Friday, December 27, 2013

Mexico - the 2013 champion of reforms

"If an award could be given in 2013 for Country of the Year, Mexico might deserve it. No other country has done more this past year to put reforms in place to transform a nation – and with startling democratic consensus", wrote Christian Science Monitor on 15 December. It is a rare compliment from the American media which have been obsessed with negative portrayal of Mexico headlining issues such as drug trafficking, illegal immigration and violence. Mexico has brought about more fundamental reforms in the last twelve months than any other democratic country. 

The reforms were initiated by Enrique Penha Nieto, the young and dynamic President of Mexico since December 2012 as part of  the " Pact for Mexico"( Pacto por Mexico) signed by the four major political parties of the country committing consensual support to vital policies and reforms of national importance. He started the negotiations with the other parties as soon as he was elected in July 2012 and  signed the Pact on the second day after his inauguration. The Pact has brought together the ruling centre-left Instituitional Revolutionary Party(PRI) and the three principal opposition parties; the leftist PRD party, the Conservative  PAN ( which was ousted from power in 2012 after two terms) and the Green Party which joined the Pact in January 2013. The political parties came together for the Pact after the realization that the polarization of politics had weakened the country alarmingly especially in the last decade.

The 95- point agenda of the Pact ranges from tax overhaul to barring junk food in schools. The Pact has already helped in passing six major reforms in the last twelve months: (1) reform of the educational system (2) legal reform  (3) a telecommunications law that limits the quasi-monopolistic powers of the biggest companies including that of Carlos Slim, the world's richest man (4) a  tax reform increasing the tax for more social spending (5) Electoral reform  and (6) the energy reform.

The energy reform bill passed by the Congress on 12 December is the most dramatic and historic one, since it was considered as the most difficult to achieve. The Petroleum sector had remained as a holy cow in Mexico since the nationalization in 1938 because of the fear of  domination by the giant US firms. The inefficient monopoly of Pemex has resulted in fall in crude output by a quarter. The new law allows entry of foreign and private investment which will rejuvenate the energy sector with investment and technology. The production of oil is expected to increase by a million barrels by 2020 and energy costs for consumers and the industry will become lower.  
The energy reform of Mexico is good for India which has been importing Mexican crude oil regularly in recent years. In 2012, India imported US $ 2.83 billion worth of crude oil from Mexico. India is Mexico's third-largest market for oil after the US and Spain. As Mexico increases its production capacity, India can count on Mexico as a regular longterm source of supply in future. The reform has also opened opportunities for Indian companies to invest in the Mexican oil sector, as they have done in Venezuela, Brazil and Colombia.
 Every one of the reforms was ferociously opposed by the vested interests, unions and ideological warriors of the country. Mexico city was paralyzed for many weeks by the protestors in the last one year. But the government firmly stood its ground and carried the reforms through. Still, the reforms would continue to face challenges by the forces opposed to them as well as in implementation through secondary legislations. Mexico also faces serious problems of drug trafficking, crime and violence, besides high levels of poverty and inequality as well as slow growth. But what is important is that the reforms have given a new confidence to the people in the political system that it could deliver and have made them more optimistic about the future. 
The reforms have heralded a new paradigm of democratic functioning besides opening a new era of economic and social transformation for Mexico. The manner in which the the ruling party and the opposition parties have worked together and brought about so many reforms under the Mexico Pact is an example and inspiration for other democracies of Latin America and the world. The Economist magazine commended, "Mexico appears to have found the medicine for political gridlock" and commented,"plenty of Americans must have cast a jealous eye south of the border this year".  Wall Street Journal wrote, " At a time when politicians in Washington struggle to agree on anything, their Mexican counterparts sit down almost daily to talk about thorny issues".  The Mexico Pact shines even more brightly against the dark background of the US government shut down in October 2013 and the policy paralysis in Washington DC due to the irreconcilable ideological polarization and fight between the Republicans and the Democrats. The next prime minister of India could start off with a "Pact for India" by reaching out to the opposition parties and forging a consensus on some of the issues of vital national interest.

This article was published by Mint Newspaper on 27 December 

Friday, December 06, 2013

Poverty and Inequality are declining in Latin America

Poverty rate has decreased signifcantly from 48.4 % in 1990  to 27.9 % in 2013 and extreme poverty has declined from 22.6%  to 11.5 % in the same period, according to a report “Social panorama of Latin America” released on 5 December by ECLAC ( Economic Commission for Latin America and Caribbean), a UN organisation based in Santiago, Chile. The other highlights of the report are:

The rate of poverty reduction has slowed down in the region in recent years due to the impact of the global financial and economic cris, the fall in commodity prices and slower domestic growth.,  The per capita GDP growth in 2012 was just 1.9% in 2012 as against 3.2% in 2011 and 4.5% in 2010.

Venezuela tops the list with the largest drop in poverty reduction. Brazil, Peru, Argentina and Ecuador have also seen significant fall in poverty. On the other hand poverty rate has gone up in Mexico.

Inequality in income has reduced in Venezuela, Brazil, Peru, Bolivia and Uruguay  while it has increased in Paraguay, Panama and Costa Rica.

Share of social spending as a percentage of GDP in 21 countries of Latin America and Caribbean has gone up from 12.5% in 1992-93 to 19.2% in 2010-11. The share of social spending as a percentage of public spending has also increased from 50 % in 1992-93 to 65.9 % in 201-11 in the same group of countries.

My comments:

The credit for the reduction in poverty and inequality in Latin America goes to the proactive poverty alleviation programmes of the Leftist governments in the region. Brazil’s Bolsa Familia is a role model for the region and for the world too.

