venezuela and Ecuador rulers are "backers of criminals." Desperate Chávez sends troops, aircraft to border with Colombia. Uribe’s charges against Chávez to be revised. Colombia ‘s vice-president denounces alliances. France contacted Reyes.
  • OAS doesn’t condemn Bogotá – Colombia acted in self-defense. OAS: Ecuador, Colombia reach agreement on resolution.
  • Bush told Uribe the US is to back democratic allies.
  • Nicaragua severs ties with Colombia.
  • Pdvsa is "reengineering" its finances to avoid sanctions. Pdvsa customers making payments through Central Bank account in Switzerland.
  • OPEC backs Venezuela in legal dispute with Exxon Mobil.
  • Investigation requested into alleged Venezuelan ideological infiltration in Peru.
  • Argentinian President goes to Venezuela to show support for Chavez. Argentina suitcase scandal: Kauffman pleads GUILTY.
  • People’s Party: The Spanish government is an accomplice of Chávez’s attitude.

View the full version of the Americas Report (PDF)

For any questions, comments, or those interested in receiving this report in the future or seeking to have their email removed from our list please contact Nicole M. Ferrand at our new e-mail address: themengesproject@centerforsecuritypolicy.org or to themengesproject@gmail.com. If you have news stories that you think might be useful for future editions of this report please send them, with a link to the original website, to the same e-mail address. If you wish to contribute with an article, please send it to the same address, with your name and place of work or stu dy.

Implications of Cuba’s leadership change

Cuban Excerpt from the Testimony before the Committee on Foreign affairs. Sub-committee on the Western Hemisphere. United States House of Representatives.  

Submitted by: Nancy Menges*, Luis Fleischman*, and Nicole Ferrand.*

Due to his illness, Fidel Castro appointed his brother, Raul Castro acting president of Cuba in July, 2006. On February 24, 2008, Cuba’s highest governing body, The Council of State, made this appointment permanent. Though characterized as a better and more pragmatic manager, Raul, who has been Defense Minister for the past forty nine years, has been a life long communist and remains ideologically close to his brother. Therefore, many believe that though there may be some minor changes that he will not deviate significantly from the last almost half century of Castro rule. From his hospital bed, Fidel remains an important presence and continues in his post as the head of the Cuban Communist Party.

Since becoming president, Raul has promised “structural changes” and said “we have to make our government’s management more efficient”. According to recent news reports, he has acknowledged that the average Cuban salary of twelve to seventeen dollars a month is too little to live on. While Raul talks of increasing salaries and lessening government control over the economy, his actions have only been reflected in minor changes in policy. For example, the Cuban government has decentralized the production and distribution of milk and has ordered new buses from China to ease major transportation problems. However, in terms of how the majority of the Cuban population still lives, very little has changed. Food continues to be rationed by neighborhood block committees, goods such as eggs and chicken are in short supply, the monthly ration reportedly only lasts for one or two weeks, housing is limited and overcrowded, and in spite of people’s efforts to get ahead, the government taxes income earned from private initiatives or refuses to grant licenses to “businesses on the side”.

What is interesting is that after the fall of the Soviet Union and the halt in their economic support, Cuba’s economy (according to a February 23, 2008 report in the Economist) shrank by 35 percent. As a result, Castro declared a “special period” and opened the economy to tourism, foreign investment in certain sectors, farmers markets, small privately owned businesses, and legalized the use of the dollar which opened the way to hard currency via remittances from one million plus Cuban Americans.1 This special period lasted from 1989 to 1996 and was reversed even though the economy was beginning to stabilize. The reasons why it was reversed perhaps have implications for how the current leadership may react. Apparently, the reforms were stopped because Castro believed that some people in society were benefiting more than others and that “it was a threat to the regime as it undermined party control”.2 In terms of current financial support, Cuba now relies on Chinese credit and three to four billion dollars worth of free oil from Hugo Chavez as well as an additional one and a half billion dollars of additional aid from the Venezuelan president.  

While there has been a change in leadership in Cuba, there has not been a transition to any significant change in ideology, in governance, in the abysmal living conditions of most Cubans, nor in the area of human freedoms. As reported by various human rights organizations, there are approximately two hundred political prisoners incarcerated in Cuban jails. It is also important to keep in mind that the Castro brothers remain hostile to American values and principles, especially democratic governance, capitalism and free markets and that they have spent their entire adult lives fighting against our way of life. In addition, it was not that long ago that Castro met with Ahmendinejad of Iran and proclaimed, “Together, we will bring the U.S. to its knees”.

The Embargo

The United States embargo against Cuba is an economic, commercial and financial instrument enacted on February 7, 1962 after Cuba expropriated the properties of U.S. citizens and corporations. The embargo was tightened in 1963 after the Cuban Missile Crisis and was reinforced in October 1992 by the Cuban Democracy Act and in 1996 by the Cuban Liberty and Democracy Solidarity Act (known as the Helms-Burton Act). This latter measure applies to foreign companies trading with Cuba and is meant to penalize those companies that allegedly traffic in property formerly owned by US citizens but expropriated by Cuba after the revolution. In October 2000, the embargo was further altered by the Trade Sanctions, Reform and Export Enhancement Act that relaxed the sale of agricultural goods and medicines to Cuba for humanitarian reasons.

Contrary to critics’ claims, lifting of the embargo and the travel ban without meaningful changes in Cuba will have several negative repercussions. First, it will send a poor message about U.S. toleration both of Cuba’s patterns of unsavory behavior and its totalitarian system. Second, a cessation of the embargo will strengthen state enterprises since most Cuban businesses are run by the state and since the Cuban government retains a partnership interest in all foreign investment. Third, it will lead to greater domestic repression and control because the leadership fears the “subversive” effects of U.S. influence upon the Cuban people. A transition to democracy on the island will thus be delayed.

The economic impact of tourism, while providing the Castro government with much needed dollars, would be limited. Dollars will flow in small quantities to the Cuban poor; state and foreign enterprises will benefit most. We have to keep in mind that no foreign trade that is independent from the state is permitted in Cuba and workers are paid below comparable wages. Cuban leaders, in any event, would allow only enough commerce to maintain their regime.

Investments will be directed and approved by the Cuban government. The Cuban government is unlikely to create a level plain field for American companies, allowing some to invest while discriminating capriciously against others. It is illegal for foreign companies to hire or fire Cuban workers directly and hiring is done by the Ministry of Labor. Foreign companies must pay the wages owed to their employees directly to the Cuban government in hard currency. The Cuban government then pays out to the Cuban workers in Cuban pesos, which are worth 1/20 of a U.S. dollar, pocketing 90 percent of every dollar it receives.3

The lifting of the embargo would allow the Castro’s to borrow from international organizations: such as the IMF, the World Bank, etc. Since Cuba owes billions of dollars to the former Soviet Union, to the Club of Paris, and to others, and has refused in the past to acknowledge or pay these debts, new loans will be wasted by Castro’s inefficient and wasteful system, and will be uncollectible. The reason Castro has been unable to pay back loans is not because of the U.S. embargo, but because his economic system stifles productivity and he continues to spend on the military, on adventures abroad, and on supporting a bankrupt welfare system on the island.4

Opponents to the embargo cite US trade with China as a reason for ending the Cuban embargo; but this example merely illustrates that American policy has been inconsistent. Trade with China, if it shows anything, demonstrates that there is little correlation between commerce and political liberalization, at least over the short term. After all, the Chinese Communist Party has, in the last two decades, managed to increase both trade and political repression. So far, commerce has strengthened the hands of communists in China.5

The embargo should only be lifted when Cuba changes its current system and develops a democratic society. U.S. policy towards Cuba is not anachronistic but is rather aimed at the legitimate goal of a free Cuba; the lifting of the embargo now will be an important psychological victory for Castro and would be interpreted as a defeat for U.S. policy. There is also no indication that negotiation and incentives can influence Cuba, which has ignored such “carrot and stick” approaches in the past. Without major internal reforms in Cuba, the Castro government – not the Cuban people – will be the main beneficiary of the lifting of the embargo, since it will use this newly-acquired wealth to strengthen its hold on the Cuban people, to rebuild its military apparatus, and to engage again in supporting anti-American terrorist and violent groups in Latin America and elsewhere.6

The reason for Cuba’s economic suffering is a Marxist system that discourages incentives. As in Eastern Europe under Communism, the failed Communist system is the cause of the economic suffering of the Cubans, not the U.S. embargo.7

The embargo was never established to overthrow the Castro government. The embargo was established to punish the Castro government for the confiscation of American properties and to pressure it to slow down its move into the Communist camp. The embargo has been maintained to show that Marxist-Leninism does not work as an economic or political system and to use it as a tool to extract human rights, economic and political concessions from the current or future Cuban government.

Hugo Chavez plays a crucial role in providing life-oxygen to the Cuban regime. In this time of history it is Hugo Chavez who represents the main threat to regional stability and geo-political security in the western hemisphere and perhaps beyond. 

Nancy Menges, Editor in Chief of the Americas Report. Mrs. Menges, the co-founder of the Menges Hemispheric Security Project, is in charge of the weekly edition of CSP’s Americas Report. Fluent in Spanish, she holds a degree in International Relations from the University of Wisconsin-Madison and has studied at the University of the Americas in Mexico City. Her postgraduate degree has been earned from the University of Maryland. She has testified in Congress and submitted CSP’s statement regarding US-Colombian relations to the House Subcommittee on the Western Hemisphere.

Dr. Luis Fleischman is an advisor to the Menges Hemispheric Security Project at the Center for Security Policy in Washington DC. He is also an adjunct professor of Political Science and Sociology at Wilkes Honor College at Florida Atlantic University.

Nicole M. Ferrand is a research analyst and editor of “The Americas Report” of the Menges Hemispheric Security Project at the Center for Security Policy in Washington DC. (www.centerforsecuritypolicy.org). She is a graduate of Columbia University in Economics and Political Science with a background in Law from Peruvian University, UNIFE and in Corporate Finance from Georgetown University.

  1. The Economist, Feb 23, 2008. The Commandante’s Last Move.
  2. The Economist, Feb 23, 2008. The Commandante’s Last Move
  3. Cuban Communism. By Irving Louis Horowitz, Jaime Suchlicki
  4. What lifting embargo on Cuba would really mean. By Georgie Ann Geyer. July 20, 2000
  5. In Defense of the Cuban Embargo. Gordon G. Chang. February 20, 2008
  6. In Defense of the Cuban Embargo. Gordon G. Chang. February 20, 2008
  7. Why the Cuban Trade Embargo Should Be Maintained. November 10, 1994. The Heritage Foundation.

