The expert who proposes including part of Latin America in the US economic growth plans.

Latin America

Among so many differences that the policy towards Latin America of the president of the United States, Joe Biden, has with that of his predecessor Donald Trump, there is a similarity: migration is a priority.

The US goal remains to reduce the irregular flow of people entering the country; Trump tried with threats and severe measures, Biden promises to address the causes of emigration in Central America, such as poverty, violence or corruption.

But some analysts note that Washington still lacks a broader strategy toward its southern neighborhood, including economic, commercial or even health initiatives in the face of the covid-19 pandemic.

In this context, Richard Feinberg, a professor of international economic policy at the University of California San Diego, launches a bold idea: that the US include the countries of the Caribbean basin in its domestic economic plan.

This would mean adding from Mexico to Central America and Colombia to Biden’s initiatives to improve infrastructure, digitization, education and job training in the United States, explains in an interview Feinberg, who directed inter-American affairs at the National Security Council of the White House during the government of Bill Clinton (1993-1996).

What follows is a synthesis of the talk, translated and edited for clarity, with this expert who also worked in the US departments of State and Treasury and recently published his proposal at the Wilson Center in Washington:

Your proposal probably reflects the idea that something must change in the way the US views Latin America …

The Biden administration is just beginning. The problem is that the region is not doing well enough.

I am not one of those who say that all of Latin America’s problems are due to the failure of US foreign policy. Countries must take responsibility for their own stories.

Now, the United States has an interest, like any great power, in countries of its near exterior.

Western Europe deals with Eastern Europe, Southeast Asian China, in the sense that they see their destinies as inevitably intertwined by geopolitics. This is in the interest of the great powers to promote economic prosperity and political stability.

What I recommend is a series of policies that encourage work with Central American and Caribbean countries, both of interest to the US and the region: more economic growth distributed more equitably and stronger, more vibrant and democratic institutions.

Isn’t the US doing that?

The Biden government has only been in place for 100 days, it is very early.

What he has suggested is a more or less traditional foreign assistance program to the Northern Triangle countries (Guatemala, Honduras and El Salvador) of some US $ 4 billion over four years. Of course, they have to define what they are going to ask for and go through Congress.

The Biden government agrees with many academic analyzes that say that the main problem in the Northern Triangle and in other developing countries has to do with the quality of government: it does not represent the population well, the institutions are weak, they cannot implement policies and a large amount of money disappears into the pockets of corrupt officials and politicians.

The Biden administration wants to focus more on those problems.

I could agree, but I don’t think that’s enough given the depth of the problems that we see in some of the countries in the region.

So I suggest a completely different approach.

The Biden administration is launching a whole series of extremely ambitious initiatives in the domestic economy and society.

But the analysis made by the Biden government is very similar to what can be done in the Caribbean basin: there are problems of infrastructure, digitization, job training, health, education and also urban violence.

These are problems that are seen both in the US and in the countries of the Caribbean basin.

And what do you propose?

What I propose is that the government take many of the programs that are being designed mainly for the domestic economy and extend them throughout the Caribbean basin.

For example, the government has already said that many programs that have to do with climate change and clean energy should also be applied to the Caribbean basin, to try to move countries away from hydrocarbons, invest more in clean energy sources .

That is also true for digitization. Central America and the Caribbean have advanced dramatically in terms of internet access, but there is often a long way to go in smaller towns in rural areas, such as in the United States.

Similarly in infrastructure: roads, ports, airports … As we are doing in the US, we could help finance projects in Central America and the Caribbean.

Ultimately, investment and growth are needed to support good social programs and public sector spending.

The government has advocated for innovation centers or technology centers that it would help fund in the US And this is related to the issue of supply chains: American corporations have become very global in their sourcing policies.

Many of the US companies have located their production facilities in Asia, particularly China. We discovered over the years that this created certain vulnerabilities.

The Biden administration says it would like to see some of those supply chains moved from Asia to the US But in most cases that would not happen because we are not cost competitive on certain production lines.

My point is that some of these centers may also be located in Central America and the Caribbean, and that the US can help finance infrastructure, working with multilateral banks such as the Inter-American Development Bank and the World Bank, as well as with private sector investors, both international and national, to put these centers into operation.

That would create a lot more jobs in the region, to intertwine its economy with that of the US.

Which countries are you referring to exactly when you talk about the Caribbean basin?

I am referring to Central America, not just the northern zone —which is what the Biden government focuses on due to immigration— but it would include Nicaragua, Costa Rica and Panama. And then the Caribbean islands, Colombia, Venezuela, which of course is a special case but is part of the basin, and Mexico.

How do you suggest financing this expansion of domestic programs to the region when there are already questions about how the Biden government can finance them at the national level?

If you include the programs in a foreign aid budget, it is very difficult to get Congress to pass them.