The region needs to keep up its Leftist orientation in the coming years since even now poverty rate is substantial. The number of people living below the poverty line in Latin America is 164 million accounting for 27.9 percent of the total population. The number of people who are extremely poor in the region is 68 million representing 11.5 % of the total population.

Honduras elections

While the Chilean elections held in November have brought back to power the Left which is a role model for the region, the elections held in Honduras in the same month has returned to power the right wing National Party which colluded with the military coup and overthrow of the democratically elected President Manuel Zelaya in 2009. If Chile is an inspiration for the Twenty First Century Latin America, Honduras is a reminder of the bad old times of the last century of coups and conspiracies.

In the elections held on 24 November 2014, Juan Orlando Hernandes, of the National party has been declared as the winner by the electoral authority of Honduras. Hernandes got 36.8% of the votes while his main rival Xiomara Castro, the centre-left candidate of the Libre party got 28.8 percent. She is the wife of ex-president Manuel Zelaya who was ousted in the 2009 coup. She has alleged irregularities in the counting and has rejected the official results. She has claimed victory and her supporters have been in the streets with protest demonstrations. In response, the electoral authority has agreed to recount in some cases. But the Libre party does not agree with the way the recounting is proposed to be done by the electoral authority. So there is going to be more street protests and uncertainty for sometime. However, the chance of Xiomara winning the election after recount is very slim, given the overwhelming strength of the right wing forces including military which are opposed to the Left.

Honduras is the original " Banana Republic" and is continuing to be true to its derogatory meaning. It is the only Latin American country to have had a coup in the Twenty First Century Latin America. Manuel Zelaya, the President was ousted in a classic military coup in 2009, put in a plane and dropped in Costa Rica as an exile. This came as a total surprise and shock since the twenty first-century Latin America has transformed into a democratic region ( exception-Cuba) having sent the military back to barracks irreversibly. So this was the first and only case of coup in the region in this century. The conservative National party, supported by their US patrons was the villain behind the coup. The reason for the overthrow of Zelaya was that he was trying to seek reelection through a referendum. Such a blatant and untenable excuse! The real reason for the coup was to punish him for being close to Chavez and give a message to other pro-Chavez presidents in the region.

Honduras has the notorious distinction as the murder capital of the world with 82 murders for every 100, 000 of the population and 20 murders a day. The ruthless Mara gangs, said to have tens of thousands of members, strike terror all over the country and are involved in drug and human trafficking. President-elect Hernandez, has promised tough measures to deal with the crime by putting the military and more police in the streets.

Many Hondurans emigrate to escape the terror inside the country. 25% of the foreign exchange comes from the remittances of Hondurans who work abroad. In US alone there are over 700,000 Hondurans, almost ten percent of the total population.

Honduras is one of the poorest countries in the region. About fifty percent of the population are below poverty line. Poverty alleviation is not a priority for the conservative party which has won the election, in contrast to most other Latin American governments which have pro-poor policies and programmes. This means that there is no immediate hope for Hondurans suffering from poverty and inequality.

Honduras is the second biggest coffee producer of Central America and an important banana exporter. The country is diversifying into textiles and exporting to US taking advantage of the FTA with US.

An interesting fact: Honduras has the second largest number of people of Palestine origin( 280,000) in Latin America, after Chile (350,000). Carlos Flores Facussé, who was President of Honduras from 1998 to 2002 was a Palestine descendent.

Monday, November 25, 2013

Chile turns Left again

The Leftist coalition candidate Michelle Bachelet won 47% of the votes in the presidential elections held on 17 November while her rightist rival Evelyn Matthei got just 25% votes. Two more candidates to the far left got ten percent votes each. Since the Constituition requires the winner to get 50% of the votes, the two leading candidates will go for a run-off election on 15 December. Bachelet is expected to win easily. This means the return of the Left after a gap of four years. The Left had ruled Chile for twenty years since the restoration of democracy in 1989 after the Pinochet military dictatorship. Bachelet was the last leftist President in the period 2006-10 and she could not seek reelection since the Chilean Constituition does not permit two consecutive terms.The centre-right coalition government of Sebastian Pinera, which had come to power in 2010 has not been able to sustain the brief right turn beyond a single term. 

In the Congressional elections held on the same day along with the presidential one, the leftist coalition has won 50% votes and the rightist one got 38%. The Left has won a majority in the lower house with 68 seats out of the total of 120  and 21 of the 38 senate seats.The Communist Party, which is a coalition member of the Left has doubled its representation in the lower house to six. Four former leftist leaders of the student agitation including the charismatic Camila Vallejo who was the poster girl of the protest movement in 2011-12, have entered the Congress. 

The outgoing conservative government of the billionaire-President Pinera which delivered on the macroeconomic front with average GDP growth of 5.7% from 2010 to 2012 failed the middle class and poor who felt left out in the growth story. Pinera is ending his term with the lowest popularity rating in comparison to his predecessors since 1989. During the student protests in 2011-12 he and his ministers made insensitive remarks showing their lack of empathy for the lower classes. In contrast, Bachelet is seen as a kind motherly figure who could feel the pulse of the downtrodden and oppressed. She is the daughter of an Airforce General who died following imprisonment and torture by the Pinochet regime while her opponent Evelyn Matthei is the daughter of another senior Airforce officer who was part of the dictatorship. Bachelet herself was detained, tortured and exiled by the military regime. 