Main News:

  • NEWS FLASH: BARACK OBAMA MENTIONED IN SEIZED FARC DOCUMENTS.
  • Summary of the meeting with President Correa’s Envoy with the FARC found in Reyes’ laptop.
  • ANDEAN CONFLICT: No. 2 FARC Commander Reyes Killed in Gunfight . Chávez’s call to Reyes revealed location of FARC camp. Colombia discloses documents linking Chávez to the FARC. Seized Laptop Shows Chavez’s – Correa Rebel Ties. Colombia Worried FARC Seek Uranium . The Washington Post: Venezuela and Ecuador rulers are "backers of criminals." Desperate Chávez sends troops, aircraft to border with Colombia. Uribe’s charges against Chávez to be revised. Colombia ‘s vice-president denounces alliances. France contacted Reyes.
  • OAS doesn’t condemn Bogotá – Colombia acted in self-defense. OAS: Ecuador, Colombia reach agreement on resolution.
  • Bush told Uribe the US is to back democratic allies.
  • Nicaragua severs ties with Colombia.
  • Pdvsa is "reengineering" its finances to avoid sanctions. Pdvsa customers making payments through Central Bank account in Switzerland.
  • OPEC backs Venezuela in legal dispute with Exxon Mobil.
  • Investigation requested into alleged Venezuelan ideological infiltration in Peru.
  • Argentinian President goes to Venezuela to show support for Chavez. Argentina suitcase scandal: Kauffman pleads GUILTY.
  • People’s Party: The Spanish government is an accomplice of Chávez’s attitude.

View the full version of the Americas Report (PDF)

For any questions, comments, or those interested in receiving this report in the future or seeking to have their email removed from our list please contact Nicole M. Ferrand at our new e-mail address: themengesproject@centerforsecuritypolicy.org or to themengesproject@gmail.com. If you have news stories that you think might be useful for future editions of this report please send them, with a link to the original website, to the same e-mail address. If you wish to contribute with an article, please send it to the same address, with your name and place of work or stu dy.

Implications of Cuba’s leadership change

Cuban Excerpt from the Testimony before the Committee on Foreign affairs. Sub-committee on the Western Hemisphere. United States House of Representatives.  

Submitted by: Nancy Menges*, Luis Fleischman*, and Nicole Ferrand.*

Due to his illness, Fidel Castro appointed his brother, Raul Castro acting president of Cuba in July, 2006. On February 24, 2008, Cuba’s highest governing body, The Council of State, made this appointment permanent. Though characterized as a better and more pragmatic manager, Raul, who has been Defense Minister for the past forty nine years, has been a life long communist and remains ideologically close to his brother. Therefore, many believe that though there may be some minor changes that he will not deviate significantly from the last almost half century of Castro rule. From his hospital bed, Fidel remains an important presence and continues in his post as the head of the Cuban Communist Party.

Since becoming president, Raul has promised “structural changes” and said “we have to make our government’s management more efficient”. According to recent news reports, he has acknowledged that the average Cuban salary of twelve to seventeen dollars a month is too little to live on. While Raul talks of increasing salaries and lessening government control over the economy, his actions have only been reflected in minor changes in policy. For example, the Cuban government has decentralized the production and distribution of milk and has ordered new buses from China to ease major transportation problems. However, in terms of how the majority of the Cuban population still lives, very little has changed. Food continues to be rationed by neighborhood block committees, goods such as eggs and chicken are in short supply, the monthly ration reportedly only lasts for one or two weeks, housing is limited and overcrowded, and in spite of people’s efforts to get ahead, the government taxes income earned from private initiatives or refuses to grant licenses to “businesses on the side”.

What is interesting is that after the fall of the Soviet Union and the halt in their economic support, Cuba’s economy (according to a February 23, 2008 report in the Economist) shrank by 35 percent. As a result, Castro declared a “special period” and opened the economy to tourism, foreign investment in certain sectors, farmers markets, small privately owned businesses, and legalized the use of the dollar which opened the way to hard currency via remittances from one million plus Cuban Americans.1 This special period lasted from 1989 to 1996 and was reversed even though the economy was beginning to stabilize. The reasons why it was reversed perhaps have implications for how the current leadership may react. Apparently, the reforms were stopped because Castro believed that some people in society were benefiting more than others and that “it was a threat to the regime as it undermined party control”.2 In terms of current financial support, Cuba now relies on Chinese credit and three to four billion dollars worth of free oil from Hugo Chavez as well as an additional one and a half billion dollars of additional aid from the Venezuelan president.  

While there has been a change in leadership in Cuba, there has not been a transition to any significant change in ideology, in governance, in the abysmal living conditions of most Cubans, nor in the area of human freedoms. As reported by various human rights organizations, there are approximately two hundred political prisoners incarcerated in Cuban jails. It is also important to keep in mind that the Castro brothers remain hostile to American values and principles, especially democratic governance, capitalism and free markets and that they have spent their entire adult lives fighting against our way of life. In addition, it was not that long ago that Castro met with Ahmendinejad of Iran and proclaimed, “Together, we will bring the U.S. to its knees”.

The Embargo

The United States embargo against Cuba is an economic, commercial and financial instrument enacted on February 7, 1962 after Cuba expropriated the properties of U.S. citizens and corporations. The embargo was tightened in 1963 after the Cuban Missile Crisis and was reinforced in October 1992 by the Cuban Democracy Act and in 1996 by the Cuban Liberty and Democracy Solidarity Act (known as the Helms-Burton Act). This latter measure applies to foreign companies trading with Cuba and is meant to penalize those companies that allegedly traffic in property formerly owned by US citizens but expropriated by Cuba after the revolution. In October 2000, the embargo was further altered by the Trade Sanctions, Reform and Export Enhancement Act that relaxed the sale of agricultural goods and medicines to Cuba for humanitarian reasons.

Contrary to critics’ claims, lifting of the embargo and the travel ban without meaningful changes in Cuba will have several negative repercussions. First, it will send a poor message about U.S. toleration both of Cuba’s patterns of unsavory behavior and its totalitarian system. Second, a cessation of the embargo will strengthen state enterprises since most Cuban businesses are run by the state and since the Cuban government retains a partnership interest in all foreign investment. Third, it will lead to greater domestic repression and control because the leadership fears the “subversive” effects of U.S. influence upon the Cuban people. A transition to democracy on the island will thus be delayed.

The economic impact of tourism, while providing the Castro government with much needed dollars, would be limited. Dollars will flow in small quantities to the Cuban poor; state and foreign enterprises will benefit most. We have to keep in mind that no foreign trade that is independent from the state is permitted in Cuba and workers are paid below comparable wages. Cuban leaders, in any event, would allow only enough commerce to maintain their regime.

Investments will be directed and approved by the Cuban government. The Cuban government is unlikely to create a level plain field for American companies, allowing some to invest while discriminating capriciously against others. It is illegal for foreign companies to hire or fire Cuban workers directly and hiring is done by the Ministry of Labor. Foreign companies must pay the wages owed to their employees directly to the Cuban government in hard currency. The Cuban government then pays out to the Cuban workers in Cuban pesos, which are worth 1/20 of a U.S. dollar, pocketing 90 percent of every dollar it receives.3

The lifting of the embargo would allow the Castro’s to borrow from international organizations: such as the IMF, the World Bank, etc. Since Cuba owes billions of dollars to the former Soviet Union, to the Club of Paris, and to others, and has refused in the past to acknowledge or pay these debts, new loans will be wasted by Castro’s inefficient and wasteful system, and will be uncollectible. The reason Castro has been unable to pay back loans is not because of the U.S. embargo, but because his economic system stifles productivity and he continues to spend on the military, on adventures abroad, and on supporting a bankrupt welfare system on the island.4

Opponents to the embargo cite US trade with China as a reason for ending the Cuban embargo; but this example merely illustrates that American policy has been inconsistent. Trade with China, if it shows anything, demonstrates that there is little correlation between commerce and political liberalization, at least over the short term. After all, the Chinese Communist Party has, in the last two decades, managed to increase both trade and political repression. So far, commerce has strengthened the hands of communists in China.5

The embargo should only be lifted when Cuba changes its current system and develops a democratic society. U.S. policy towards Cuba is not anachronistic but is rather aimed at the legitimate goal of a free Cuba; the lifting of the embargo now will be an important psychological victory for Castro and would be interpreted as a defeat for U.S. policy. There is also no indication that negotiation and incentives can influence Cuba, which has ignored such “carrot and stick” approaches in the past. Without major internal reforms in Cuba, the Castro government – not the Cuban people – will be the main beneficiary of the lifting of the embargo, since it will use this newly-acquired wealth to strengthen its hold on the Cuban people, to rebuild its military apparatus, and to engage again in supporting anti-American terrorist and violent groups in Latin America and elsewhere.6

The reason for Cuba’s economic suffering is a Marxist system that discourages incentives. As in Eastern Europe under Communism, the failed Communist system is the cause of the economic suffering of the Cubans, not the U.S. embargo.7

The embargo was never established to overthrow the Castro government. The embargo was established to punish the Castro government for the confiscation of American properties and to pressure it to slow down its move into the Communist camp. The embargo has been maintained to show that Marxist-Leninism does not work as an economic or political system and to use it as a tool to extract human rights, economic and political concessions from the current or future Cuban government.

Hugo Chavez plays a crucial role in providing life-oxygen to the Cuban regime. In this time of history it is Hugo Chavez who represents the main threat to regional stability and geo-political security in the western hemisphere and perhaps beyond. 

Nancy Menges, Editor in Chief of the Americas Report. Mrs. Menges, the co-founder of the Menges Hemispheric Security Project, is in charge of the weekly edition of CSP’s Americas Report. Fluent in Spanish, she holds a degree in International Relations from the University of Wisconsin-Madison and has studied at the University of the Americas in Mexico City. Her postgraduate degree has been earned from the University of Maryland. She has testified in Congress and submitted CSP’s statement regarding US-Colombian relations to the House Subcommittee on the Western Hemisphere.

Dr. Luis Fleischman is an advisor to the Menges Hemispheric Security Project at the Center for Security Policy in Washington DC. He is also an adjunct professor of Political Science and Sociology at Wilkes Honor College at Florida Atlantic University.

Nicole M. Ferrand is a research analyst and editor of “The Americas Report” of the Menges Hemispheric Security Project at the Center for Security Policy in Washington DC. (www.centerforsecuritypolicy.org). She is a graduate of Columbia University in Economics and Political Science with a background in Law from Peruvian University, UNIFE and in Corporate Finance from Georgetown University.

  1. The Economist, Feb 23, 2008. The Commandante’s Last Move.
  2. The Economist, Feb 23, 2008. The Commandante’s Last Move
  3. Cuban Communism. By Irving Louis Horowitz, Jaime Suchlicki
  4. What lifting embargo on Cuba would really mean. By Georgie Ann Geyer. July 20, 2000
  5. In Defense of the Cuban Embargo. Gordon G. Chang. February 20, 2008
  6. In Defense of the Cuban Embargo. Gordon G. Chang. February 20, 2008
  7. Why the Cuban Trade Embargo Should Be Maintained. November 10, 1994. The Heritage Foundation.

