Credibility is the banner cry of any Central Bank economist in the Americas, and can make or break a career for many of these policy experts. The OECD recently singled out Mexico as a BRICS type nation that has not been able to increase its productivity, thus placing sustained long-term growth at a distance from Mexico’s economy. The OECD recommended that structural reforms are required to place Mexico in an extended position of growth and to take advantage of recent economic booms in the Mexican economy. Mexico needs to make extensive in-depth policy changes to bring the informal economy into the main economic system in the country. Mexico also needs the help of its legal experts to produce a legal framework that ensures economic growth through the protection of commercial rights, as well as a means to terminate corruption and violence in the country. Despite a great deal of violence plaguing Mexico, it has grown over the last few years at an impressive rate. This singles out corruption as a main source of potential economic loss for the country. Where violence is often attributed to non-state actors fighting over the control of rival drug cartels and old-fashioned street violence, corruption involves private sector and public sector leaders, using company funds or the national purse to provide themselves with direct personal benefits, be it economic or otherwise. Corruption, whether it be the type that is accepted in a legal framework, or one that violates the legal protections in a society, is always a bad investment. This informal tax on investment that comes from corruption in Mexico is a difficult issue to resolve, as it is linked to many historical institutions, interests and groups in the country. Without a comprehensive reform to Mexico’s economy, growth will be limited in Mexico.

A scandal characteristic of some of the worst attributes of corruption in the Americas has occurred recently in one region of one country. This should come as a warning to investors to ensure that their funds are not turned into an informal tax. In order to become re-elected, a political party with a majority used a very expensive policy decision to ensure victory in a few select regions and maintain their majority in government. This was done during a 2011 election campaign. When information was revealed showing that the policy decision was intentionally used as a last minute attempt to gain votes and evidence showed that it was done negligently in order to win an election, the government shut down the legislature. Information about the costs of the policy decision were hidden by the government that won the election and they presented false low estimates to the public with the knowledge of the true costs at many levels at the head of government. When the legislature returned, the information showed that the costs of the policy decision to win the election, the movement of two power plants, did not cost $200 million as claimed by the government, but more towards the $500 million to a billion dollar range. While the extent of knowledge and intention of the head of government was being debated, the office of the head of government erased information and communications that detailed their actions and intentions as late as a few days before the offending premier left office. They officially violated a law that governed the retention of public information documentation, but for some reason there is no penalty to violating the act in question.

While this government still sits at the head of the Government of Ontario, in Canada, investors should note that the loss of over $500 million to benefit the careers of a few public officials is not characteristic of a healthy investment climate. The truth in corruption, whether it is accepted by the standing laws, or violates those laws, is that it always creates economic loss to the public, commercial agents and investors. Without a legal and transparent response and a means to change corrupt governments, investments will be informally taxed without fail.

Brazil stood first in line for comeuppance. Since 2011, the economy has underperformed, leaving key policy hands to point fingers at the Americans (for quantitative easing), the Chinese (for currency manipulation), the Japanese (ditto), and just about everyone else.  Last week the Financial Times poked fun of Guido Mantega’s “ability to put an optimistic spin on any piece of news.”

Meanwhile, Mexico’s momentum—a giddy combination of cutting into Brazil’s lead as the region’s largest economy, tentative signs that the drug war may be waning, and the rapid-fire reforms of the country’s new telegenic president—is slowing. The official growth rate there was recently revised downward to 3.1 percent, from 3.5 percent in January. To this, the government partly blamed the early Easter holiday; with its usual degree of dry wit, The Economist noted lackluster data for December was chalked up to Christmas falling in the middle of the week.

These may just be signs that politicians in Latin America’s two largest countries, quick to take the credit when the news was good, have yet to figure out a way to manage rising expectations.  In some cases though, the quibbling may be more foreboding.