The return of the Left does not mean any drastic change of direction. It will be just course correction and more inclusive growth. In her election manifesto, Bachelet has promised free higher education, increase in taxes and constitutional reforms. But Bachelet will be able to do only limited educational and tax reforms and will find it difficult to change the constitution ( vestige of the Pinochet era) since her coalition does not have the two thirds Congressional majority required. But she could still try to negotiate with her right wing colleagues since the moderates from the right have won and the hardliners have lost in the elections.

Chile has already established its distinction as the Latin American country with the most stable and sober democracy with a dynamic and growing market. Chile stands out in the region as the country with the least corruption, crime and violence. It has successfully reduced its dependence on copper exports and diversified its exports and economy. It has signed FTAs with the most number of countries, ranks ahead of other Latin American countries in credit ratings and the World Bank Index of ease of doing business, investor-friendly policy regime, one of the best pension systems in the world and a solid sovereign wealth fund created from windfall profits made by the high prices and demand for its copper exports in recent years.

The victory of Left in Chile is part of the left turn of many countries of Latin America in the last two decades after having suffered rightist military dictatorships in the last century and the neoliberal policies of the post -dictatorship governments which had worsened the problems of inequality and poverty and caused the " Lost Decade" of the region. But the left that emerged was of two kinds: the radical group lead by Chavez; and the moderate and pragmatic group which has come to power in Chile, Brazil, Uruguay and Peru. People have got disillusioned with the radical model after seeing the tragedy of Venezuelans suffering from the highest rate of inflation, scarcity of essential and consumer items, mismanagement of economy, power shortages, foreign exchange rationing, import controls and the rampant crime, violence, kidnappings and corruption while the democratic institutions have been damaged badly. President Maduro, who imitates Chavez, continues the policy of confrontation and class warfare with a daily discourse of crude abuses, insults and threats to opponents, polarizing the society. On the other hand the Chilean Left is enlightened, respectful of opponents and seeks to make changes in a conciliatory and democratic manner. The Latin Americans are attracted more and more by this Chilean model of moderation and pragmatism; balanced mix of pro-poor and pro-market policies: as much emphasis on creation of wealth by the private sector business as on the distribution of wealth among the poor. This constructive model is the dominant trend  in Latin America. This is good for the long term health of democracy and inclusive economic growth of the twenty first century Latin America. 

Friday, November 22, 2013

Book Review of Juan Alfredo Pinto's novel "Atalaya XXI – when Nature Hits back "

"Atalaya XXI – when Nature Hits back" is the novel of Juan Alfredo Pinto Saavedra, Colombia's ambassador to India for six years till mid- November 2013. The book was launched on 23 October 2013 in New Delhi. The book belongs to the new genre " environmental thriller". There is, of course, "magical realism" in the book, in the style of Gabriel Garcia Marquez and other writers of this genre from Colombia. Amb Pinto wrote the book originally in Spanish with the title " cuna marina" which has been translated by Alka Jaspal of India.

The story is about the rescue of nine environmental experts trapped in the debris of the collapsed convention and commercial centre called as Atalaya XXI in Lima, Peru. The experts were participating in a conference on " climate change and coastal cities". The building collapses due to the climate change factors and particularly "marine wedge" caused by the incessant crashing of waves on the coast in which the building is located.  The survivors are rescued through a lateral tunnel made from the sea side. The whole operation is shown on live TV and thereafter the survivors are interviewed on the core environment issues as well on their personal experience and feelings while buried under the debris for ten days. 

The experts include an Indian philologist Dilip Vandrewalh from JNU (Jawaharlal Nehru University) Delhi, an Argentine environmental activist, a Gringo (American ) specialist in carbon bonds, green economy and financing of projects, a Peruvian mining engineer, a microfinance expert (of British and Costa Rican origin) from a multilateral organisation, a Colombian environmental consultant, a Vietnamese woman from the Communist party cadre and a Spanish professor. They are found to be alive sixteen meters under the ground four days after the collapse and rescued after ten days . During the time of their entrapment and trauma they interact with each other on their personal affairs and environmental issues and cheer and support each other physically and emotionally. 

Part two of the novel is the love story of Hipolito a Honduran, born of a Boilivian Mestizo and his Cuban wife. He comes t to study MBA in the National Agricultural University of Molina in Peru, after graduation in veterinary studies from Colombia. He falls in love with Maria Mimi, a classmate from one of the traditional oligarchy of Peru. After a long romance, they marry. While Hipolito is occupied with business, Maria has an affair with another man Norman with whom she starts a new business of establishment of a school of gastronomy, restaurants and jewellery chains based on the theme of asparagus in the Peruvian province famous for its cultivation. Hipolito disocovers the affair and poisons the lovers to death with a venom from the golden frog found in the jungles of Colombia. He disposes the bodies in the water next to the conference building, making it look like part of the tragedy of the building collapse.

The most moving part of the novel is the interactions and exchanges between the nine people from the different countries during the ten days of their entrapment under the ground. It is a discourse of multiculturalism and dialogue between societies with diverse value systems and mindsets. This is where Juan Alfredo Pinto displays his deep understanding of the Asian and Latin American cultures, besides others. 

The Indian explains to the others, in the manner of Gurus, the Indian philosophy, culture and traditions such as arranged marriage, karma,chakras, agni, third eye and even what does Sixer mean in cricket. He  claims that he has extra flexibility in fingers thanks to the habit of eating with hands. The Argentine does all kinds of profound psychological analysis taking his audience through labyrinths of fantasies like Jorge Luis Borges, the famous Argentine writer does in his books. The Peruvian mining engineer sees the world through rocks and fossils and says, "Stones show their age on their own surface unlike the human beings who pretend or tell lies".