Main News:

  • NEWS FLASH: BARACK OBAMA MENTIONED IN SEIZED FARC DOCUMENTS.
  • Summary of the meeting with President Correa’s Envoy with the FARC found in Reyes’ laptop.
  • ANDEAN CONFLICT: No. 2 FARC Commander Reyes Killed in Gunfight . Chávez’s call to Reyes revealed location of FARC camp. Colombia discloses documents linking Chávez to the FARC. Seized Laptop Shows Chavez’s – Correa Rebel Ties. Colombia Worried FARC Seek Uranium . The Washington Post: Venezuela and Ecuador rulers are "backers of criminals." Desperate Chávez sends troops, aircraft to border with Colombia. Uribe’s charges against Chávez to be revised. Colombia ‘s vice-president denounces alliances. France contacted Reyes.
  • OAS doesn’t condemn Bogotá – Colombia acted in self-defense. OAS: Ecuador, Colombia reach agreement on resolution.
  • Bush told Uribe the US is to back democratic allies.
  • Nicaragua severs ties with Colombia.
  • Pdvsa is "reengineering" its finances to avoid sanctions. Pdvsa customers making payments through Central Bank account in Switzerland.
  • OPEC backs Venezuela in legal dispute with Exxon Mobil.
  • Investigation requested into alleged Venezuelan ideological infiltration in Peru.
  • Argentinian President goes to Venezuela to show support for Chavez. Argentina suitcase scandal: Kauffman pleads GUILTY.
  • People’s Party: The Spanish government is an accomplice of Chávez’s attitude.

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For any questions, comments, or those interested in receiving this report in the future or seeking to have their email removed from our list please contact Nicole M. Ferrand at our new e-mail address: themengesproject@centerforsecuritypolicy.org or to themengesproject@gmail.com. If you have news stories that you think might be useful for future editions of this report please send them, with a link to the original website, to the same e-mail address. If you wish to contribute with an article, please send it to the same address, with your name and place of work or stu dy.

CSP’s Menges Project testifies on Capitol Hill

(Washington, D.C.): In a clear demonstration of the long overdue urgency with which the United States must turn to the security situation in Latin America, Venezuelan President Hugo Chavez is massing troops on neighboring Colombia’s border in response to Colombia’s recent raid against FARC operatives in Ecuador.  In the wake of these and other significant and troubling developments in Latin America – including the ascension of Fidel Castro’s brother and long-time Defense Minister Raul Castro to the Cuban presidency, as well as Chavez’s embrace of the Hezbollah-sponsoring Iranian regime and ongoing support for violent groups such as the narco-terrorist FARC – Nancy Menges of the Center for Security Policy appeared today before the House Committee on Foreign Affairs’ Subcommittee on the Western Hemisphere to discuss the growing turmoil in the region and its implications for American national security. 

Ms. Menges manages the Center’s Menges Hemispheric Security Project, and also serves as Editor-in-Chief of The Americas Report – a Center for Security Policy publication covering political and security developments in the Western Hemisphere.  In her prepared remarks and in response to questions from Committee members, Ms. Menges made the following comments and policy recommendations with respect to this critical region:

  • The embargo against Cuba must remain in place.  The leadership change in Cuba does not signify any change in ideology, governance, or human freedoms for the Cuban people.  Lifting the embargo now would be interpreted as a defeat for U.S. policy, and would provide the Castro government with newly acquired wealth with which to strengthen its hold on the people of Cuba.
  • Venezuela ‘s Hugo Chavez is pursuing nuclear cooperation with Iran.  Chavez has defended Iran’s right to produce atomic energy while declaring his own aspirations to develop nuclear weapons for "peaceful purposes", and has stated his intention to seek cooperation with Latin American countries and Iran in this regard.  Reports have confirmed the production of uranium inside Venezuela.
  • Chavez is cultivating relationships with radical Islamist terror organizations including Iranian-backed Hezbollah.  The U.S. Southern Command has identified Isla Margarita as one of the most important centers of terrorist gathering and money laundering activities for Hamas and Hezbollah.  Following Islamist terrorism doctrine, Chavez has spoken publicly about the adoption of methods such as suicide bombers in the event of a war between Venezuela and the United States.
  • Iran is making its presence felt in other Latin American countries such as Nicaragua and Bolivia.  Nicaragua exerts no control over the movements of Iranian diplomats, and it was recently disclosed that President Daniel Ortega permitted twenty-one Iranians to enter the country without visas.  Nicaragua has also signed numerous agreements with Iran on energy, technology, and commerce.  In Bolivia, President Evo Morales has welcomed the Iranians and is allowing them to open a radio station, which could enable Iran to spread its ideology throughout Latin America.
  • Chavez is actively supporting numerous violent revolutionary organizations in Latin America, including the narco-terrorist Revolutionary Armed Forces of Colombia (FARC).  Chavez is also lending ideological and financial support to violent revolutionary organizations in Argentina and Peru.
  • The U.S. must take several steps to counter Chavez’s influence in the region.  These includes:
  1. Provide continued support to Colombia, a critical ally in the region through measures such as the reauthorization of "Plan Colombia";
  2. Work with opposition leaders and activists in Venezuela, Ecuador and Bolivia who are committed to democracy and the rule of law;
  3. Reduce regional dependence on Venezuelan oil;
  4. Ratify free trade agreements with Colombia and Panama;
  5. Educate Latin American countries about the dangers Iran poses to the region; and
  6. Rebuild American public diplomacy and broadcasting efforts to counter Iranian radio programming and propaganda.

Ms. Menges concluded by observing: "We cannot afford to be optimistic about events in Latin America in the era of terrorism in an area where Chavez and Iran are cooperating so closely. Our foreign policy should be comprehensive and creative and needs a most serious cooperation between the Administration and Congress. It needs to be taken seriously and not pushed to the backburner because of the emergence of other conflicts in the world."

A copy of the full testimony is available here.

Who’s behind the protests in Peru?

Peace, man?  There is evidence that Humala is fostering subversion in Peru.

Thousands of farmers started open-ended violent strikes in eight Peruvian departments on Feb. 18, holding marches and blocking highways to demand "government measures to ease the impact of a free trade agreement (FTA, or TLC in Spanish) with the US." At least 150 people were arrested and five have died so far. The government declared a state of emergency in the eight departments on February 19, and by the end of the day the organizers had suspended the strike and resumed negotiations with government officials. Also on February 19, teachers marched on Congress in Lima to protest a decree by social democratic president, Alan Garcia that teachers hired to work in public schools must have university degrees. [1]

Campesinos continued the strike through February 20 in the southern departments of Cusco, Arequipa and Ayacucho to protest the deaths in the preceding days. On February 20, US ambassador, Peter Michael McKinley spoke out in favor of the trade pact, which the US Congress approved in December. It will establish modern systems of trade regulation and design a discipline which will improve Peru’s competitiveness and promote its prosperity, he said. The protests continued two more days in Cusco, where local people called a 48-hour strike starting on Feb. 21 to protest a law allowing companies to set up businesses near archeological zones. Strikers blocked roads out of the city of Cusco, while some 500 marched in the downtown area. On February 21 protesters marched on the airport, causing some damage and leading the authorities to suspend flights for the duration of the strike. Hundreds of tourists were stranded. [2]

 

On February 22, Peruvian vice president Luis Giampietri blamed the protests on subversion by former presidential candidate, Ollanta Humala, and his Nationalist Peruvian Party (PNP). Prime Minister Jorge del Castillo has called for regional court systems to punish anyone that is caught blocking highways or protesting violently. Regional authorities have been warned that if protests continue, Cusco will not be accredited as one of the twelve venues for the Asia Pacific Economic Cooperation forum (APEC) meetings. The president of the Chamber of Commerce, Tourism and Industry of Huancayo, Luis Torres Garay, said that his province has the necessary hotel infrastructure to become an alternative venue for APEC, replacing Cusco. [3]

APEC Peru 2008 will be a series of political meetings to be held in Peru between the 21 members of the Asia-Pacific Economic Cooperation forum. Leaders from all countries will meet on November 22, 2008 in the capital city of Lima. The Asia-Pacific Economic Cooperation is a forum for 21 Pacific Rim countries or regions (styled ‘member economies’) to discuss the regional economy, cooperation, trade and investment. The membership is claimed to account for approximately 41% of the world’s population, approximately 56% of world GDP and about 49% of world trade. The activities, including year-round meetings of the members’ ministers, are coordinated by the APEC Secretariat. [4]

The leader of Peru’s left-leaning Nationalist Party, Ollanta Humala has organized "The People’s Social Summit," which is to take place from May 13 – 15, the same dates world leaders will come to Lima for the European Union-Latin America and Caribbean (EU-LAC) Summit. Over 60 world leaders are to come to Peru for the EU-LAC summit while another 20 will be present for the APEC summit to be held in Peru. [5]

It’s no coincidence that the protests coincided with the EU-LAC and the APEC summits. T he recent violent clashes between some groups of farmers and the police are believed to have been promoted by Humala and financed by Chavez since both do not want economic prosperity in Peru and want to destabilize the country for their socialist plan. Economic growth could block their nationalistic campaign in the region and they are taking advantage of these world events to halt progress and gain international publicity. The demonstrations have been infiltrated by members of the terrorist group, "Shining Path," as well as supporters of Chavez and Humala, all in an effort to block progress. The encounters have already cost the provinces involved millions of dollars since they survive on tourism and commerce and many roads are now impassable. It has been reported that money is being sent through Bolivia from Venezuela to actually pay people to carry out attacks against government facilities and to help organize Humala’s summit.

Some locals complain that the armed forces are not reacting strongly enough against the demonstrators, which is true. The answer: they are afraid to be accused of "human rights violations." Peruvians are now watching the absurd trial against former President Alberto Fujimori, where witnesses, including armed forces personnel, are being accused of "murder" for simply doing their jobs. Peru was fighting the terrorist groups "Shining Path" and the MRTA, which over thirty years killed thousands of innocent people. The Fujimori regime effectively contained them but the left and their NGO’s were furious about this and now are taking revenge. Many of these witnesses are in jail and are being horribly mistreated by the prosecutors and the judges involved in the case. President Fujimori is not being spared any of this treatment and his prison regime is much worse than that of Shining Path leader, Abimael Guzman.

The judge, prosecutors, the majority of the media and some presidential hopefuls are desperate to pin down the former leader and put him away and don’t seem to mind destroying people’s lives in the process. They still see him as a threat to their personal agendas since recent polls reveal his popularity is soaring. Since they cannot find proof that the government " carried out acts of political violence (massacres, extrajudicial killings, and forced disappearances) in a systematic way and with a level of organization that could have only existed with approval from the highest levels of government," they are becoming desperate. In order to convict Fujimori, the prosecutors must demonstrate that the Colina Group (a team of select army intelligence operatives belonging to the armed forces, created in the late ‘80s’) acted with the president’s imprimatur, that he either ordered its creation, approved of its actions, or, at the very least, knew of its existence as Commander in Chief of the Peruvian military. Many of the accused have declared that some abuses committed by the military "are isolated actions that do not reflect institutional behavior." Witness after witness have revealed that they were bribed or promised lighter sentences if they accused Fujimori, stating that they never saw or heard him giving any orders and cannot involve him in the cases he is accused of. So it is not difficult to see why the police don’t want to act against the recent protests.