Witness the blather out of Buenos Aires. President Cristina Fernandez, who long ago refined her rhetoric against holdout creditors of the country’s sovereign debt, has more recently come under fire for money laundering and corruption. A former secretary for Fernandez claims that she and her husband, the late Nestor Kirchner, installed a vault in their Patagonia mansion and that she was sometimes told to weigh bags of illicit cash. To these and other allegations, Fernandez has responded by writing off her domestic critics as “loons.” Amid a hail of indications that the country’s economy is in a tailspin, Fernandez’s latest round of excuses and dismissals may signal a more troubling horizon for the country (put forth just two years ago as a model for a Greek recovery) long known for steep descents.

Image from BlouinNews. 

[REUTERS/Luke MacGregor]

When French politician Pascal Lamy set the process in motion to replace himself as the head of the World Trade Organization (WTO), it was an interesting outcome that the two last candidates for the position were both from Latin America and were both from economies either from BRICS nations or that are considered as pre-BRICS nations. Brazil and Mexico in the recent past would have never been considered as having a chance at the head of one of the European or American dominated international organisations like the International Monetary Fund (IMF). Despite Christine LaGarde beating out her Latin American rivals to become the latest head of the IMF, there is no doubt that Latin America’s economic giants have come full circle in representing the region as being a large part of the world economic system. In the end, Brazil’s Roberto Azevedo won to become the next head of the WTO with the challenge to reinvigorate Doha with a perspective coming from a BRICS nation. Azevedo might have the natural advantage of coming from a BRICS nation as he will be able to represent both developed and developing countries’ interests as opposed to a Doha trade liberalization process born out of European or American interests. While countries like Mexico have been outperforming many of the BRICS nations recently, the ability to have a strong say in the international economic system for countries like Mexico has gone very far in officially placing them at the head table of the international economic order, even without being part of the informal BRICS designation.

The Obama administration and the previous Bush administration had done little to activate their natural relationship with Latin America after 9/11. In Obama’s second term as president, there has been an active push for President Obama and Vice President Biden to re-engage with Latin America, not as rulers of the backyard of the Americas, but as partners in a region that has a great deal of economic and political potential in the world economic order. The United States has sat back over the last ten years while China has created lucrative ties with countries like Brazil, Venezuela and Argentina. U.S. officials were unable to pivot any interest or policy initiatives away from the Middle East, despite having a wealth of resources and experts that were able to develop more than one prudent foreign policy action. The lack of interest the U.S. had showed in the recent past had left many U.S. allies in the region looking for ways to peak America’s interest in their issues and lead them to tackling many issues individually without any significant U.S. assistance. Many U.S. allies in South America took to their traditional position of diversifying trade, but instead of balancing the U.S., EU and international trade relationship, much of the new trade relations have gone directly to China with little American overtures to increase trade across the Americas post 9/11. As for the opposition to the U.S. in the region, the left in Latin America under the late Hugo Chavez had become very strong to the point where Latin American opposition to the U.S. was able to affect U.S.-Iranian relations for a short period of time. The influences of the BRICS and pre-BRICS nations have earned their respect globally, and finally it has become somewhat of a priority for the United States.

BRICS nations might be gaining intangible power in the international system, but the label of “BRICS” is not a complete solution to issues that have slowed growth in BRICS nations or challenge development of the economic system in pre-BRICS nations. Mexico’s economic boom under the previous PAN government did not save them in the last election, and even placed the past ruling party in third place despite Mexico’s historically high growth rates. Countries like Brazil has slowed their growth significantly and are struggling to reform their political system to make FDI gains accountable to national growth and not to a few wealthy and powerful individuals. India’s growth has slowed due to the systemic inability to quell nepotism and promote a reduction of red tape in creating commercial entrepreneurs in India. Red tape is also a large restriction to investment in China, a country that is trying to move from a purely manufacturing based economy into more diverse industries before its employees working in manufacturing become too old to keep up its growth rate. Any successful BRICS nation will only remain successful if stability and a healthy growth rate prevails over a addictive super growth rate and eventual bust cycle. Trying to develop the country before it is no longer possible to do so will only place BRICS in a situation that plagued Latin America throughout the latter half of the 20th century. For Brazil and Mexico to remain significant players in the WTO and worldwide, Azevedo and other policy experts assisting BRICS and pre-BRICS nations must look for stability and long term growth as policy goals above any scenario where boom and bust cycles dominate economic models.