Picture- Ambassador Pinto speaks at the launch of his book at Teen Murti Bhavan New Delhi on 23 October 2013

The author elaborates myths and parables from different cultures such as how bats are perceived in Central America, Mexico, Colombia, US, China and Indo-China. His little story of " operation thump" in which the angry termites eat away the desk of the environment minister and make him lose his job as well as the story of birds and sage of Jodhpur are amusing and educative. In the subplot of Hipolito-Maria romance, the author gives us the flavor of Peru's famous cuisine and pisco traditions. In the conversations between the environmental experts as well as in their TV debates after the tragedy, the author brings out many facts, lies, conflicts and contradictions in the approaches to environment and climate change by scientists, vested interests, business and governments.

Atalaya XXI is the second book authored by Ambassador Pinto during his six year stay in India. He had earlier published a book " Lotus Flower- stories from Asia" in 2010. Each story takes place in a different Asian country including India, Cambodia, Indonesia and Kazhakstan but the main character in the stories are Latin Americans. In these stories also he brings out the culture of the different countries of Asia and weaves a magic carpet by blending them with Latin American culture. This book has been translated into Hindi and English by the Sahitya Academy.

Ambassador Pinto's books have been enriched by his multidimensional personality as a diplomat, academic, politician, economist and entrepreneur.They reflect the perceptive experience of his extensive travels in Asia and knowledge of the cultures of many parts of the world. He has an abiding affection for India and is specially fascinated by the Indian cultural, ethnic, religious and linguistic diversity. In his farewell interview to media on 29 October 2013, he says " I have lived for 2200 days in India and each one of them gave me special memories". His books bridge the millennial cultures of Asia with the magical realism of Latin America.

Friday, September 27, 2013

India could learn from the success of the Brazilian fuel ethanol policy

Here is the link to The Hindu which published the article as an Op-Ed piece on 24 September 2013

The public and media were outraged recently by a suggestion that petrol stations could be closed from 8 pm to 8 am to curb consumption. Oil import is the heaviest burden on foreign exchange, with 144 billion dollars last year. The situation could get worse  given the potential for increase in crude prices with the escalation of the Syrian crisis and further destabilisation in the Middle East. India needs to think beyond 8 pm to 8 am and look for longterm indigenous sustainable solutions.

One of the ways to reduce petrol consumption is by the use of ethanol as a fuel. Brazil has already done it successfully and reduced petrol consumption by thirty percent. All the new cars produced in Brazil have flexifuel engines which run on 100% ethanol or 100% petrol or any combination of the two. In addition, there is a 20 percent mandatory ethanol addition to petrol. Brazil is the global leader with 16 million flexifuel vehicles out of the world total of 27 million in December 2011. Brazil uses ethanol in motor cycles, light commercial vehicles and agricultural aircrafts too. They are now experimenting with ethanol in buses, trucks, tractors and harvestors. They have developed sugar cane diesel which is used in some Sao Paulo buses. They are now moving into cellulosic ethanol technology which uses waste material and bagasse from the sugar mills. The use of fuel ethanol has created a synergy between agriculture and energy sectors and a win-win for the farmers, industry and government. The Brazilians have improved the quality of air in their cities with the use of ethanol which causes less pollution than petrol.

How did Brazil do it? The Brazilian government has brought all the stake holders (the sugar cane farmers, sugar mills, car manufacturers and oil companies besides the ministries of agriculture, industry and energy) together and formulated a policy and oversaw its implementation rigorously as a strategic priority since 1975 after the first oil crisis. They provided three important initial drivers: guaranteed purchases by the state-owned oil company Petrobras, low-interest loans for sugarcane farming and ethanol production, and fixed gasoline and ethanol prices. The policy has evolved over the years through learning from experience. Today fuel ethanol is the centre piece of Brazil's energy, agricultural and industrial strategy and Brazil is a role model for the world.

The success of the policy has encouraged the oil companies to become stakeholders in ethanol production in Brazil. Multinational oil companies such as Shell and traders like Luis Dreyfus and Bunge have invested in  ethanol besides Petrobras, the state oil company.

Conscious of the cyclical nature of the sugar cane production and weather risks, the government has a flexible policy of exports during surplus and imports at times of shortage. Brazil is working quietly to create a global ethanol market with standardization of specifications and market mechanisms in collaboration with US. Brazil is encouraging and collaborating with other Latin American and Caribbean countries to produce fuel ethanol. Brazilian ethanol companies have started investing in other countries. 

As the second largest producer of sugar cane in the world, India has the potential to replicate the success of Brazil. The risk and investment involved in ethanol production are much less in comparison to oil exploration and production. 

The government of India launched a programme of 5% mandatory ethanol blending in 2006. But it does not work because the oil companies have shown the least interest in ethanol. They offer unattractive prices to the ethanol suppliers even when they pay through their nose for the foreign oil suppliers. The ethanol producers prefer better prices offered by chemical and alcohol companies as well as foreign importers. It is a mistake for the government to have left the ethanol policy as a hostage to this conflict of interest between the oil and the sugar companies. Neither of them see the larger picture of nationalinterest. The petroleum ministry is also biased on the side of the oil companies. In view of this, the government needs to take up the matter in its own hands, bring all the stake holders together and evolve a long term policy treating it as a national energy security imperative. The mandatory blending should be increased to ten percent immediately and the target should be 20 percent in the next three years. They should force the oil companies to invest in ethanol production to make them develop a stake. The car manufacturers need to be brought on board to modify the engines. Some of the car makers in India such as Ford, GM, Volkswagen, Honda, Toyota, Renault and Fiat are already producing flexifuel cars in Brazil.