But there could be another reason for the lack of governmental resolve to stop the violence. It is said that current vice President Jorge del Castillo wants to run for President in the next elections in 2011 and that is why he wants to appear as a "moderate."

The fact of the matter is that many sectors of the population seem to be aware of what is going on and are becoming extremely disturbed by these attacks which are costing small businesses money and are putting jobs at risk. Many locals are coming out loudly against the Nationalist leader, Humala and his supporter, Chavez. Unfortunately, the Garcia regime is taking a toll and recent polls reveal he is sliding as many people are voicing their disappointment at the lack of action.  

Update:

The Minister of Defense Ántero Flores-Aráoz announced on February 27, that Cusco would not be one of the venues for the Asia Pacific Economic Cooperation (APEC) forum summit because of certain violent sectors of the region and the silent attitude from the rest of the Cusqueñans. "Cusco has given up their title as one of the venues for APEC in November and the government has accepted this decision," said the minister. He also announced that a venue to replace Cusco hasn’t been decided yet, but will be announced within the next few weeks. The Minister stated that the violent protests, acts of vandalism, roadway blockages, and the assault on the airport have caused them to take this precaution and exclude Cusco from APEC venues. "The violent protesters don’t wish APEC members to visit Cusco, while the rest of Cusco has been silent in all languages, that is to say, instead of expressing their protests against the violent acts, they’ve remained quiet and have therefore in a way accepted that violence. By being silent, they have become accomplices in this situation." [6]

This is a sad but correct decision. Sad because Cusco is a beautiful place and the APEC summit would definitely benefit the region but it is the correct one. Now everyone will know the costs of having and/or allowing such behavior and the government has gained legitimacy among Peruvians. 

[1] APEC and EU-LAC Peru 2008 Summits – Daily Updates. Living in Peru

[2] APEC and EU-LAC Peru 2008 Summits – Daily Updates. Living in Peru.

[3] APEC and EU-LAC Peru 2008 Summits – Daily Updates. Living in Peru.

[4] APEC and EU-LAC Peru 2008 Summits – Daily Updates. Living in Peru.

[5] APEC and EU-LAC Peru 2008 Summits – Daily Updates. Living in Peru.

[6] APEC and EU-LAC Peru 2008 Summits – Daily Updates. Living in Peru.

Who’s behind the protests in Peru?

Thousands of farmers started open-ended violent strikes in eight Peruvian departments on Feb. 18, holding marches and blocking highways to demand “government measures to ease the impact of a free trade agreement (FTA, or TLC in Spanish) with the US.” At least 150 people were arrested and five have died so far. The government declared a state of emergency in the eight departments on February 19, and by the end of the day the organizers had suspended the strike and resumed negotiations with government officials. Also on February 19, teachers marched on Congress in Lima to protest a decree by social democratic president, Alan Garcia that teachers hired to work in public schools must have university degrees.1

Campesinos continued the strike through February 20 in the southern departments of Cusco, Arequipa and Ayacucho to protest the deaths in the preceding days. On February 20, US ambassador, Peter Michael McKinley spoke out in favor of the trade pact, which the US Congress approved in December. It will establish modern systems of trade regulation and design a discipline which will improve Peru’s competitiveness and promote its prosperity, he said. The protests continued two more days in Cusco, where local people called a 48-hour strike starting on Feb. 21 to protest a law allowing companies to set up businesses near archeological zones. Strikers blocked roads out of the city of Cusco, while some 500 marched in the downtown area. On February 21 protesters marched on the airport, causing some damage and leading the authorities to suspend flights for the duration of the strike. Hundreds of tourists were stranded.2

On February 22, Peruvian vice president Luis Giampietri blamed the protests on subversion by former presidential candidate, Ollanta Humala, and his Nationalist Peruvian Party (PNP). Prime Minister Jorge del Castillo has called for regional court systems to punish anyone that is caught blocking highways or protesting violently. Regional authorities have been warned that if protests continue, Cusco will not be accredited as one of the twelve venues for the Asia Pacific Economic Cooperation forum (APEC) meetings. The president of the Chamber of Commerce, Tourism and Industry of Huancayo, Luis Torres Garay, said that his province has the necessary hotel infrastructure to become an alternative venue for APEC, replacing Cusco.3

APEC Peru 2008 will be a series of political meetings to be held in Peru between the 21 members of the Asia-Pacific Economic Cooperation forum. Leaders from all countries will meet on November 22, 2008 in the capital city of Lima. The Asia-Pacific Economic Cooperation is a forum for 21 Pacific Rim countries or regions (styled ‘member economies’) to discuss the regional economy, cooperation, trade and investment. The membership is claimed to account for approximately 41% of the world’s population, approximately 56% of world GDP and about 49% of world trade. The activities, including year-round meetings of the members’ ministers, are coordinated by the APEC Secretariat.4

The leader of Peru’s left-leaning Nationalist Party, Ollanta Humala has organized “The People’s Social Summit,” which is to take place from May 13 – 15, the same dates world leaders will come to Lima for the European Union-Latin America and Caribbean (EU-LAC) Summit. Over 60 world leaders are to come to Peru for the EU-LAC summit while another 20 will be present for the APEC summit to be held in Peru.5

It’s no coincidence that the protests coincided with the EU-LAC and the APEC summits. The recent violent clashes between some groups of farmers and the police are believed to have been promoted by Humala and financed by Chavez since both do not want economic prosperity in Peru and want to destabilize the country for their socialist plan. Economic growth could block their nationalistic campaign in the region and they are taking advantage of these world events to halt progress and gain international publicity. The demonstrations have been infiltrated by members of the terrorist group, “Shining Path,” as well as supporters of Chavez and Humala, all in an effort to block progress. The encounters have already cost the provinces involved millions of dollars since they survive on tourism and commerce and many roads are now impassable. It has been reported that money is being sent through Bolivia from Venezuela to actually pay people to carry out attacks against government facilities and to help organize Humala’s summit.

Some locals complain that the armed forces are not reacting strongly enough against the demonstrators, which is true. The answer: they are afraid to be accused of “human rights violations.” Peruvians are now watching the absurd trial against former President Alberto Fujimori, where witnesses, including armed forces personnel, are being accused of “murder” for simply doing their jobs. Peru was fighting the terrorist groups “Shining Path” and the MRTA, which over thirty years killed thousands of innocent people. The Fujimori regime effectively contained them but the left and their NGO’s were furious about this and now are taking revenge. Many of these witnesses are in jail and are being horribly mistreated by the prosecutors and the judges involved in the case. President Fujimori is not being spared any of this treatment and his prison regime is much worse than that of Shining Path leader, Abimael Guzman.

The judge, prosecutors, the majority of the media and some presidential hopefuls are desperate to pin down the former leader and put him away and don’t seem to mind destroying people’s lives in the process. They still see him as a threat to their personal agendas since recent polls reveal his popularity is soaring. Since they cannot find proof that the government “carried out acts of political violence (massacres, extrajudicial killings, and forced disappearances) in a systematic way and with a level of organization that could have only existed with approval from the highest levels of government,” they are becoming desperate. In order to convict Fujimori, the prosecutors must demonstrate that the Colina Group (a team of select army intelligence operatives belonging to the armed forces, created in the late ‘80s’) acted with the president’s imprimatur, that he either ordered its creation, approved of its actions, or, at the very least, knew of its existence as Commander in Chief of the Peruvian military. Many of the accused have declared that some abuses committed by the military “are isolated actions that do not reflect institutional behavior.” Witness after witness have revealed that they were bribed or promised lighter sentences if they accused Fujimori, stating that they never saw or heard him giving any orders and cannot involve him in the cases he is accused of. So it is not difficult to see why the police don’t want to act against the recent protests.

But there could be another reason for the lack of governmental resolve to stop the violence. It is said that current vice President Jorge del Castillo wants to run for President in the next elections in 2011 and that is why he wants to appear as a “moderate.”

The fact of the matter is that many sectors of the population seem to be aware of what is going on and are becoming extremely disturbed by these attacks which are costing small businesses money and are putting jobs at risk. Many locals are coming out loudly against the Nationalist leader, Humala and his supporter, Chavez. Unfortunately, the Garcia regime is taking a toll and recent polls reveal he is sliding as many people are voicing their disappointment at the lack of action.

Update –

The Minister of Defense Ántero Flores-Aráoz announced on February 27, that Cusco would not be one of the venues for the Asia Pacific Economic Cooperation (APEC) forum summit because of certain violent sectors of the region and the silent attitude from the rest of the Cusqueñans. “Cusco has given up their title as one of the venues for APEC in November and the government has accepted this decision,” said the minister. He also announced that a venue to replace Cusco hasn’t been decided yet, but will be announced within the next few weeks. The Minister stated that the violent protests, acts of vandalism, roadway blockages, and the assault on the airport have caused them to take this precaution and exclude Cusco from APEC venues. “The violent protesters don’t wish APEC members to visit Cusco, while the rest of Cusco has been silent in all languages, that is to say, instead of expressing their protests against the violent acts, they’ve remained quiet and have therefore in a way accepted that violence. By being silent, they have become accomplices in this situation.”6

This is a sad but correct decision. Sad because Cusco is a beautiful place and the APEC summit would definitely benefit the region but it is the correct one. Now everyone will know the costs of having and/or allowing such behavior and the government has gained legitimacy among Peruvians.

Nicole M. Ferrand is a research analyst and editor of “The Americas Report” of the Menges Hemispheric Security Project at the Center for Security Policy in Washington DC. (www.centerforsecuritypolicy.org). She is a graduate of Columbia University in Economics and Political Science with a background in Law from Peruvian University, UNIFE and in Corporate Finance from Georgetown University.

 

1-6 APEC and EU-LAC Peru 2008 Summits – Daily Updates. Living in Peru  

 

 

 

Main News:

  • Peru: Chavez & Daniel Ortega support Humala after charges brought up.
  • Argentinian President: The region needs Venezuela’s oil reserves. With Bolivian gas supplies uncertain, Argentina looking for energy.
  • The FARC deliver four hostages to Venezuela – three Americans held by group in poor health. Release: another publicity stunt.
  • IMPORTANT – US: Venezuela purchases four times more weapons than it needs . Zapatero rejects Chávez’s attitude. Venezuela: Chavez supporters invade chancery. Defendant in suitcase scandal was in touch with Venezuelan intelligence, newspaper says.
  • Mexico: Congress approves judicial reform.
  • Brazil and Argentina committed to building a nuclear submarine.
  • Nicaragua: Ahmadinejad says Iranian, Nicaraguan revolutions are twins.
  • Vatican Secretary of State Concludes Visit to Cuba.
  • PETROBRAS in Bolivia Again. Bolivia’s Evo Calls off European Tour. Bolivia to Denounce "US Interference."