Many Americans feel that their current system of government is unable to get anything done in any meaningful way. Conflicts between interests in the U.S. government has blocked essential legislation from being passed, and interest groups in the political system thrive off preventing the president from passing many of his key policy initiatives. While compromise is certainly needed in the United States at the moment, the American political system has done a good job in identifying and eliminating corrupt practices and in promoting policies that reflect the core ideals of the American people. When there are questions of unfair or corrupt practices in the United States, the country is able to address the issues. While many issues are not technically illegal, the U.S. will maintain the authority to challenge for equality. Any less is simply a detriment to society. The best recent example was the absurd and inequitable wait times in some areas of the U.S. that voters had to endure in order to vote in the last election. Hiding behind non-existent, inequitable or unjust laws cannot be tolerated when there is a clear breach of confidence in a society. In the end, no matter what their backgrounds are, all Americans have the same right to vote as anyone else in the country. Discouraging their rights to participate in an election is now something commonly seen as a stain on American democracy.

America’s neighbors are not strangers to conflicts in their political systems. In the Canadian Province of Ontario, the last regional election resulted in a scandal where the Provincial government that has been sitting for over 10 years wasted over 500 million dollars in order to win two seats in the last election. Information revealed this week showed that the costs of a policy move to cancel the construction of two power plants was likely done in order to secure the votes of those two seats during the election. After the opposition challenged that the government simply moved the power plants for votes by using public funds, the sitting government closed all business in the legislature in order to stop the ability of the opposition to bring inquiries onto the sitting Premier of Ontario and his party at the time. During this downtime, the governing party removed their leader and others who had direct links to the movement of the power plants, and reopened when they saw it fit to do so. After, they claimed the 500 million dollar bill only costs 40 million, but it is apparent that the government used public funds to needlessly change a policy decision to win a majority in the parliament and that they likely knew of the real costs in the process.

While claiming that using this policy move was not part of their campaign plan to be re-elected and was not illegal, there is a clear violation of the customary laws prevalent in all Commonwealth countries and the legal tradition of equity when one political party can use a large amount of public funds in order to be re-elected to their own benefit. Clearly the legislature should have never been allowed to be closed and one party should not be able to have such a large financial advantage using public funds for their own political party. To maintain the legitimacy of the political system, charges ranging from corrupt practices to criminal charges should be laid on any member of the current or past government that knowingly used public funds and lied to the costs of the amount in order to be re-elected. In a legal test, any reasonable person in that position as a government minister or advisor during an election campaign would clearly know that it is unjust and illegal when one party in government has the intent of using a policy decision in the middle of an election campaign in order to secure their seat. After the last U.S. election, there was a condemnation and acknowledgement of the errors of allowing voting wait times so long that it affected American democratic values. In Ontario, an acknowledgement of the issue should be met with charges and an election. The outcome of a large scandal is that a ruling party will always be seen as corrupt in every action they take, whether it is true or not. Democracy must be reaffirmed before a society can progress, and legality must be paramount over the issue so that equity prevails and ends the ability of corruption to continue.