Use of ethanol as fuel has multiple benefits for India besides reducing petrol consumption. Money will go to the Indian farmers and industry in rupees instead of the foreign oil suppliers in dollars. It will help the farmers to sustain their income during the cyclical bumper harvests and consequent lower sugarprices, like the prevailing situation this year. India can reduce trade deficit and cut foreign exchange outflow. Ethanol causes less pollution than petrol. Most importantly fuel ethanol will be a sustainable long term India-centric solution.

Saturday, August 31, 2013

why are the Brasilians protesting?

While the massive June protests by over a million Brazilians have subsided, minor protests continue in small scale for diverse causes in various parts of Brazil. For example, the protestors in Rio de Janeiro have announced an agenda of protests for August and September directed against the Mayor, the Governor, the media monopolies and some specific companies. There is also the threat of bigger protests during the world cup in 2014 and the Olympics in 2016.
Why are the Brazilians protesting? Here is a brief analysis:
 It is not a protest of the poor masses who have revolted against an uncaring oligarchic government. The poor never had it so good in the entire history of Brazil as they have now. Over twenty million people have come out of poverty in the last decade thanks to the pioneering poverty alleviation programmes of the centre-left government. These were started by a poor man himself, Lula who became the President and champion of the poor. He had suffered more than most of the protestors and started a series of sincere and meaningful Inclusive Development programmes, which have become models for other developing countries.The rate of unemployment in Brazil is at its lowest ( ever since unemployment measurement was started in Brazil ) level of around 5%. There is job for almost anyone who wants to work. It is an employees' market. While they have ample choice, it is the companies which run after the human resources and work hard to retain them. The salaries are generally high. Consumers have had access to plenty of low-interest credit in the last few years since the government reduced the interest rates and forced the banks to increase lending. 
It is not a protest for freedom or against an oppressive regime. The Brazilian democracy is vibrant and open. The government has been elected in free and fair elections.The media is vocal and has been doing its duty of watch dog overzealously.
It is not against a corrupt and arrogant President. Dilma Rousseff is a clean and straight forward politician who herself is struggling with the corrupt and wheeling and dealing congressmen and senators to pass legislation needed for reforms. In fact, she should be happy that the protests have facilitated her job by putting pressure on many leaders of the Congress and Senate who have already shown some signs of responsibility and cooperation.
It is not against the ruling party. The centre-left Workers Party is the best bet for the poor. In any case no single party gets majority and coalition politics has come to stay as in India. Coalition means less control over corruption. In fact, the Workers Party suffered its biggest scandal called Mensalao because of this coalition logic. The party leaders had to bribe the opposition congressmen and senators with monthly payments to get their legislative support.
It is not a protest against football or stadiums. Football is the religion, opium, pride and passion of the Brazilians. The protestors are only against the over-the-budget expenditure and the priority given to stadiums over hospitals and schools. They are against the collusion between big business, venal politicians, local foot ball organizations and FIFA who enrich themselves disproportionately in the construction of stadiums and organization of events.
Lastly, it is not the outburst of a culturally stifled society. The Brazilians are lively and free-spirited. In general, they are laid back and relaxed people who take things in their stride and manage to find happiness in beaches, football, samba and caipirinha (a sugar cane liquor). They are not known for violent protests to change things. They did not even have to fight for their independence unlike in the case of the other Latin American countries, US or many Asian and African countries. The Portuguese prince in Rio de Janeiro himself declared independence from his father who was King of Portugal. He preferred Rio over Lisbon. Who will not? The Independence declaration was not followed by any violence or serious consequence from Portugal. There is no Father of the Nation in Brazil like Simon Bolivar or Mahatma Gandhi. Brazil was never invaded or threatened by any outside power and the Brazilians never had to rise to defend their country. Of course, they had suffered military dictatorships. But the military dictators were not brought down by public protests, although urban guerrilla groups and trade unions bravely stood up against the army rule. The military turned over power to the civilians after hopelessly messing up the economy and reaching the height of incompetence. 
So what triggered the protests? It was the discontent of the middle class. While the poor and the rich benefited more from the government programmes of poverty alleviation and business promotion, the middle class got squeezed by the high cost of living and poor infrastructure and services. They were angry with the corruption among politicians as well as with the football organizations. In fact those who run the football organizations are more corrupt and less accountable than the political leaders in Brazil. This is true of the rest of Latin America too.
It is an assertion of the middle class which has risen against the commissions and omissions of the political and business leaders. They have shown readiness to spoil the Fiesta of the powerfuls ( Confederation Cup, World Cup and Olympics) with global embarrassment. The threat of the protestors that they will come back to the streets during next year's World Cup is a more serious message than what happened in June. The facility of Facebook and other social media have helped in the mobilization of the people with the slogan of Vem para Rua ( come to the street ).
Such middle class protests took place in recent years in Venezuela, Argentina and Chile. The Venezuelan middle class rose against the authoritarian policies of Chavez in 2002. But he crushed it ruthlesslessly using his Chavista militants.  In Argentina, the middle class has held a number of protests against the outmoded Peronist policies of President Cristina starting from 2009 but she has managed to survive with the captive vote of her constituency of the poor. She is continuing her anti-middle class policies with a vengeance imposing more and more foreign exchange and import controls. The Chilean students and middle class agitated against the high cost of education in 2011 with limited success against the centre-right government of Pinheiro. The students have resumed their agitation recently. Unlike Chavez, Cristina and Pinheiro, the Brazilian President Dilma showed sensitivity and dialogued with the protest leaders and already initiated some measures to meet their demands.
The Brazilian protests will not bring about a dramatic change. But they will result in incremental improvement, as is evident already. Besides withdrawing the bus fare hike, the government has announced a 1.3 billion dollar investment to create 99 kms of express bus lanes and additional investment of billion dollar plus investments for sanitation and low cost housing. The protests have served a useful purpose in the maturing process of the Brazilian democracy and the transition of the country from the Third to the First World. The protesters have given a strong message that the country cannot become a First World if the political and business leaders continue with their Third World ways. The protests are indicative of the empowerment of the middle class, which has been enlarged by the pro-poor policies of the government. The growing and strengthening middle class is the solid new foundation of the young Brazilian democracy.