View the full version of the Americas Report (PDF)

For any questions, comments, or those interested in receiving this report in the future or seeking to have their email removed from our list please contact Nicole M. Ferrand at our new e-mail address: themengesproject@centerforsecuritypolicy.org. If you have news stories that you think might be useful for future editions of this report please send them, with a link to the original website, to the same e-mail address. If you wish to contribute with an article, please send it to the same address, with your name and place of work or study.

Garcia’s two terms

Back in office, Garcia leads a transformed Peruvian nation.

When Peru’s Alan Garcia was elected President for a second time in 2006, I was perplexed. How could this happen I kept asking myself. His first term in office between 1985 and 1990 was catastrophic. He was voted the worst President of Latin America. While visiting Peru in February 2008 I wanted to find out the reasons behind his 2006 victory and how his current regime is progressing.    

Let’s recap Alan García’s first term in office between 1985 and 1990 to fully understand the magnitude of the Peruvian transformation. At 36 years of age García became the youngest civilian president in Peru’s history.  His first regime was marked by bouts of hyperinflation which reached 7,649% in 1990, profoundly destabilizing the Peruvian economy.

[More]Due to such chronic inflation, the Peruvian currency, the sol, was replaced by the Inti in mid-1985, which itself was replaced by the nuevo sol ("new sun"), at which time the new sol had a cumulative value of one billion (1,000,000,000) old soles. By the end of his term in 1990, national reserves were a negative $900 million dollars. García also made an attempt to nationalize the banking and insurance industries. He incurred the wrath of the International Monetary Fund and the financial community by unilaterally declaring a limit on debt repayment equal to 10% of the Gross National Product, isolating Peru from international financial markets. According to studies of the National Institute of Statistics and Informatics and the United Nations Development Program [1], around the start of his presidency, 41.6% of Peruvians lived in poverty. During his presidency, this percentage increased by 13% (to 55%) in 1991.

This economic turbulence exacerbated social tensions in Peru and contributed in part to the escalation in violence of the terrorist groups: Shining Path ( Sendero Luminoso) and Movimiento Revolucionario Tupac Amaru (MRTA) . These groups controlled about a third of the country and were responsible for the deaths of thousands of innocent civilians, and army and police personnel. (Read "The Americas Report" from October 11 and 18 – Fujimori: the other side of the story – Part I and Part II by Nicole M. Ferrand).

The SL and MRTA began attacking electric towers, causing almost daily blackouts all over the country. The García administration sought a military solution to the growing problem, but was unsuccessful. The MRTA used kidnapping and extortion as well as drug trafficking to finance their activities. In addition, the country was being ravaged by corruption, by drug problems, and by terrorist warfare. Most universities were inaccessible since they were dominated by these violent groups.

In general, everyday life was harsh. There were food, water and electricity shortages, car bombs exploded almost daily, killing and severely injuring thousands of people as well as members of the military and police. Soon, the attacks were also felt in the capital city of Lima and people lived in constant fear. There were limits on the amount of food each family could buy, and supermarkets were meagerly stocked as prices changed by the hour.   By the end of García’s presidency Peru was suffering from hyperinflation, was isolated from the international financial community, had negative reserves of US$900 million, and was dealing with continuous subversive activities by the Shining Path and MRTA. There was also a great increase in poverty levels. I remember these days clearly since my siblings and I were sent daily to various supermarkets to buy what we could find.

In 1992, García went into self- exile and lived in Colombia and later in France. The Fujimori regime re-opened charges against him for allegedly taking millions of dollars in bribes. He denied the charges, and in 2001 Peru’s Supreme Court ruled that the statute of limitations had run out. García decided to ran for president in the new elections called by the temporary president, Valentin Paniagua, but lost against Alejandro Toledo.

Why did Alan Garcia win the 2006 Presidential elections: the "Humala"/Chavez factor

García officially started his campaign for the April, 2006 presidential election on February 18, 2005. Voting for Alan Garcia was considered by over 40% of the voters as "voting for the lesser of two evils". Many citizens had a very negative impression of García after his first presidency but were scared by rumors that Humala would create a government based on Fidel Castro’s Cuba and would turn Hugo Chavez, President of Venezuela, into the virtual ruler of Peru, due to his patronage and financial support of Humala’s party. Humala denied these accusations, but his conflicting statements about his government’s vision and Chavez’s strong campaigning for him created enough suspicions among voters to cost him the election. President Chavez openly declared his support for Humala, and referred to García as a "robber", and a "bandit." García, in response, stated that Chávez was "not acting as a statesman" and challenged Chávez to a public debate. García also brought this issue to the Organization of American States. In the end, the Venezuelan leader cost Humala the election and García was inaugurated as President of Peru on July 28, 2006.

With thirty-six seats, Garcia’s Party, APRA, has the second largest bloc in the 120-seat unicameral Congress which was sworn in a couple of days before the President. With forty-five seats, Humala’s "Union por el Peru" Party has the largest bloc, although it has been divided into three factions. [2]

García’s victory was praised by democratic nations. It prevented Hugo Chávez’s left-leaning "socialist revolution" from spreading throughout the continent.

What Alan Garcia inherited from previous governments

 

The Government of Peru under former President Alberto Fujimori took the necessary steps to bring the problems created by the Garcia regime under control. Democratic institutions, however, and especially the judiciary, remained weak. Between 1992 and 2001, Peru attracted almost $17 billion in foreign direct investment, after negligible investment during the 1980s, mainly from Spain (32.35%), the United States (17.51%), Switzerland (6.99%), Chile (6.63%), and Mexico (5.53%). [3]

 

The Peruvian economy underwent considerable free market reforms since 1992, from legalizing parts of the informal sector to significant privatization in the mining, electricity and telecommunications industries. The economic stabilization and liberalization program lowered trade barriers, eliminated restrictions on capital flows, and opened the economy to foreign investment. Thanks to strong foreign investment and the cooperation between the Fujimori government and the IMF and World Bank, growth was strong from 1994 to 1997 and inflation was brought under control. Peru now has one of the most open investment regimes in the world.

Alejandro Toledo’s presidency (2001-2006) was characterized by extremely low approval ratings but high economic growth rates; 5.9% in 2005 and 8% in 2006 due to the policies of the Fujimori regime. Toledo was able to push through several reforms, including tax reform and a pending free trade agreement with the United States. Despite the economic improvements, Toledo’s presidency was plagued with allegations of corruption and frequent popular protests.

Garcia’s current term in office

I was impressed by what I found during my recent visit to Peru. The Jorge Chavez Airport has been modernized and the security systems are impeccable. The roads are in extremely good condition and there is construction everywhere which shows the confidence many Peruvians and international corporations have in Peru. Consumption has grown tremendously and there are small businesses, elegant restaurants and new shopping malls full of people. Tourism has reached levels never seen before and hotels are fully booked throughout the year.

It is a pleasure to go south using the highways and the country overall seems more secure and organized. Big exporting farms and packing plants in the south have incorporated and employed people from surrounding communities and social programs are present everywhere. Entrepreneurs provide social services as hospitals and schools are built. Many previously marginalized groups are now active participants in this new found economic expansion. Police officers in modern cars are present throughout and big trucks full of merchandise come and go, showing the growing commercial capacity in the countryside.

To the surprise of many, Mr. Garcia recruited a respected and competent cabinet, including an economic team of technocrats which increased the confidence of national and international investors and financial communities. He has continued the orthodox economic and fiscal policies carried out by the previous two Peruvian governments. These policies have contributed, along with the international commodities boom to Peru’s growth rate of more than 8% annually; expanding reserves while containing inflation. Construction and retail opportunities are spreading from Lima to several regions. Peru’s export sector, particularly specialty vegetables and fruits, is growing at an impressive rate, as well as mining investments. Garcia has since avoided abrupt policy shifts and has retained the political initiative and defused opposition to his government. When strikes and protests occurred, Garcia has tried to turn these to his political advantage, asserting national authority against the retrograde ultra-left members of some Unions who are not widely popular.

During the first few months of his administration, Garcia boosted his approval rating into the high sixties, mainly by demonstrating that he was a force for stability, unlike Humala, and also for austerity, unlike his predecessor, Alejandro Toledo, who was given to extravagant personal spending and outright frivolousness. Garcia also promised a major expansion of investment, greater decentralization of public expenditures, big infrastructure projects, a campaign against malnutrition and a crackdown on crime, including application of the death penalty for pedophiles.

According to estimates from analysts as well as local and foreign banks, Peru will register the lowest inflation rate in Latin America during this year and 2009. The president of the Central Reserve Bank of Peru (BCR), Julio Velarde, pointed out that the inflation rate in Peru would be within a range from one to three percent over the second half of this year. In addition, Julio Velarde forecasted that Peru’s economy would increase 7% this year – stimulated by both the public and private sectors. [4]

The Peru-United States Free Trade Agreement (FTA), also known as the United States-Peru Trade Promotion Agreement (TPA), was signed on April 12, 2006 by President George W. Bush , and won Congressional approval on December 4, 2007. This accord is already benefiting producers in both countries with greater market access and consumers with less expensive products. From a security standpoint, this ratification consolidates a partnership with the South American country which is critical in a region where free markets and U.S. influence is being attacked by populist and nationalist governments in Venezuela, Ecuador and Bolivia.

The following data show the benefits of the trade agreement: U.S. imports from Peru will increase by $439 million, or 8% and U.S. exports to Peru will increase by $1.1 billion, or 25%. The largest value increases in U.S. exports will be in machinery and electrical equipment, chemicals, rubber, plastics, wheat, rice, pork, and poultry. Trade facilitation provisions, such as the definition of custom procedures, administration, and dispute, will lead to a more stable and reliable trading environment, further buttressing U.S.-Peru trade and investment. The protection of intellectual property in Peru, through new rules Peru commits to under the agreement, will be significantly improved. [5]

FTA, Security and Humala

After Chile and Colombia, Peru is an important democratic ally in South America’s Andean region. It trades nearly $6 billion in goods and services annually with the United States and cooperates in combating illegal drug trafficking but poverty still afflicts about half the population. Peru needs a more skilled workforce, a stronger rule of law, a reduction in burdensome regulations, and a commercial code that promotes entrepreneurship. Having FTA will help to advance these objectives.