So what I suggest is to include the programs in these great domestic initiatives. Biden has advocated for $ 2.7 billion in the Build Back Better Initiative , also known as investing in jobs.

How will they be paid? There are basically two sources: the tax hike, which is what Biden has proposed, and the financing of the deficit. Because interest rates are very low, the government can issue bonds with modest interest rates in the future.

The US already has a free trade agreement with Mexico and another with Central America plus the Dominican Republic that liberalized trade and services. But that did not help reduce the flow of migration, violence or corruption in the region. Why would an initiative like the one you propose have a better result?

These various business initiatives have created many jobs in the region.

On the US-Mexico border there are something like 2 million Mexicans working in maquilas or supply chains linked for the most part to US manufacturing companies.

Trade agreements cannot solve all problems. The fact that there are problems of corruption and inequality in Mexico is not the fault of NAFTA, which did what it is supposed to do: increase commercial investment flows and create more jobs in Mexico.

Similarly in Central America. There are some 500,000 jobs in the region that support perhaps 2.5 million Central Americans in supply chains alone. That is a contribution.

You cite the example of the maquiladoras and propose the creation of different centers in the region to produce for the US market. What would be the difference between these centers and the factories created by free trade agreements that are now seen as symbols of poor labor standards?

Who considers them? If you were a young woman in Central America with six to nine years of education, you would be happy to get a job in one of those factories. I am telling you this because I have talked to a lot of people there.

Now, could conditions improve? Yes, of course. What I am advocating is that the US signs social agreements with host countries that include protections for workers’ rights, the environment, and community rights.

And there would be extensive supervision: national and international auditors of compliance with the agreements.

Another of the great problems of the region is corruption. How would you prevent any investment from ending up in the pockets of officials?

As a requirement for these agreements, oversight mechanisms could be created, including the US government, with agencies that would have their offices in the field, so that there is full transparency to limit corruption.

I am not going to tell you that they are going to eliminate it overnight. But you can put in place mechanisms that provide some guarantees, and then, over time, try to strengthen national institutions and staff training.

You have warned that the US employment plan presented by Biden for domestic politics could harm the Central American economies. Why?

That is if you are serious about wanting American companies that source their supply chains from factories abroad to return to the United States.

There are around 500,000 jobs in Central America alone, and if each worker supports a family of five, there are 2.5 million citizens who would potentially lose their jobs and family income.


  • Gerardo Lissardy
  • BBC News World, New York

Guillermo Lasso: 3 problems facing Ecuador’s fragile economy (and how the new president intends to overcome them)

Latin America

The 65-year-old former conservative banker Guillermo Lasso assumed the presidency of Ecuador on Monday amid a severe economic crisis aggravated by the covid-19 pandemic.

Lasso aims to stimulate the economy by increasing foreign investment and boosting the production of oil, the most important export product of the South American nation.

During the campaign he promised to create two million jobs and expand the agricultural sector through low-interest loans.

But with a country deeply in debt and with scarce resources in the fiscal coffers, its economic agenda is likely to be an uphill road.

The new president will take over a bankrupt country, a fragmented Congress and strong social discontent.

In a dollarized economy, with few ammunition to fulfill his electoral promises , Lasso will probably face an avalanche of demands from the population in a country polarized between correísmo and anticorreísmo.

These are three of the biggest economic problems that the new president of Ecuador will face.

1- The chronic challenge of financing

The economy of the oil country was already in crisis due to low oil prices and the high level of indebtedness when the coronavirus outbreak broke out in 2020.

It had structural problems (such as a permanent fiscal deficit since 2009) that led President Lenín Moreno to impose painful austerity measures as part of the conditions of a loan of US $ 6.5 billion approved by the International Monetary Fund, IMF, of which already they have disbursed US $ 4,000.

One of those measures was to end the fuel subsidy, a decision that generated a social outbreak in late 2019 that forced President Moreno to back down.

The new president will inherit the toughest part of the IMF’s requirements, which include a fiscal reform to get the equivalent of 2% of GDP in new income.

The great challenge will be how to implement economic adjustment in the midst of a crisis that last year caused an economic contraction of 7.8%.

And Lasso will take up the challenge without a majority in the Legislative Assembly, with a third of the population in poverty and close to five million Ecuadorians earning less than the basic salary.

While Ecuador’s public debt is around 63% of the Gross Domestic Product (about US $ 63,000 million) and the fiscal deficit exceeds 7%, the country faces the great challenge of financing a high level of public spending.

“The indebtedness is enormous for a country like Ecuador that has a high country risk, the debt service is very expensive and the fiscal expenditure is gigantic,” Vicente Albornoz, dean of the Faculty of Economics and Administration of the University of the America (UDLA).

In the last decade the weight of the debt has grown year by year and despite negotiations with international creditors, the doors of the international financial market are practically closed.