Tuesday, April 23, 2013

Colorado Party comes back to power making Paraguay as a politically landlocked country again

Horacio Cartes of the Colorado party won the presidential elections held last sunday in Paraguay. The Colorados had ruled the country continuously for 61 years in a one-party dictatorship until 2008 when Fernando Lugo, the leftist " Bishop of the Poor" defeated the Colorado candidate and made history. Lugo was hailed as the historic saviour of the poor and was expected to bring about a much needed change in the poor and backward country ruled by traditional oligarchs. Part of the reason for the Colorado defeat was the division within the party leadership. But as soon as Lugo came to power, the Colorados reunited and did not let Lugo to implement his reformist agenda. Poor Lugo was not allowed to help the poor  by the rich Colorados who dominated the Congress. Eventually the Colorados in collusion with Vice President Franco from the Liberal party ousted President Lugo through impeachment in an ugly congressional coup in june 2012. As a punishment for this breach of the spirit of democracy, Paraguay was suspended from Mercosur and Unasur. The country will regain its presence in these regional organizations when the new president takes over as the legitimately elected one.

Until 2008, Paraguay, the geographically landlocked country remained as a kind of politically landlocked one too with its rightist governments while all the surrounding countries  had gone Left in the last couple of decades. The Leftists continue to rule in Brasil, Argentina, Bolivia, Peru, Ecuador, Venezuela and Uruguay, while the Leftist government of Paraguay was overthrown before the completion of its term. Again Paraguay has become the exception by going back to the oligarchic rightist rule now while the other countries of the region are progressive, reducing poverty and inequality. True, Chile had also gone right after two decades of centre-left rule in 2010. But it seems that the leftist candidate Michelle Bachelet is likely to win back the presidency in the next elections to be held in 2014.

The return of the Colorados means " business as usual" with the government agenda driven by the rich and powerful. The President-elect Cartes is one of the richest businessmen with interests in 25 companies and he is also the owner of the football club La Libertad. Paraguay is the only country in the western hemisphere which does not have " Personal Income Tax". The governance is opaque and the instituitions are weak. They are not based on rules or systems. Even the economy is mostly informal. Unofficial foreign trade is much more than the official one. One of the biggest business in the country is to smuggle electronic and other goods to Brasil and Argentina from the border city of Ciudad del Este.

The Colorado party is not just like any other political party. It is the strongest institution in the country with a stranglehold over the whole political, economic and social system. One has to be a member of the Colorado party to succeed in government career. Most government servants including diplomats are members of the Colorado party. There is no proper merit-based transparent system for recruitment to government jobs. There are very few avenues for upward mobility of the bottom of the pyramid given the poor educational and socio economic conditions. There are over a million ( one sixth of the total population) Paraguayans who have moved to work as maids and labourers in Argentina.

Paraguay has not changed much from the portrayal of the country by Graham Greene in his novel " Honorary Consul". Greene describes the country as a corrupt, decadent and backward. Even today, visitors to the country are likely to feel as though they have entered the ninteenth century.

The scandal caused by the revelation of President Lugo's affairs with some women when he was a catholic priest is illustrative of another unusual social aspect of the country. A number of women had alleged that they had affairs with Lugo when he was working as priest. President Lugo admitted to fathering a child with one of the women and agreed to pay compensation. In another case, he neither admitted nor denied. In any other country, such a scandal would have brought him down from power immediately. But he was able to ride out the scandal since the country is full of such sinners. The Colorado party could have got him impeached for this. But they did not do it since their political leaders had more skeletons in their cupboards. Affairs with many women are common in Paraguay due the shortage of males after most of the men were wiped out in the Triple Alliance War ( over sixty percentage of the entire population was killed in the war ) which Paraguay had foolishly waged against the combined powers of Brasil, Argentina and Uruguay in 1864-70.

Paraguay has enormous agricultural potential with its vast tracts of arable land and abundant water resources. It is the fourth largest exporter of soybeans in the world. It has huge surplus electricity which it sells to Brasil. With these agricultural and energy resources and a small homogeneous ( Paraguay is the only country in Latin America where the native language Guarani is spoken by all the citizens) population of just six million, the country can become prosperous easily and quickly, if only the Paraguayan political leaders change their mindset. President-elect Cortes could get inspiration from the new Mexican president Enrique Nieto, who has given a new direction and image to the PRI party which had ruled Mexico for 71 years and was also perceived negatively like the Colorados in Paraguay. Cartes could add Inclusive Development in his political and economic agenda and modernise the country to move it into the twenty first century and make it as part of the emerging New Latin America.