So far, Alan Garcia has taken the correct steps and Peru is still a growing economy. In addition, some groups which previously didn’t have access to private property are now enjoying the benefits of having their own houses and small businesses. Some even say that Peru has already reached a point of no return and a socialist appeal will hardly find much support. But let’s keep in mind that Chavez’s ally, Ollanta Humala, remains a threat to democracy and a free market economy since he is still popular in some provinces due to his socialist and nationalistic rhetoric. Some people remain convinced that he continues to receive financial support from Chavez and that he is quietly campaigning in many provinces. This is of concern to many locals and regional leaders. In fact the recent violent clashes between some groups of farmers and the police are believed to have been promoted by Humala who has organized "The People’s Social Summit", which is to take place from May 13 – 15, the dates on which world leaders will come to Lima for the European Union-Latin America and Caribbean (EU-LAC) Summit, and financed by Chavez since both do not want economic prosperity in Peru and want to destabilize the country for their socialist plan. Economic growth could block their nationalistic plans in the region and they are taking advantage of the Summit which Peru is hosting to halt progress and gain international publicity. Peru and Colombia now constitute a headache for Chavez’s socialist revolution as they are examples of functioning democracies, with strong economic growth.

In this regard, successful economic policies and the ratification of the FTA are providing incentives for Peru to become more competitive and less likely to succumb to authoritarianism and closed markets. For the United States and its allies in the region, this is critical. It is hoped that the Peruvian example will provide an incentive to many Democrats in Congress who are still refusing to ratify the FTA with Colombia and Panama. Trade is important but the region’s security must be a priority. Latin America is still at risk and the trade accord and the continuous funding of Plan Colombia will help placate those who want to destabilize the region.

[1] Alan García reta a Chávez a polemizar por CNN, El Universal , 28 April 2006 .

[2] Alan García in Dispute with Hugo Chávez, University of British Columbia — Peru Elections 2006, April 28, 2006

[3] Exit Poll Results: Alan Garcia in First Place University of British Columbia — Peru Elections 2006, June 4, 2006.

[4] Peru will register lowest inflation in Latin America in 2008 and 2009. 11 February, 2008. Living in Peru.

[5] Congress Should Advance U.S.-Peruvian Free Trade Ties. July 12, 2006. The Heritage Foundation.

Peru: two terms of Garcia

When Peru’s Alan Garcia was elected President for a second time in 2006, I was perplexed. How could this happen I kept asking myself. His first term in office between 1985 and 1990 was catastrophic. He was voted the worst President of Latin America. While visiting Peru in February 2008 I wanted to find out the reasons behind his 2006 victory and how his current regime is progressing.

 

Garcia’s first term in office

 

Let’s recap Alan García’s first term in office between 1985 and 1990 tofully understand the magnitude of the Peruvian transformation. At 36 years of age García became the youngest civilian president in Peru’s history. His first regime was marked by bouts of hyperinflation which reached 7,649% in 1990, profoundly destabilizing the Peruvian economy.

 

Due to such chronic inflation, the Peruvian currency, the sol, was replaced by the Inti in mid-1985, which itself was replaced by the nuevo sol (“new sun”), at which time the new sol had a cumulative value of one billion (1,000,000,000) old soles. By the end of his term in 1990, national reserves were a negative $900 million dollars. García also made an attempt to nationalize the banking and insurance industries. He incurred the wrath of the International Monetary Fund and the financial community by unilaterally declaring a limit on debt repayment equal to 10% of the Gross National Product, isolating Peru from international financial markets. According to studies of the National Institute of Statistics and Informatics and the United Nations Development Program1, around the start of his presidency, 41.6% of Peruvians lived in poverty. During his presidency, this percentage increased by 13% (to 55%) in 1991.

 

This economic turbulence exacerbated social tensions in Peru and contributed in part to the escalation in violence of the terrorist groups: Shining Path (Sendero Luminoso) and Movimiento Revolucionario Tupac Amaru (MRTA). These groups controlled about a third of the country and were responsible for the deaths of thousands of innocent civilians, and army and police personnel.

 

The SL and MRTA began attacking electric towers, causing almost daily blackouts all over the country. The García administration sought a military solution to the growing problem, but was unsuccessful. The MRTA used kidnapping and extortion as well as drug trafficking to finance their activities. In addition, the country was being ravaged by corruption, by drug problems, and by terrorist warfare. Most universities were inaccessible since they were dominated by these violent groups.

 

In general, everyday life was harsh. There were food, water and electricity shortages, car bombs exploded almost daily, killing and severely injuring thousands of people as well as members of the military and police. Soon, the attacks were also felt in the capital city of Lima and people lived in constant fear. There were limits on the amount of food each family could buy, and supermarkets were meagerly stocked as prices changed by the hour. By the end of García’s presidency Peru was suffering from hyperinflation, was isolated from the international financial community, had negative reserves of US$900 million, and was dealing with continuous subversive activities by the Shining Path and MRTA. There was also a great increase in poverty levels. I remember these days clearly since my siblings and I were sent daily to various supermarkets to buy what we could find.

 

In 1992, García went into self- exile and lived in Colombia and later in France. The Fujimori regime re-opened charges against him for allegedly taking millions of dollars in bribes. He denied the charges, and in 2001 Peru’s Supreme Court ruled that the statute of limitations had run out. García decided to ran for president in the new elections called by the temporary president, Valentin Paniagua, but lost against Alejandro Toledo.  Why did Alan Garcia win the 2006 Presidential elections: the “Humala”/Chavez factor  García officially started his campaign for the April, 2006 presidential election on February 18, 2005. Voting for Alan Garcia was considered by over 40% of the voters as “voting for the lesser of two evils”. Many citizens had a very negative impression of García after his first presidency but were scared by rumors that Humala would create a government based on Fidel Castro’s Cuba and would turn Hugo Chavez, President of Venezuela, into the virtual ruler of Peru, due to his patronage and financial support of Humala’s party. Humala denied these accusations, but his conflicting statements about his government’s vision and Chavez’s strong campaigning for him created enough suspicions among voters to cost him the election. President Chavez openly declared his support for Humala, and referred to García as a “robber”, and a “bandit.” García, in response, stated that Chávez was “not acting as a statesman” and challenged Chávez to a public debate. García also brought this issue to the Organization of American States. In the end, the Venezuelan leader cost Humala the election and García was inaugurated as President of Peru on July 28, 2006.

With thirty-six seats, Garcia’s Party, APRA, has the second largest bloc in the 120-seat unicameral Congress which was sworn in a couple of days before the President. With forty-five seats, Humala’s “Union por el Peru” Party has the largest bloc, although it has been divided into three factions.2

García’s victory was praised by democratic nations. It prevented Hugo Chávez’s left-leaning “socialist revolution” from spreading throughout the continent.

What Alan Garcia inherited from previous governments

 

The Government of Peru under former President Alberto Fujimori took the necessary steps to bring the problems created by the Garcia regime under control. Democratic institutions, however, and especially the judiciary, remained weak. Between 1992 and 2001, Peru attracted almost $17 billion in foreign direct investment, after negligible investment during the 1980s, mainly from Spain (32.35%), the United States (17.51%), Switzerland (6.99%), Chile (6.63%), and Mexico (5.53%).3 

The Peruvian economy underwent considerable free market reforms since 1992, from legalizing parts of the informal sector to significant privatization in the mining, electricity and telecommunications industries. The economic stabilization and liberalization program lowered trade barriers, eliminated restrictions on capital flows, and opened the economy to foreign investment. Thanks to strong foreign investment and the cooperation between the Fujimori government and the IMF and World Bank, growth was strong from 1994 to 1997 and inflation was brought under control. Peru now has one of the most open investment regimes in the world.

 

Alejandro Toledo’s presidency (2001-2006) was characterized by extremely low approval ratings but high economic growth rates; 5.9% in 2005 and 8% in 2006 due to the policies of the Fujimori regime. Toledo was able to push through several reforms, including tax reform and a pending free trade agreement with the United States. Despite the economic improvements, Toledo’s presidency was plagued with allegations of corruption and frequent popular protests.  Garcia’s current term in office  

I was impressed by what I found during my recent visit to Peru. The Jorge Chavez Airport has been modernized and the security systems are impeccable. The roads are in extremely good condition and there is construction everywhere which shows the confidence many Peruvians and international corporations have in Peru. Consumption has grown tremendously and there are small businesses, elegant restaurants and new shopping malls full of people. Tourism has reached levels never seen before and hotels are fully booked throughout the year.

 

It is a pleasure to go south using the highways and the country overall seems more secure and organized. Big exporting farms and packing plants in the south have incorporated and employed people from surrounding communities and social programs are present everywhere. Entrepreneurs provide social services as hospitals and schools are built. Many previously marginalized groups are now active participants in this new found economic expansion. Police officers in modern cars are present throughout and big trucks full of merchandise come and go, showing the growing commercial capacity in the countryside.

 

To the surprise of many, Mr. Garcia recruited a respected and competent cabinet, including an economic team of technocrats which increased the confidence of national and international investors and financial communities. He has continued the orthodox economic and fiscal policies carried out by the previous two Peruvian governments. These policies have contributed, along with the international commodities boom to Peru’s growth rate of more than 8% annually; expanding reserves while containing inflation. Construction and retail opportunities are spreading from Lima to several regions. Peru’s export sector, particularly specialty vegetables and fruits, is growing at an impressive rate, as well as mining investments. Garcia has since avoided abrupt policy shifts and has retained the political initiative and defused opposition to his government. When strikes and protests occurred, Garcia has tried to turn these to his political advantage, asserting national authority against the retrograde ultra-left members of some Unions who are not widely popular.

 During the first few months of his administration, Garcia boosted his approval rating into the high sixties, mainly by demonstrating that he was a force for stability, unlike Humala, and also for austerity, unlike his predecessor, Alejandro Toledo, who was given to extravagant personal spending and outright frivolousness. Garcia also promised a major expansion of investment, greater decentralization of public expenditures, big infrastructure projects, a campaign against malnutrition and a crackdown on crime, including application of the death penalty for pedophiles. According to estimates from analysts as well as local and foreign banks, Peru will register the lowest inflation rate in Latin America during this year and 2009. The president of the Central Reserve Bank of Peru (BCR), Julio Velarde, pointed out that the inflation rate in Peru would be within a range from one to three percent over the second half of this year. In addition, Julio Velarde forecasted that Peru’s economy would increase 7% this year – stimulated by both the public and private sectors.4 The Peru-United States Free Trade Agreement (FTA), also known as the United States-Peru Trade Promotion Agreement (TPA), was signed on April 12, 2006 by President George W. Bush, and won Congressional approval on December 4, 2007. This accord is already benefiting producers in both countries with greater market access and consumers with less expensive products. From a security standpoint, this ratification consolidates a partnership with the South American country which is critical in a region where free markets and U.S. influence is being attacked by populist and nationalist governments in Venezuela, Ecuador and Bolivia. The following data show the benefits of the trade agreement: U.S. imports from Peru will increase by $439 million, or 8% and U.S. exports to Peru will increase by $1.1 billion, or 25%. The largest value increases in U.S. exports will be in machinery and electrical equipment, chemicals, rubber, plastics, wheat, rice, pork, and poultry. Trade facilitation provisions, such as the definition of custom procedures, administration, and dispute, will lead to a more stable and reliable trading environment, further buttressing U.S.-Peru trade and investment. The protection of intellectual property in Peru, through new rules Peru commits to under the agreement, will be significantly improved.5 FTA, Security and Humala  After Chile and Colombia, Peru is an important democratic ally in South America’s Andean region. It trades nearly $6 billion in goods and services annually with the United States and cooperates in combating illegal drug trafficking but poverty still afflicts about half the population. Peru needs a more skilled workforce, a stronger rule of law, a reduction in burdensome regulations, and a commercial code that promotes entrepreneurship. Having FTA will help to advance these objectives.