To see how a political system works when there is no transparency in a government’s decisions and the ruling party is seen as lacking respect for legal equity and the confidence of society, we must look at this past week in Venezuela. After the last election, Nicolas Maduro won by a very thin margin and the opposition in Venezuela took to protest the vote, and have been protesting fervently since Hugo Chavez was officially replaced. The lack of confidence in the Venezuelan political system comes from many years of Hugo Chavez and actions by his government to solidify Chavez and his presidency beyond the powers of the legislature and Judiciary in Venezuela. Claims by both the government and opposition of violence and intimidation being used is so prevalent that a recent discussion in Venezuela’s National Assembly lead to many ministers being physically beaten in a brawl on the floor of their congress. Venezuelan politics is a reflection of how power can be abused and maintained by all parties claiming guilt over their opponents. When all political groups in a country are painted as bad as the worst ones and the government denies traditional balances in their political system, there are no mechanisms that provide for transparency and inquiry into legal and illegal actions by government ministers. In broken democracies, elections can be the only form of equity when the lines between legal and illegal are no longer respected. Without a true balance and respect for legal norms and traditions along with an equitable government and a mechanism to clear out corrupt practices, a healthy democracy cannot truly exist. The valves that exist in democratic and fair government systems to defuse tensions must always be respected in order for a society to progress. It is to the benefit of very few people when a legal system will support inequitable acts simply to legitimise corruption and end progress in our society. The legal system is an outcome of democratic values, to promote inequity in a legal system is to lack an understanding of democracy as a whole.

Economic Comission for Latin America and the Caribbean (ECLAC) recently published its growth forecasts for Latin America’s economies in 2013. With a few exceptions, the news is disappointing. The 3.5 percent projected growth for Latin America’s economy is slightly above last year’s rate, but well below the 5 percent clip that the region has experienced since 2002.

Unsurprisingly, the biggest laggard will be Venezuela, where growth is expected to be 0.1 percent. Beset by high inflation and a high budget deficit, Venezuela’s economy will effectively enter recession. What makes this year different from 2012? Oil prices for one. In mid-April, the Economist Intelligence Unit forecast the price of Brent oil will average $107 a barrel this year, down $5/b from 2012.

Argentina’s economy will also be lackluster, notching 3 percent growth amid 20-30 percent inflation.

Among the economic heavyweights, Mexico’s economy is expected to expand by 3.5 percent, and Brazil’s by less than 3 percent. No doubt this is unwelcome news. But, for Mexico at least, the growth is within its trend rat
e.

On the upside there’s the “three Ps.” After a soft coup last year, Paraguay’s economy will rebound heartily this year, racking up 11 percent growth. Record crop prices, especially for soya, account for the growth. Meanwhile, Panama and Peru will enjoy 9 percent and 6 percent growth, respectively. The good news for Panama and Peru is that growth owes to sound economic policies that have encouraged foreign investment and reduced poverty.

The ECLAC report is entitled “As Tailwinds Recede: The Search for Higher Growth.” The Miami Herald provides a brief synopsis of the findings.

It is no mystery that when in Mexico you are expected to eat, and as a courtesy your Mexican hosts will ensure that you will eat a lot. Mexico has one of the most unique and delicious food traditions in the world, and to ignore the food and the culture that surrounds it is to ignore a large part of the culture. Despite this, while little kids, or gorditos, are prized as cute and loved children, when they grow into adulthood there is a significant amount of pressure to be in shape and to be extremely fit. It is Latin America, after all, and there is a great deal of pride in the appearance of an individual in most countries in the region. The influx of fatty foods and sugar addiction is not locked into Mexican society for reasons of culture or proximity to the United States. Other countries with strong culinary traditions such as France also have been plagued by youth with sugar addictions and sedentary options, a trend that is affecting most countries regardless of economic growth.

When speaking with Mexicans, the difference in class is often defined in relation to diet. Food plays a large role in Mexico’s class system in that the end products that Mexicans have access to or can afford within Mexico varies among groups. There are also cultural differences in regions and groups in Mexico that may differ from the ideal body type desired in popular culture in Mexican society. While most Mexicans can have access to Coke, many in the country rely on government subsidies for milk and eggs, and base most of their diet on tortillas and frijoles and other traditional basic foods. The core elements of Mexico’s food culture are inherently healthy, based on whole grains and fresh fruits and vegetables. Cheese in Mexico is not similar to the cheddars and mozzarellas eaten by their neighbors to the north and is often a healthy option. Adding too much cream and fat is something that was invented in Tex-Mex cooking, food native of California as opposed to Mexico. Tex-Mex food is often not looked upon as the best option when eating in Mexico. When living in the United States, fresh and healthy Mexican food is now readily available in most parts of the United States, and is often the best and healthiest option when dining out in the U.S.