Monday, April 15, 2013

New beginning and hope for Venezuela

The election of Nicolas Maduro, the chosen heir of Chavez, in last sunday's  election, is good news for the peaceful and orderly transition of Venezuela after the abnormal, autocratic and quixotic rule of Chavez in the last fourteen years. If Capriles had won, the change would have been abrupt and traumatic for the  Chavistas who might not have given up power so easily without some messy fight. Maduro's victory has given extra time for the country to decide its new course in the post-Chavez period. If Maduro  follows the pro-poor policies of Chavez in a moderate and pragmatic manner (wthout the confrontational and extreme method of Chavez) and combines them with business-friendly policies ( as Lula did in Brasil) there is new hope for Venezuela.

Venezuela is blessed with one of the largest petroleum reserves, large mineral and water resources as well as a pleasant climate and small homogeneous population of just 28 million without any ethnical. linguistic, religious issues. Venezuela has the potential to be one of the prosperous countries of the world with an ordinary and sensible Maduro rather than an extraordinary prophet cum caudillo like Chavez.

Chavez raised the hope of millions of poor Venezuelans after the corrupt regime of his predecessors who had plundered the country and left poverty. He started off with good intentions and policies but later succumbed to megalomanic temptations. While he has distributed some of the oil wealth to the poor people, he has left the country in a worse shape than what it was when he came to power in 1998. Inflation, power shortage, scarcity of essential items, falling oil production and a corrupt system of controls on foreign exchange and imports are some of his legacies. He has brutally damaged the political, economic and social instituitions of the country. Caracas, which was a peaceful city in 1998 is the only city in Latin America where even diplomats feel unsafe because of the rampant crime and kidnappings.

 If Maduro does not deliver, Capriles will come to power in his third attempt next time ( Lula also lost three times before winning in the fourth time ). Capriles, just 40 in age, has time on his hands. Henrique Capriles could be a reformist President, like Enrique Nieto of Mexico, who has renewed the hope for Mexico. Capriles could get inspiration from Nieto's PRI party which has made a come back after having been out of power for twelve years and learning the right lessons.

In any case, Maduro will be a  less- polarizing political leader with a weaker political base. He is not an ideological fanatic like Chavez, who wanted to change Venezuela and Latin America upside down and who was rooting for daily battles against anyone who did not agree with him. Maduro's authority will be challenged both from within Chavismo and outside. Diosdado Cabello, the rival of Maduro has the support of the military and is waiting to take the place of Maduro. The opposition party, encouraged by the closest finish in this election, will challenge Maduro's administration all the way.

With these constraints, Maduro is likely to be a moderate leader  and be less antagonistic towards business and allow more space for the private sector to grow. He could make the political course correction by being respectful of the middle class and businessmen who were the target of insults and abuse by Chavez.

Maduro will not interfere in the affairs of other Latin American countries as Chavez did so brazenly. Nor will he squander the oil wealth in freebies to other countries as Chavez did so extravagantly. The Colombians would be happy with Maduro while FARC has lost a crucial support after Chavez.

Maduro will, however, continue to be loyal to the Castro brothers, who had played a role in his designation  as the heir of Chavez. But he will not be able to be over generous to Cuba as Chavez was. Maduro will continue the anti-American rhetoric but in a much less confrontational way. He will not go out of his way to needle the Americans as Chavez did.

Maduro will be a faithful friend of Brasil and especially Lula, who had openly campaigned for him. Brasil's economic and commercial interests in Venezuela will be safe and continue to grow.

Maduro will fit Venezuela in Mercosur without politicizing it as Chavez tried. A sober and moderate Venezuela will add to the strength of Mercosur, which will become a global power house of agriculture and energy.

All this is good news for Venezuelan democracy and the future of the country.  It is also good for Latin America as a region which is now free from the polarising influence of Chavez. The moderate left will now consolidate itself and prevail over the extremism preached by Chavez. Lulaism ( pragmatic and balanced pro-poor and pro-market policies) is the indisputable long term trend for Latin America. Not Chavism.

A stable Venezuela and Latin America are good for the world and for India too. Venezuela supplies over 300,000 barrels of crude oil per day and this amounts to ten percent of India's total crude imports. Indian companies have billions of dollars of investment plans in the Venezuelan oil sector. Chavez sought a political price from India for giving oil fields to India. This made the Indian political leadership cautious since they were uncomfortable with his all- out anti-American tirade. But India need not have any such hesitations about Maduro, a devoted Sai Baba follower.

Saturday, March 09, 2013

End of Chavez and Chavism..Eventually Lulaism will prevail in Latin America

I grieve for the untimely and sad death of Chavez, for whom I had great admiration when I went to Caracas in 2000. He worked for the poor people of Venezuela and made their life better. His oligarchic predecessors had squandered the oil wealth leaving 50% of the people poor and the economy in bad shape. Chavez emerged as a messiah of the masses. He made the PDVSA, the oil company accountable and used the oil revenue for development. He reduced the excessive dependence on US and opened new markets like China and India for the Venezuelan oil. He stood up against the US (which considered Latin America as its backyard and playground) and literally isolated President Bush in the Mar del Plata Summit of the Americas. He gave strength to the resurgent Left in the region and helped many small Caribbean countries and Cuba with oil at very concessional terms.

Chavez was a charismatic leader and engaging personality. He spoke to my son for five minutes when my son did not understand a word of spanish. He had incredible political instincts and mobilised the masses with his Bolivarian Revolution.

That is the positive part.