Without new sources of financing available and with a high country risk of close to 1,200 points, Lasso will have to cut public spending if he wants to access more funds from the IMF or other multilateral organizations.

Or go into debt with China, which has not closed its doors, but charges high interest or oil guarantees.

One way to reduce the deficit is to lower spending and raise taxes, but just as in Ecuador it was impossible to eliminate the fuel subsidy, it would not be easy to reform the tax system either.

2- Dependence on oil

Ecuador depends on oil. In 1998 a barrel of crude was sold at US $ 7 a barrel and in 2008 it soared to US $ 117.

“It was like winning the lottery , but unfortunately we spent every last penny,” Albornoz said.

“We not only spent all the money, but we also got into debt.”

Then there was another cycle of oil bonanza between 2010 and 2014 but, since there were no savings, those profits were spent to the same extent that petrodollars entered the country.

In those years, former President Rafael Correa (who is convicted of bribery), increased fiscal spending and distributed a part of the benefits of the oil boom in aid for the most vulnerable sectors.

Resources from crude oil accounted for about a third of fiscal revenue.

Starting in 2014, a period of lean cows began. The economy began to roll downhill, indebtedness increased even more and the pandemic ended up turning the stagnation into a devastating crisis .

Currently both a barrel of WTI oil, which is traded in the US, and Brent (in the UK) are around US $ 60.

As the world economy recovers, expert projections are that in the future the price of crude should show an upward trend, giving the Ecuadorian economy a break. But that remains to be seen.

3 – The economic management of social demands

In Ecuador, one in four children under the age of 5 suffers from chronic malnutrition, according to Unicef. Poverty reaches 35% of the population and although formal unemployment is barely 6%, a large part of the population lives from underemployment (in precarious conditions).

In recent years, the cost of living has risen as much as that of the oxygen tanks that are now sold in the informal market to help the victims of the pandemic.

The country has deflation (or negative inflation of 0.8%) because there is very little consumption and people usually buy only the essentials.

And although the minimum wage is US $ 400, higher than in other Latin American countries, the cost of living is also high.

In a country with squalid fiscal coffers, with serious difficulties in increasing social spending, without the possibility of borrowing in the financial market and with the IMF imposing an adjustment on it in the midst of the crisis, Lasso will have to overcome many barriers.

In this context, a potential social outbreak could put the new government in check if it does not find a quick way to finance its electoral promises.

What does Lasso propose?

Faced with such a complex scenario, Lasso told BBC Mundo before the elections that he wanted to promote alliances between the public and private sectors to attract both local and foreign investment.

“The global oil sector will see the invitation that Ecuador will make to come and invest in joint venture contracts,” he assured during the campaign.

And he added that it will respect contracts in the formal mining sector “by processing environmental licenses with greater agility, to generate more tax revenue.”

Regarding the agreement with the IMF, Lasso indicated that he would respect the pact, except in one point.

“We are not going to ignore the agreement with the International Monetary Fund. What we are not going to do is raise the VAT, ” Lasso said, clarifying that the fiscal accounts can be put in order without increasing this consumption tax.

Even the candidate assured during the campaign that it would be even “bolder” than the goals set by the IMF.

“They talk about reducing the deficit, I talk about reaching a zero deficit , because the day Ecuador reaches a zero deficit there will be no more debt.”

To get resources, Lasso proposed doubling oil production, incentives for foreign investment, reducing both public spending and the size of the state, and fighting corruption.

The big stone in his shoe is that he has only a four-year mandate to implement his agenda.

International investors and analysts welcomed Lasso’s triumph as good news.

“Public debt will follow a sustainable path and will probably boost the country’s dollar sovereign bonds in the short term,” said Nikhil Sanghani, Emerging Markets economist at Capital Economics consultancy.

While the investment bank Credit Suisse, based in Zurich, Switzerland, noted that “much of its economic program focuses on creating conditions for entrepreneurship , less regulation and more efficient processes.”

During his campaign, Lasso offered to raise the minimum wage to US $ 500 a month , give a US $ 210 salary to housewives and “urgently assist 300,000 families who feel hungry.”

By delivering these and other benefits, you will likely have a hard time matching your promises with fiscal discipline.

It is a fine line that the new president of Ecuador will have to walk to move forward with his economic and political agenda and ensure the governance of the country.

AstraZeneca: what is known about the distribution in Latin America of the covid-19 vaccine produced between Mexico and Argentina

Latin America

The long wait for what some called “the Latin American vaccine” for covid-19 seems to be coming to an end.

After weeks of delay on the plan of Mexico and Argentina to produce and distribute between 150 and 250 million doses of the AstraZeneca vaccine, both governments confirmed on Tuesday that the first of the vaccine packages will be released over the weekend.