For Mexicans living in the U.S., a truly passionate food culture where family and community dines together is strong, but the access to cheap and fatty foods in the U.S. has permeated all cultural groups living in the United States. So much is the influence of American food culture on Latinos in the United States that programs to ensure confident children that will avoid eating disorders are broadcast to Latinos living in the U.S. In the end, whether living in Mexico or the U.S., eating well and with close friends and family is a part of being a positive and happy person. With one of the strongest food cultures worldwide, an appreciation for Mexican food and all of the wealth it brings to an individual and community may be the primary reason for obesity levels in Mexico. The end result with happy and full people enjoying their meal without the obsession of weight bearing down on their thoughts each time they take a bite has value in itself. Eating properly was never an issue in Mexico; it might simply be that other options have entered into Mexican culture and have been accepted in many Mexican communities without bias.

Below is a recipe for one of the best dishes to come out of Mexico, Chile en Nogada from foodnetwork.com:

Ingredients
· 6 poblano peppers

Nogada sauce:
· 1/2 cup goat cheese
· 1 cup walnuts
· 1 cup small diced white bread
· 1 1/2 cups milk
· 1/2 teaspoon salt

Filling:
· 1 tablespoon olive oil
· 1/2 cup white onion, finely chopped
· 2 garlic cloves, coarsely chopped
· 1 medium ripe tomato, finely chopped
· 1 tablespoon freshly minced cilantro leaves
· 1 pound ground beef
· Salt and freshly ground black pepper
· 1 cup cooked diced potato
· 2 tablespoons dried black currants
· 2 tablespoons toasted sliced blanched almonds

Garnish:
· 1/2 cup pomegranate seeds
· 2 tablespoons coarsely chopped parsley leaves

Directions

Prepare the poblano peppers by heating a griddle or skillet over medium-high heat until a drop of water sizzles on contact. Add the poblanos, and cook, turning occasionally with tongs, until the skin is blackened and blistered on all sides, about 5 to 7 minutes depending of the size of the poblanos. Remove from the griddle as they are done and place in a plastic bag, let sit for 5 minutes, until the skins are soft enough to be easily removed. Remove the poblanos from the bag, and using your fingers and small sharp knife, peel and scrape off as much of the blackened skin as possible, (a few black specks don’t matter). Leave the tops on and cut small (2 to 3-inch) lengthwise slits in the polios and carefully pull out the seeds without tearing the flesh.

Nogada (walnut sauce):

Add all the sauce ingredients to a blender and process until thoroughly pureed. Set aside art room temperature or keep in refrigerator until ready to serve.

Filling:

In a medium-size skillet, heat one tablespoon of olive oil over medium-heat. Add the onion and garlic and cook for one to two minutes, stirring often. Add the tomato, cilantro and cook for another minute. Add the meat and cook stirring, until the meat is cooked through, about 10 minutes. Season with salt and black pepper, to taste. Add the potatoes, cook for two minutes, then stir in the black currants and the almonds. Remove from the heat. Carefully stuff the mixture into the chiles through the slit, taking care not to rip the chiles. Transfer the stuffed poblanos to a serving platter. Cover with the walnut sauce and garnish with pomegranate seeds and parsley.

This recipe was provided by professional chefs and has been scaled down from a bulk recipe provided by a restaurant. The FN chefs have not tested this recipe, in the proportions indicated, and therefore, we cannot make any representation as to the results.

The optimism over Latin America’s economically mobile population has missed the large segment that remains vulnerable—not in poverty but still at risk of falling back into it. Photo: Monique Naoum.