Like Qaddafi and Saddam Hussain, he became a megalomaniac, although as an elected autocrat. He has destroyed the industry, business and education system. He controlled foreign exchange, imports and oil income and allowed the Chavistas to become corrupt. He polarised the society with his venom, abuse and insult against anyone who did not follow his line. He ruled by threats, abuses and insults. He allowed crime to flourish in Caracas to teach a lesson to the middle class people who did not vote for him. He was so mean and vindictive against anyone who did not say yes to him.

Chavez sullied the image of the Left by taking it to ridiculously radical levels. He polarized Latin America and resurrected the hated Caudillo image back in the region.

On balance,  the damage to Venezuela, Latin America and the Left are much more in comparison to his positive contribution. It will take atleast 14 years ( he was in power that long after changing his own constitution) for Venezuela to recover from Chavez's destruction.

Of course, Nicholas Maduro might get elected by the sympathy wave. But he and other rivals of him cannot be as bad as Chavez.

So while I condole the death of Chavez, I believe that this is the time of hope for Venezuela.

Will the Bolivarian Revolution, the 21st Century Socialism and Chavism continue after Chavez?  May be for some time Chavism will linger on like the Peronism in Argentina. But the Latin Americans have had enough of the polarising and confrontational ideological battles.  What will prevail eventually is Lulaism which replaces the destructive Chavez model of polarization with a constructive model of Consensus. This consensus, called as Brasilia Consensus, seeks a pragmatic and balanced approach of pro-poor and pro-market policies. 

Wednesday, February 13, 2013

Latin American students looking to and visiting India

A group of 39 students and professors from La Sabana University of Colombia were on a study cum sightseeing tour between 22 November and 8 December 2012. They visited Delhi Agra, Jaipur, Udaipur, Ahmedabad, Pune and Mumbai. They visited universities, IIM Ahmedabad, IIT Delhi and some top companies such as TCS and Tata Motors

Another group of 40 Colombian students completed their three months' training in the Mysore Campus of Infosys in December 2012. This is part of the tie-up between EAFIT University of Colombia and Infosys, which has operations in Colombia. Infosys provides the training as well as boarding and lodging free. The students pay only the airfare. Infosys has extended this facility to other Colombian universities.

Students from a Mexican MBA programme also visit India every year  for 10-15 days and do projects on Indian companies and business between India and Mexico. 

But the most impressive student group which visits India is from Uruguay. Every year over 50 final year architecture students and another 50 plus Economics students visit India as part of their global exposure every year. The Uruguayan University has an innovative scheme of lottery to enable the students to mobilize funds for the tour. They say that almost every Uruguayan architect has visited India. Once I stayed in a boutique hotel in San Ignacio in Uruguay. The owner of the hotel who is an architect and his daughter who also studied architecture have both visited India during their student days. Carlos Ott, a Uruguayan architect is the designer of the IT complex of TCS in Chennai, which is the largest of its kind in the world with working space for 30,000 staff. 

A group of MBA students from Chile come to IIM Bangalore for a short term course every year. A Mexican University was keen to have a similar tie-up with IIM Kolkatta.

The Brazilian government has an ambitious programme to send over 100,000 students abroad for higher studies to make up for the shortage of qualified human resources for the booming market of the country. Our ambassador in Brazil Mr Prakash has worked hard on the Brazilian government to send their students to India too and organized the visit of a Brazilian delegation to India.

A number of Latin American universities are keen to have tie-ups with their Indian counterparts for academic exchanges.

Some Indian students have also started going to Latin American universities. A number of Indian students have studied medicine in Cuba. A Cuban vice Minister fell ill during his visit to India some years back. He was admitted to the Ganga Ram Hospital in Delhi. The Cuban Minister was surprised to find that the Indian doctor who took special care of him, spoke fluent spanish. The doctor had studied in Cuba.

Arul, a Delhi girl who had an MA in Spanish language went to Buenos Aires to study bilingual MBA in a university in 2010.  She is surely an asset to Indian companies doing business in Latin America. 

A number of Indian-origin students in USA and UK also go to Latin America for internships as well as for part of their study abroad programme.

Some Indian IT companies offer internship programmes in their Latin American operations. For example, TCS has a centre in Montevideo, Uruguay, where they provide training and internship for students from all over Latin America. There are about 20,000 young Latin Americans working with two dozen Indian IT companies in their near-shore operations from Mexico to Chile. Aegis, the BPO company which is part of the Essar Group has 5000 Argentine staff. The Indian IT companies operating in Latin America are in contact with local universities. During my stay in Argentina I had organised workshops/seminars on opportunities for work/training in Indian companies in the campuses of some universities and technology institutes in collaboration with the Indian companies.

A Brazilian student did an internship with an Indian autoparts company in Ludhiana for a year.

The interaction and exchanges help the Latin Americans and Indians to develop multicultural skills to understand and deal with each other.  The two cultures also complement each other. The Indians learn to balance life by adding some guiltless fun while the Latin Americans get inspiration from the hardworking Indians hungry to succeed professionally. While an Argentine night club has Yoga rave parties free from alcohol, drugs, smoking and non-vegetarian food, the Indian youth is taking to salsa and tango.

Besides universities and companies even other sectors have started attracting Latin American interns. There was a law student from Rio de Janeiro who did  internship for a year in a Delhi law firm some years back. 

A young law student from Cordoba in Argentina sought an appointment with me last year. I gave her the appointment immediately because, when she called me on the phone she said , " Vanakkam Saar " . She had done a one year internship in Chennai with Surana and Surana firm of advocates. She has fallen in love with India and wants to work for an Indian company in Argentina.