 

So far, Alan Garcia has taken the correct steps and Peru is still a growing economy. In addition, some groups which previously didn’t have access to private property are now enjoying the benefits of having their own houses and small businesses. Some even say that Peru has already reached a point of no return and a socialist appeal will hardly find much support. But let’s keep in mind that Chavez’s ally, Ollanta Humala, remains a threat to democracy and a free market economy since he is still popular in some provinces due to his socialist and nationalistic rhetoric. Some people remain convinced that he continues to receive financial support from Chavez and that he is quietly campaigning in many provinces. This is of concern to many locals and regional leaders. In fact the recent violent clashes between some groups of farmers and the police are believed to have been promoted by Humala who has organized “The People’s Social Summit”, which is to take place from May 13 – 15, the dates on which world leaders will come to Lima for the European Union-Latin America and Caribbean (EU-LAC) Summit, and financed by Chavez since both do not want economic prosperity in Peru and want to destabilize the country for their socialist plan. Economic growth could block their nationalistic plans in the region and they are taking advantage of the Summit which Peru is hosting to halt progress and gain international publicity. Peru and Colombia now constitute a headache for Chavez’s socialist revolution as they are examples of functioning democracies, with strong economic growth.

 

In this regard, successful economic policies and the ratification of the FTA are providing incentives for Peru to become more competitive and less likely to succumb to authoritarianism and closed markets. For the United States and its allies in the region, this is critical. It is hoped that the Peruvian example will provide an incentive to many Democrats in Congress who are still refusing to ratify the FTA with Colombia and Panama. Trade is important but the region’s security must be a priority. Latin America is still at risk and the trade accord and the continuous funding of Plan Colombia will help placate those who want to destabilize the region.  

Nicole M. Ferrand is a research analyst and editor of “The Americas Report” of the Menges Hemispheric Security Project at the Center for Security Policy in Washington DC. (www.centerforsecuritypolicy.org). She is a graduate of Columbia University in Economics and Political Science with a background in Law from Peruvian University, UNIFE and in Corporate Finance from Georgetown University.

NOTES 

  1. Alan García reta a Chávez a polemizar por CNN, El Universal, 28 April 2006.  
  2. Alan García in Dispute with Hugo Chávez, University of British Columbia — Peru Elections 2006, April 28, 2006  
  3. Exit Poll Results: Alan Garcia in First Place University of British Columbia — Peru Elections 2006, June 4, 2006.
  4. Peru will register lowest inflation in Latin America in 2008 and 2009. 11 February, 2008. Living in Peru.
  5. Congress Should Advance U.S.-Peruvian Free Trade Ties. July 12, 2006. The Heritage Foundation.

 

NEWS

  • Ex-army agent says he was offered lighter sentence to incriminate Peru’s former leader. Farmers strike turns violent in Peru. Peru-Chile Border Tiff to The Hague. Peru trusts free trade deal with Korea will be established soon. Ollanta Humala organizes ‘Social Summit’ near EU-LAC summit dates.
  • Panama : Chávez accused of backing protests against Torrijos.
  • Castro’s resignation believed to undermine ALBA. Cubans must demand their rights, former prisoners say.
  • French FM to visit Bogotá, Caracas to address hostage issue.
  • Former hostage reports pact between FARC and Chávez.
  • Chávez and FARC Leader Marulanda met last week in Venezuela. Pdvsa’s tax contribution down 38.7 percent of gross income. Venezuela does not plan on halting oil exports to the United States. Venezuela to tackle economic unbalances.
  • Colombia – Canada soon to sign a Free Trade Agreement.
  • Brazil to buy weapons from France.
  • Argentina: Cristina Kirchner travels to London and will press Malvinas issue.
  • Attempt to kill Paraguayan president discovered.
  • Nicaragua: Ex-vice president warns of Ortega’s dictatorial intentions. Venezuela ships oil to Nicaragua.
  • Morales: Iran to start TV channel in Bolivia. Government to preserve unity against pro -independence proclamations.
  • Mexico and Cuba to boost trade ties.

View the full version of the Americas Report (PDF)

 

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Tehran threat in the US’ backyard

 

While some world leaders are extremely concerned about the real threat Iran poses to peace, with Ahmadinejad announcing just recently on January 29, 2008 that it was close to its target of producing nuclear energy by saying: "We are moving towards the summit on the nuclear path," the Tehran menace is much closer to the US than ever: in Nicaragua.

Iran has been slapped with two sets of UN sanctions for its refusal to halt uranium enrichment and a third package is currently being considered by the Security Council. The West fears that Iran is using its nuclear drive to try to build atomic weapons, a charge Tehran has consistently denied, saying it is aimed at generating electricity. Uranium enrichment is a process which makes nuclear fuel but can also be diverted to produce the fissile core of atomic bombs.

The Security Council held informal talks on a third sanctions resolution, a draft of which was agreed by the five veto-wielding permanent members: Britain, China, France, Russia and United States plus Germany. The proposed new measures include an outright travel ban by officials involved in Tehran’s nuclear and missile programs and inspections of shipments to and from Iran if there are suspicions of prohibited goods. [1]

We at the Americas Report have been following closely the Iranian President’s movements in Latin America during 2007, when he visited Venezuela, Nicaragua and Ecuador while developing ties with these countries’ leaders, specifically with Hugo Chavez (read ‘The Americas Report’ from January 19, 2007: "Chavez and the Iranian connection" by Luis Fleischman).

Diplomatic Relationship between Ahmadinejad and Ortega

Venezuela’s Hugo Chávez opened Latin America to Iran by signing multiple accords with President Mahmoud Ahmadinejad, including bilateral deals on oil, tractors and bicycles. The relationship between these two leaders is first of all geopolitical and then economic.

In January 2007, Iranian President Mahmoud Ahmadinejad led a five-day official visit to Venezuela, Nicaragua, and Ecuador. His visit coincided with the inauguration of Nicaragua’s newly-elected president Daniel Ortega where Ahmadinejad was a guest of honor. At the inauguration ceremony, the Iranian president was awarded two state medals.

Iran recently established an embassy in Managua and the new envoy is Akbar Esmaeil-Pour. This compound, in an upper-scale neighborhood in Managua is said to be huge and lies behind twelve-foot-high concrete walls.  Diplomats have immunity coming and going and the building is protected against espionage. Such an embassy in Managua is definitely of concern to US national security interests. Since the Iranians are allowed to come and go as they wish and there is no surveillance by the Nicaraguans as to what goes on inside this compound, it is easy to imagine that this new embassy might be used for smuggling of weapons and development and execution of plans to attack American interests. Ortega shares an ideological affinity with Iran including a hatred of the West so he is all too happy to use his territory as a jumping off point for terrorism.

Even more dangerous is the fact that on July 2007 it was discovered that Ortega permitted 21 Iranians to enter the country without visas. (Here is the link to the official document: http://www.mysanantonio.com/news/images/graphics/20071216MigrationDoc.pdf.)

The letter is addressed to the CEO of TACA, Juan Salguero. TACA is the flag airline of El Salvador, comprised of a group of five combined Central American airlines. The company is owned by the Kriete family of San Salvador. Originally an acronym of Transportes Aéreos Centroamericanos (Central American Air Transport), it now stands for Transportes Aéreos del Continente Americano (Air Transport of the American Continent), reflecting its expansion to North, Central and South America. It flies to about 50 different countries. The five airlines are: Aviateca (Guatemala), Lacsa (Costa Rica), NICA (Nicaragua), Taca (El Salvador) and Taca de Honduras (Honduras). It comes from the Nicaraguan immigration offices and reads as follows: After revising the resolution number 347-07-2007, the following Iranian citizens are allowed to enter Nicaragua without visas arriving at the Cesar Sandino Airport via Lacsa, flight number LR-718 departing from Costa Rica arriving in Managua on July 31, 2007 at 9:15am. Then there is a list of names and last names of the "tourists." The document is signed by Pamela Aguilar Mora, the Nicaraguan head of immigration.

This clearly shows that the Ortega regime is eager to allow Iranians in and out of Nicaragua and terrorists might find it extremely easy to come to the region to carry out terrorist attacks against the US or other countries in Latin America. Iran could stage strikes on American or allied interests from Nicaragua, deploying the Iranian terrorist group Hezbollah and Revolutionary Guard operatives already in Latin America. They could easily go to Mexico and then illegally enter the US.

Commercial deals between Nicaragua and Iran

Tehran is launching new cultural exchange programs in Nicaragua to encourage trade and investment. Nicaragua has signed contracts with Iran worth hundreds of millions of dollars. President Daniel Ortega has agreed to trade bananas, coffee and meat in exchange for Iranian help with infrastructure projects. T hey have signed agreements for bilateral cooperation in 25 sectors.

In return for Nicaraguan agricultural goods, Iran is to help fund a farm equipment factory, 4,000 tractors, five milk-processing plants, a health clinic, 10,000 houses and a deep-water port. In November Iran is also expected to choose a site for a 120 million dollar hydroelectric power station, with another three plants potentially to follow. The Sandinista leader has upgraded ties with Cuba and North Korea, and in June visited Iran, Algeria, Libya and Cuba in a jet lent by Libya’s Muammar Ghaddafi.

Bill Weinberg, editor of the online journal World War 4 Report and a co-founder of the National Organization for the Iraqi Freedom Struggles recently wrote a very interesting article titled: Iranian Revolutionary Guards in Nicaragua to scout "Dry Canal" project? , which talks about how Nicaragua’s Sandinista President Daniel Ortega, Iran and Venezuela have announced the financing of a $350 million deep-water port at Monkey Point on the wild Caribbean shore, and then plow a connecting "dry canal" corridor of pipelines, rails and highways across the country to the populous Pacific Ocean.

Ahmadinejad also promised that, along with Monkey Point, the will include fixing the Pacific port of Corinto. Also in December 17, 2007 Iran’s official news agency IRNA reported a visit to Managua by Ezzatollah Zarghami, president of Iranian state radio and television, who pledged to make programming available for local broadcast.