This week the BBC was promoting a new study that redefined the traditional class structure in Britain into new modern categories. With the assistance of some U.K. universities and research institutes, they made a class calculator that can be taken online and will define in what part of British society you currently belong. You can find the link to the survey here – I suggest you take a turn as it is fun and interesting. On the BBC World Service, they compared the seven new categories of classes redefined in the study with the traditional class and caste system in India. While there were changes and movement due to certain lower classes gaining additional wealth over the generations, the class system and caste systems are still very prominent in India, affecting how people work, live, socialize and define themselves politically.

Latin America is not a stranger to a ridgedly defined class system, and some conclusions from the discussion on Britain and India could be easily applied to many countries in the region. One issue that was raised by the expert on India’s caste system was that while some lower castes enjoyed some economic success, their identity in their caste system defined much of their political support in the greater political system in their region in India. It could be the case that a wealthy entrepreneur could also support a social left leaning party in such a conflict among classes, even if the party they support is not considered business friendly. So much was the divide among classes that political support may be secured not for a positive policy approach, but an approach that reasserts the divide among classes even if some from the lower class had the funds and mobility to become part of the top economic percentile of the population. In this case, class systems could result in possible “entrepreneurial socialists” due to a narrowly defined class structure.

In the upcoming election in Venezuela, the strategy that may define how much the opposition wins or loses in the election may not be solely based on the popular support Hugo Chavez’s base has for the party and Maduro. While many socially oriented voters in Venezuela supported Chavez, the balance of the vote may depend just as much on how they see the opposition as coming from a different class in Venezuelan society and how they see those classes supporting social goals in the next presidential term. If the Venezuelan opposition ends up being defined as a different class that can never be permeated or become accepting of hard working and innovative lower class individuals, then those classes that have no opportunity to grow will inevitably choose and change or revolution over promoting elites into power. This underlying narrative in Venezuelan and Latin American society may keep the leftists in the region around for a long time, even without their natural leaders being present in future debates.

The inherent problem with strong class systems is that it solidifies traditional systems that may not work to benefit the nation as a whole. The result is that the best and brightest that should come out of fair and healthy competition in society are stifled at the whims of a few powerful elites. Without a way to benefit from hard work and innovation, a country can never move forward or grow because the elite structure that benefits from current and past contradictions in society will keep the nation from innovation and growth in order to maintain the awards of a system that keeps them in an elite posture. One of the best examples illustrating the errors of class limitation in Latin American society is the progressive and organised nature of the non-documented worker community in the United States. Most undocumented workers in the United States come from Mexico and Latin America to the U.S. due to a lack of jobs in their own countries and a limitation on their ability to grow and prosper in society in the region. Despite not having the legal rights to work in the United States, many undocumented workers earn and save to such a great degree that they have rebuilt many of their communities back home and now have ownership of one or more homes in their community as well. Funds coming from lower class undocumented workers in the United States compete with the levels of national revenues in Mexico that come from Mexico’s oil industry, placing Mexico’s illegal émigrés in direct competition with Mexico’s upper classes that run much of PEMEX and Mexico’s energy sector.

Despite having a legal limitation to earn and work in the United States, the opportunities for undocumented workers to rebuild their own communities in Mexico and Latin America grew from nothing into Mexico’s largest source of national revenue. This socially orientated industry came from innovation, hard work and growth, separated from class limitations. The rebuilding of Mexico’s hinterlands through the work of socially oriented entrepreneurs comes from a group of individuals limited in both Mexico’s class system and America’s legal system. The only lesson to be learned in their class is that an entrepreneurial spirit will come naturally from innovative individuals when they find an opportunity for a better life for themselves and their communities.

Certainly Pemex, Mexico’s ailing state-owned oil giant, begs reform. The tragic January 31 explosion at Pemex headquarters in Mexico City, which killed 37 people, is just the most acute sign of the company’s creaky infrastructure. Oil output is down 25 percent since 2004.

Yet, as I argue in World Politics Review, the momentum behind reform faces a steep hurdle when it comes Pemex. Off the bat, two of Peña Nieto’s tricks appear unlikely to work.