“It is great news. It is to increase production with a combination of efforts from the public sector, the private sector, and that Latin America has production, let’s say, its own: Argentine active substance, bottled and filled in Mexico, access to many countries of Latin America “, highlighted the Mexican Foreign Minister, Marcelo Ebrard.

“It is great news, it is solidarity and it is what we have been demanding in the world, that there be equity, that there be access,” he added.

Nine months ago, both Latin American countries announced the plan to produce and package the AstraZeneca coronavirus vaccine in the region, thanks to funding from the Mexican magnate Carlos Slim’s foundation.

However, the ambitious project presented in its day as a success as a result of the cordial relationship between Mexico and Argentina has faced various problems such as the shortage of some supplies that resulted in delays over the scheduled date to release the vaccines.

How many vaccines will be available?

This Tuesday, however, Ebrard confirmed that it will finally be this week when the first vaccines produced and packaged in Latin America will be distributed.

“We only need the release of AstraZeneca in London which should be this week, that’s what they told us, so that the weekend, finally from August 2020 to May 2021 (…) we can say that the weekend there will be a flight that it will take to Argentina what corresponds to them “, announced Ebrard.

“Mexico will receive 800,000 and Argentina the other 800,000, half and half,” the foreign minister advanced.

According to the Federal Commission for the Protection against Sanitary Risks (Cofepris) of Mexico, the four batches that are expected to be released this week contain a total of 3,403,080 doses.

In the second week of June, it is planned to release a batch of almost 895,000 doses (June 7), another two batches of 1,800,000 in total (June 9) and a fourth batch still in production, once the tests are completed. those who undergo vaccines to confirm their safety and efficacy.

“It is expected that between four and six batches can be produced per week,” Cofepris head Alejandro Svarch predicted on Tuesday.

When will they reach the rest of Latin America?

Ebrard said that, after the release this weekend, production and packaging will continue so that the rest of the doses can continue to be distributed in Mexico, Argentina “and also to many Latin American countries that made contracts with AstraZeneca.”

The authorities did not clarify at the moment which countries will be, the number of vaccines that each will receive or on what date.

Last year, Mexico and Argentina announced that the vaccines would be distributed equitably among the interested countries at the request of the governments of the region except Brazil, which made an independent agreement.

“We are being more independent in Mexico, Argentina and Latin America,” said the president of Argentina, Alberto Fernández, who participated by videoconference in the press conference where the announcement was made in Mexico.

“That agreement that we made (…) what will allow is that Mexicans and Argentines have joined the effort, the joint work, to have vaccines for Mexicans and Argentines, but also for all our Latin American brothers,” he stressed.

“There are no borders, we are together, I would say that in the same cause, seeking the welfare of our peoples,” agreed his Mexican counterpart, Andrés Manuel López Obrador.

What caused the delays in the process?

In August 2020, it was announced that the Argentine laboratory mAbxience, of the Insud group, would manufacture the active substance of the AstraZeneca vaccine and the Mexican Liomont would be in charge of packaging it, before its distribution to the rest of the region.

Initially, it was said that the doses would be available in the first half of 2021, although later other specific dates were announced that were not met.

Last March, for example, Foreign Minister Ebrard announced that distribution in Mexico and the rest of Latin America – where the second wave of the coronavirus was strongly felt, especially in South America – would begin “from the third week of April.”

Peru doubles deaths from covid-19 after a revision of figures and becomes the country with the highest per capita mortality rate in the world

Latin America

Deaths from covid-19 in Peru are more than double those recorded until now.

Authorities reported this Monday that more than 180,000 people have died from coronavirus in the South American country , which is 2.5 times more than the figure of almost 70,000.

This also ranks Peru as the country with the highest per capita death rate in the world in the pandemic.

The new number is consistent with the so-called “excess deaths,” a measure of how many more people are dying compared to trends in previous years.

The president of the Council of Ministers Violeta Bermúdez indicated that the death toll was reviewed by a council of Peruvian and international experts.

The highest rate in the world

Peru has been one of the countries most affected by the pandemic in Latin America, with a saturated public health system and a crisis due to lack of oxygen tanks.

Until now, deaths from the pandemic have only included the deaths of symptomatic patients with a positive test for COVID-19 .

However, the National Death Information System showed that there was an underestimation of deaths.

In April, the Executive created a panel of experts to review the figures.

With the information as of May 22, the total number of deaths from covid-19 was established at 180,764, a large increase compared to the 69,342 that had been counted.

Neighbors Colombia and Bolivia have registered 88,282 and 14,000 deaths, respectively. In contrast, Brazil has one of the highest death figures in the world, with more than 460,000.

But Peru now has the highest number of deaths from covid-19 in the world in relation to the size of its population , (about 32.5 million): around 500 deaths per 100,000 inhabitants.

Hungary previously had the worst number of deaths per capita with a rate of 300 per 100,000 people.