Monkey Point is inhabited by the Rama and Creole communities who live in isolation and are people of predominately African ancestry who subsist on fish and jungle animals. The Iranian presence in Nicaragua became news in December 2007, when some angry Rama Indian and Creole villagers complained about two helicopters landing in their territory. Rupert Allen Clear Duncan, a leader of some 400 Creole who live along the shoreline, confronted the foreigners dressed in suits and military uniforms and demanded to know the purpose of their aerial trespasses." This is our land; we have always lived here, and you don’t have our permission to be here," Duncan got angry when these people refused to give an explanation. Then Duncan threatened to destroy the aircraft and that is when he and his followers learned, in astonishment, that some of the men were from the Islamic Republic of Iran and had come promising to establish a Central American foothold in the middle of their territory. [2] Days later a Nicaraguan website, Nicaragua Hoy, called the Iranian team that visited Monkey Point "advance parties of the Iranian Revolutionary Guard."

Ortega immediately reacted saying that the Iranians were there as part of a cultural delegation. Weinberg also states that a feasibility study for a Bluefields-Nueva Guinea highway has been completed by the Danish development agency DANIDA, linking two towns in the Southern Atlantic Autonomous Region (RAAS), with a further link foreseen to Monkey Point (which lies south of Bluefields, the RAAS seat). The Spanish national port authority completed a similar study for the Monkey Point dredging project in 2000. The report says the Venezuelan Army Corps of Engineers is now studying construction of a highway between Puerto Cabezas in the Northern Atlantic Autonomous Region (RAAN) and Rio Blanco in the central department of Matagalpa, also to be integrated into the network linking to the Dry Canal. The report also claimed Nicaraguan army Chief Omar Halleslevens Acevedo is seeking to purchase helicopters, patrol boats and arms from Iran. [3]

Since being elected President of Nicaragua, Daniel Ortega has developed extremely close relationships with US foes adopting the same populist-socialist-leftist rhetoric of his Venezuelan counterpart, Hugo Chávez, and his recent actions suggest that he wants to consolidate power and back Chávez’s 21st century socialist vision for Latin America. Ortega dreams of a long run as president of Nicaragua. His renewed anti-American rhetoric, destabilizing economic policies and friendship with Chávez and Ahmadinejad has not been welcomed by Nicaraguans or Americans. Since Ortega took office, the economy has slowed, and his approval rating has dropped. In the June 2007 CID-Gallup poll, only 26 percent of those surveyed approved of Ortega’s performance, a sharp drop from his 61 per­cent approval rating in February. [4]

But the problem doesn’t end here. The Menges Hemispheric Security Project has been warning about the presence of Hezbollah in Latin America. Hezbollah has fronts all over the region. (Please read "The Americas Report March 28, 2007 titled: The Radical Grassroots: a danger on the Horizon" by Luis Fleischman and Nicole M. Ferrand, and "The Americas Report April 11, 2007 titled: The Radical Grassroots Part II" by Luis Fleischman and Nicole M. Ferrand). Iran and Hezbollah are now present in Argentina, the tri-border region between Brazil, Paraguay and Argentina, Bolivia, Ecuador, Venezuela and Nicaragua. It may be even the case that they are already present in Cuba.

On March, 2007 Iran Air, Iran’s national airline, had completed its first direct flight to Venezuela. This weekly, commercial flight linking Tehran and Caracas stops in Damascus, Syria, before crossing the Atlantic Ocean. Travelers from those countries to Venezuela are visa-exempt, raising concerns that terrorists may attempt to exploit weak Venezuelan immigration controls to undertake acts of terror in the U.S. or elsewhere in the hemisphere. Other nations like Qatar, Syria and Poland are interested in using Venezuela as a new commercial route for their businesses.

Iran now has fully operational embassies in Cuba, Venezuela, Mexico, Brazil, Argentina and Nicaragua with plans to strengthen its diplomatic presence in Bolivia, Chile, Colombia, Ecuador, and Uruguay. Given the growing presence of radical, anti-western Iran in Central and South America, the threat to the national security interests of the United States and the region is a very real concern. How the United States Government chooses to respond to this threat has tremendous implications for our future survival. 

 

[1] Iran’s vows to win nuclear tussle with West. January 30, 2008. AFP.

[2] Iran making push into Nicaragua. December 18, 2007. Todd Bensman. Express-News.

[3] Avanzadilla de la Guardia Revolucionaria Iraní en Monkey Point. December 22, 2007. Nicaragua Hoy.

[4] "The Honeymoon Is Over: Ortega’s Job Approval Crashes," Public Opinion Survey: Nicaragua. June 2007.

Russia extends a helping hand to Chavez

Closer, ever closer.  Putin and Chavez are working against the U.S.

The last 20 years of the USSR were characterized by very poor economic results, at least compared to the economic performance of the leading western economies. With the fall of communism, new hopes for a better life came to millions of people living in the different republics and satellite countries. However, the transition was difficult, and although some countries like the Czech Republic and Slovenia were able to overcome the early years of transition, becoming the prosperous democracies that they are now, some others eventually adopted new types of autocracies. In the case of Russia, the early years of the Yeltsin administration saw the Russian GDP per capita falling about 50%, and the dismantlement of the major industrial parks.

The persistent economic problems that led to the 1998 rubel crisis, its strong authoritarian tradition and the lack of a new generation of democratic leaders led to the election of a former KGB officer, Vladimir Putin, as president of Russia in 1999. Under Putin, the brief Russian democratic experience vanished, and a new kind of authoritarianism emerged. In a ranking from 1 to 7, in which 1 means a regime of full political and civil rights and 7 the absolute absence of them, Freedom House has progressively worsened the ranking of the Russian regime, from 3 in 1999 to 6 today. New vague legislation to fight terrorism is often used against political opponents. Thirteen journalists have been assassinated since Putin came to power, including investigative journalist Anna Politkovskaya, which has had the effect of silencing most public critics against the government.

There is an open campaign against NGOs and human right groups, and an increasing segregation against Georgians living in the country. Although people still have the right to vote, elections are far from fair; Putin has strong control of all political powers of the State. Together with widespread corruption, this has allowed him to jail potential opponents like the oil magnate Mikhail Khodorkovsky, confiscating his assets which included the oil company, Yukos. A new law allows firing legislators if they change parties, and prohibits the forming of coalitions in elections. It also removed the option of voting "against all" from the ballot, which invalidated elections if it was the most voted. The economic system in Russia largely resembles a fascist State. Although private property is recognized, there is strong State intervention.  Property rights are shaky, openly favoring those businesses friendly to the Government and prosecuting those critical of the Kremlin.  Labor unions are quite limited in practice, and employers frequently ignore collective bargaining rights.

What has made this increasing authoritarianism possible in modern Russia? There is no doubt that this can in part be attributed to better economic conditions during the last years. According to the World Bank, compare to the poor economic performance during Yeltsin administration, in which per capita income had a average negative growth rate of -6.2% per year, during the Putin administration, the Russian per capita income has increased an average of 6.9% per year. That has given Putin enough popular support to consolidate his political power inside Russia.

However, Putin’s political ambitions are not only about Russia. He has repeatedly stated that dismantling the Soviet Union was a mistake, and has not hidden his intention of making Russia a true heir of the former Soviet world power. In fact, the Russian attitude toward terrorist states like Iran has been rather weak, as they plan to take advantage of the increasing isolation of the Islamic regime in order to increase Russian influence on them.

In Latin America, Putin has found an excellent ally in the Venezuelan dictator, Hugo Chavez. However, the relationship between both presidents has not been easy at times, mainly due to the peculiar characteristics of the South American President, whose ambitions and megalomania make him believe that he must lead the world revolution against capitalism, as he has stated several times. In economic terms, Venezuela represents a new market for Russian exports and investments. During the last three years, Russia has sold Venezuela 100,000 AK-103 assault rifles, 53 helicopters, including 12 Mi-17 military helicopters, and 14 Su-30MK fighter aircrafts. That has represented for Russia earnings of over 5 billion U.S. dollars. Russia has also offered to sell Venezuela 50 of its most advanced warplanes, the MIG 29 Fulcrums. Last year, Chavez stated that Russia would deliver 5 Kilo class 636 diesel submarines to Venezuela, 10 more Su-30MK fighter aircrafts and 5,000 Dragunov sniper riffles. Currently, plans are being made to acquire from Russia an additional 36 helicopters and Su-35 fighters, a yet undetermined number of Antonov transport aircrafts. Talks about setting up a factory of Russian weapons in Venezuela are currently underway. According to Chavez, he is buying this vast amount of weaponry because he is getting ready for an eventual USA invasion. However, this rearmament causes more concerns among Venezuela’s neighbors than to the US, as Chavez is building alliances with subversives groups everywhere in the region. This includes its recent petition for removing the Colombian FARC and ELN from the list of "terrorist organizations," despite that they have kidnapped over 700 people, are involved in arms and drug trafficking, have employed car and gas cylinder bombs, landmines, extortion, hijacking, and enrolled by force poor children in their army to reach their goals.

The Russian-Venezuelan economic relationship also extends to the energy sector. Venezuela was looking for Russian help to build an ambitious gas pipeline to connect Venezuela, Brazil, Bolivia, Argentina, Uruguay, and Russian State firms. LUKoil and Gazprom are increasingly replacing American oil companies in the exploitation of the Orinoco Basin. Although the Russian presence in the exploitation of petroleum in Venezuela is still relatively small, it is growing strong. Venezuela is the fourth oil supplier of the USA.

Since the Russian diplomacy has a clear commitment to restore its world influence, at least at the Cold War level, Chavez also represents for them a door to Latin America in terms of political and economic influence. Chavez has strong influences on the several Latin American countries Venezuela is financially supporting, namely, Argentina, Bolivia, Cuba, Ecuador and Nicaragua. That has allowed the Russians to place a foot in other countries of the continent, looking to expand its market for its military and oil industries, as evidences the Russian delegation that recently visited Argentina.

The danger of that situation is that an increasing influence of Russia in Latin America also means a stimulus to the authoritarian forces in the region. However, although the growing Russian influence may look strong, the fact is that it has a strong weakness: its economy is at every time becoming more dependent on the oil industry, and in particular, on the high oil prices. On the other hand, due to the high oil prices and the bursting of real estate bubble, the USA economy is recently giving strong signals of a forthcoming stagflation: a recession with increasing inflation rate. Although the Fed has recently announced that it will cut interest rates in order to prevent an economic slowdown, the recession does not seem easy to stop. That policy may bring even higher inflation and higher oil prices in the short-run, and force the Fed to abandon it in the future, postponing a mild recession now to a deeper recession tomorrow. What all that means is that, if the USA enters into a recession, it seems difficult that the rest of the world do not enter into a recession as well, with the unavoidable fall in one of its major causes, the oil price. That fact would put in troubles the oil dependent Russian and Venezuelan economies, creating strong political problems to both dictators. Could that bring the end of the last wave of autocracies?

Jose Noguera obtained a Ph.D. degree from State University of New York at Buffalo. He currently teaches and conducts research on macroeconomics, political economy and development with the rank of Associate Professor at the Whittemore School of the University of New Hampshire. He has also been appointed at Michigan State University, CERGE-EI (Prague, Czech Republic), University of Warsaw, Central University of Venezuela and Mohila Academy University of Kiev.