First, the government advanced education reform by putting a face on the problem, literally. Although the arrest of Esther Gordillo, the all-powerful head of Mexico’s teacher’s union, came after Peña Nieto signed education reform into law, her surgically enhanced visage—clearly at odds with her paltry official salary—removed the major impediment to implementation, sparked international intrigue, and gave forward momentum to the reform agenda. But Pemex is faceless.

Second, Peña Nieto’s reform coalition appears to be fracturing when it comes to Pemex. At the recent PRI national convention, members voted overwhelmingly to change the party platform in order to appear open to the idea of privatizing Pemex. This suggests a base of support for Peña Nieto, who in January cooed about turning Pemex into something akin to the partly privatized Petrobras.

Evidently Peña Nieto’s energy minister, who’s also a member of the PRI, didn’t get the message; he recently ruled out just such a privatization. And Mexico’s leftist parties, which together proved crucial to passage of the education and telecom reforms, are dead-set against privatizing Pemex. Doing so would cost jobs, they insist.

So, if Peña Nieto is serious about modernizing Pemex, he may need to focus less on a political broad coalition for the time being. Instead, he can advance reforms by recasting the debate, from privatizing Pemex to expanding the company’s reach into new areas where Pemex has been slow to manifest its monopoly right: shale gas and deep offshore oil. Far from costing jobs, moving Pemex into these sectors—via partnerships with U.S. oil companies—will surely create them.

[Gregorio Borgia/Associated Press]

Porteños (Argentines from the capital city Buenos Aires) will get quite a self-esteem boost today, March 19 when the Vatican inaugurates Argentine Cardinal Jorge Mario Bergoglio as the new pontiff of the Roman Catholic Church.

There has been no news in Buenos Aires for the last five days that has not focused on the Pope. Immediately after the announcement last Wednesday, I made my way down to the Plaza de Mayo to witness the country’s faithful celebrating the news in front of the Metropolitan Cathedral. Yet I couldn’t help but notice the crowd was … small, especially when compared to the teacher salary protest march happening at the same time a few blocks away.

In an increasingly secular country, the news was certainly met with pride, but there are doubts the new pontiff will be able to achieve the major goal placed upon him: unify Latin American Catholics and stem the growth of Evangelical Protestantism.

It is unclear if anyone briefed the Vatican’s cardinals on inter-state rivalries in South America before this decision. Immediately social media networks were filled with jokes that ranged from political to ridiculous: “Finally! A Latin Pope… even if he is Argentine”; “It’s a consolation prize for Argentina losing the Malvinas referendum”; and “This could mean bad news for the Brazilians if God is with Argentina for the 2014 World Cup.”

Latins have clamored for years for a Latin American pope; after all, more than 40 percent of the world’s 1.2 billion Catholics are concentrated in Latin America. But the favorite was Sao Paulo’s Archbishop Odilo Scherer. Brazil has the largest Catholic community in the world and one of the fastest-growing populations of evangelicals. The hope among many Catholics was that a Latin American pope, specifically a Brazilian one, would engender new excitement among the population. More pointedly, that a Latin pope could stymie or even reverse the growing trend toward Evangelical Protestantism.

According to the polling site Latinobarometro, in 1996 Catholics made up some 80 percent of Latin America’s population, with Protestants lagging far behind at only 4 percent. 2010’s polling showed that the number of Protestants had more than tripled to 13 percent of the population while Catholics dropped to 70 percent. The proportion of conversions has been even stronger in the region’s two most populous Catholic countries: Brazil and Mexico. The new pontiff’s humility and rejection of the pomp and circumstance that many high-ranking clergy enjoy is undeniably refreshing. It could go far in terms of reaching Latin America’s poor increasingly report feeling better served by Evangelical Protestant churches.

But being a Latin is not enough, and even Argentines will admit that. Time will tell if Francis is really a pope of the people.

