Notes on Regional Economic Integration

On a day of somewhat slower news, a run-down of some interesting economic opinions and developments from the last week:

At Americas Quarterly, Carlos Ignacio Rojas and Alejandro Vera look at the plan to the merge stock exchanges of Colombia, Peru, and Chile – a proposal agreed to in 2009 and, according to AQ, set to become functional this year. Rojas and Vera – like Andres Oppenheimer in the Miami Herald earlier in the week – argue the union is a positive development for the region, the latter calling the “Integrated Latin American Market” (MILA) an important step in “attracting domestic and foreign investors to buy stock in each of the participating countries’ companies, thus increasing their corporations’ ability to sell their stocks and attract investments.” There also appears to be the possibility of a future expansion of the stock exchange union, should things go well in the coming years. Oppenheimer:

“We may be witnessing the redrafting of Latin America’s financial architecture…Latin American governments have failed to advance the cause of integration despite grandiose announcements at regional summits that they have created a region-wide common market. Maybe the region’s stock exchanges will be able to start doing what politicians have failed to do for so many years. We should wish them luck.”

Some questions that remain include just how integrative the union will be. For example, Infolatam today calls the project the beginning of a “Chile-Colombia-Peru axis” a term that could be read as an alternative to a conceptualization of regional integration advanced by the so-called “Caracas-Brasilia axis.” The creation of an alternative stock exchange model has been a part of the Venezuelan government’s plans to “democratize access to liquidity and investment” in recent months.

The release of new numbers on imports from Brazil’s industrialist federation, FIESP, created some worries about “de-industrialization” in the region’s economic power house earlier this week. In Argentina, some similar discussions about how to “preserve” a model of “re-industrialization” that was begun in 2003. On the issue, Mercopress reports this week on the extension of “non-automatic licenses” to slow the entry of specified imports and promote the continued growth of local manufacturing.

On the structural nature of the region’s economies, Carmen Ruiz Marrero at CIP’s Americas Program has an interesting piece about the continuation of “extractivist” models of growth under the watch of progressive governments which rose to power on the back of neoliberalism’s collapse. According to Ruiz Marrero, similarity overshadows difference:

“Unlike in neoliberalism, in the new Latin American “progresismo” or “21st Century Socialism” the state has much more participation in the economy and directs part of the foreign exchange funds into social programs, and also China has replaced the United States as the main importer of raw materials. But little else has changed. Instead of post-extractivism now there is neo-extractivism. Extractive activities and the export of raw materials continue as before, but are now justified with a progressive discourse.”

Alberto Acosta, the former minister of mining and environment in Ecuador, seconds much of that assessment, saying:

“In Latin America, in countries with progressive governments- and immediately Venezuela, Bolivia and Ecuador come to mind, and then others- there is no move toward a structural transformation of our region’s historical accumulation patterns. There is no substantial shift. It’s not traditional neoliberalism anymore, but we remain within the extractivist logic.”

According to Uruguayan economist Eduardo Gudynas, the executive secretary of the Latin American Center for Social Ecology, “the objective of national development, as ‘endogenous development’, is lost; autonomy in relation to global markets vanishes. National industries do not recover, in some cases they are reduced,” under the new model of “neo-extractivism.”

And on more immediate economic news this week, the Economist looks at Dilma Rousseff’s early attempts to “cool down” the Brazilian economy by cutting budgets and, this week, seeing through the passage of a minimum wage ceiling in Brazil’s lower house. In Bolivia, meanwhile, Evo Morales, has faced new round of protests from trade unionists protesting rising prices and food shortages. Earlier in the week, Morales reorganized his cabinet in response to those protests. However, the Central Obrera Boliviana (COB) says such measures did not go far enough.

To other stories:

· The Houston Chronicle and the AP have more good reporting on the roadside attack against two US ICE agents in Mexico Tuesday. Meanwhile, Reuters, the BBC, and Insight Crime, speculate about the impact the attacks could have on US-Mexico relations. The former and the latter suggest there are few possibilities of significant change in that relationship, despite blustery rhetoric from some about the Tuesday killing being a “game changer.” Reuters: “The FBI will send a team to help investigate this week's attack, but U.S. officials do not expect the kind of response that followed the murder of undercover U.S. Drug Enforcement Administration agent Enrique Camarena in 1985.”

· Reuters also reports this morning on issues of forced displacement which have accompanied Mexico’s drug wars. Reuters:

“No official numbers exist, but the Geneva-based Internal Displacement Monitoring Centre, or IDMC, estimates 115,000 people have been displaced by Mexico's drug violence. Another 115,000 or more have fled and slipped into the United States, IDMC says. Some leave and then move back, creating a floating population that is hard to track.”

· Reuters compares Mexico’s situation to that of Colombia, writing that “compared to Colombia…Mexico's problem is still small,” although there are serious worries that is growing. A Colombian-like future seems one best avoided. As the Colombian human rights group Codhes says in its latest report on displaced persons, released this week, over 280,000 individuals were displaced in 2010 alone because of armed conflict and political violence. Notably, over 32% of those displaced ( 91,499 persons) came in areas that that fell under the government’s “National Plan for Territorial Consolidation,” launched by the Uribe government in 2007 as part of its “democratic security” plan. More from IPS on the new Codhes report, which notes that 5.2 million people were displaced in Colombia between 1985 and 2010.

· Also in Colombia, El Tiempo says the president of Colombia’s Congress, Armando Benedetti, has made new calls for the country’s defense minister, Rodrigo Rivera to resign. Juanita Leon at La Silla Vacía with the full story of growing dissatisfaction with the defense minister.

· On the state of siege in Guatemala, NACLA with a report on how the militarization of Alta Verapaz has brought crackdown not only on suspected traffickers but also on social movement organizing against oil drilling, ranching, and agro-fuel production in the department. The piece highlights one such case: the “shadowy” February 8 detainment of Felix Cuc Xo, a community activist from the settlement of Xya’al K’obe’ in northern Alta Verapaz, Guatemala who was “beaten in front of his family and taken away by soldiers and police.”

· At meetings of the Central American Parliament (Parlacen) in San Salvador yesterday, a new proposal to create a regional police force to fight transnational organized crime. According to EFE the so-called “Policía Multinacional Regional de Investigación Criminal” would have “complete legal and operational jurisdiction in all of its member states” and would receive “political, technical, financial and logistical” support from partner states. There was also mention of creating of a regional “Instituto de Investigación Criminal” under which the proposed regional police force would operate.

· And finally, the Washington Post yesterday with a new report on South America’s diplomatic recognition of an independent Palestine. In particular, the Post focuses on the active role of Palestinian diplomats in gaining recognition from eight South American nations in recent months. Argentine foreign minister Hector Timerman, in the news for other reasons this week, tells the paper that his country's declaration of support for the Palestinians is part of a larger Middle East strategy independent of “hegemonic interferences.”