Pope Francis waves to the crowd from the central balcony of St. Peter’s Basilica at the Vatican on March 13, 2013. (Dmitry Lovetsky/Associated Press)

Jorge Mario Bergoglio became the first Pope from outside of Europe for nearly a millennium, reflecting the reality of a church that has the majority of its followers in Latin America and the strong connection with society and social justice that churches have had in the developing world. Pope Francis I is a native of Argentina and comes from a background where the social awareness of the problems in a society torn by poverty and deep issues of historical inequality and corruption permeates every decision by leaders in the region. A conservative, he has been challenged by issues in Argentina related to same-sex marriage as well as a history of the church’s cooperation with the former military regime in Argentina that had scarred Argentine society as a whole. Pope Francis I will have to also provide guidance to a part of the world that bases much of their lives on their faith, but is also is turning away from the Catholic Church towards other Christian churches in Latin America.

The issues that will be challenged by Francis I will be reflective of the issues that he had faced in Buenos Aires and Argentina in general, those of poverty and social justice in an unequal society. The Catholic Church in Latin America is an integral part of society and helped form much of the modern systems of social welfare in the region. Where systems of social assistance often did not function in the region, churches and organizations started by many churches are often the only source of guidance and assistance to many in Latin America. With one of the worst levels of inequality in the world, many in poverty in Latin America have little power to improve their own lives. In many countries in the region, the grassroots of poverty reduction and systems that became part of national strategies to reduce poverty and inequality came from programs of the church. While many believe the church does not affect their lives in the developed world, the church in Latin America and the developing world is often the only source of help and kindness in societies that have failed to support everyone living inside it. Pope Francis I will bring his strong focus to help the poor to the Papacy, already becoming an example of frugality in the first days of his election as Pope.

Whether speaking about Latin America, Africa or Asia, the issues of inequality and social justice will resonate with a non-European Pope speaking about issues in which he has personal experience. Social justice was one of the major issues that created the ideas of Hugo Chavez’s campaign during his election campaigns and maintained his presidency until his recent death. Whether a socialist or a pope, social justice and dignity in poverty is an issue that may never disappear in Latin America. A strong individual that leads by example in tackling social justice issues will always be a mark of leadership in Latin America. Social justice is needed worldwide, and with a strong tradition of fighting for equality by Chavez and Francis I, social justice issues will challenge governments in Latin America and global inequality over the next few years.

Photo Credit: Alfredo Estrella/AFP/Getty

Since before the 2006 election of President Felipe Calderon, Elba Esther Gordillo has been someone who could wag a finger and move Mexico’s most powerful politicians into line. These include former President Calderon himself. Gordillo is head of the Mexican teachers union, the largest union in Latin America at 1.4 million members. Historically a member of the PRI (Institutional Revolutionary Party), her decision to endorse Calderon swayed the election in favor of his National Action Party (PAN).

But oh, how things have changed. Today, the PRI is back in office, and Elba is in prison.  On February 26, President Enrique Peña Nieto signed a law requiring stricter teacher evaluations. The next day, Elba was arrested for allegedly embezzling about $160 million from the teachers’ union account. While the timing is conspicuous, the charges seem to have some legs. Peña Nieto has also used public opinion to strengthen his endorsement of the law – think tank analyst José Antonio Crespo calls Elba “one of the most hated people in the country.”[1] With her lifestyle, Ms. Gordillo is a wonderful Imelda Marcos-like throwback to the past. She reports income of $45,000 per year (a public school teacher with 10 years of experience generally makes around $14,000). And yet, she is known for wearing designer clothes, traveling by private jet, and plastic surgery jobs – rather curious.

Elba has lasted because she has done well for herself and her union members. Teachers are mostly tenured for life, and can grossly buy or sell their positions within the union. Naturally, this is degrading to Mexico’s kids. As I detailed in a 2011 post, Mexico has ranked “statistically significantly below the OECD average in reading, math, and science. The Economist points out that the education budget is 22 percent of public non-capital funding, the highest percentage in the OECD, but 80 percent goes to teacher salaries, well above the OECD average. Many false names and deceased teachers are being paid.[2]

So what does it mean to have La Maestra, a wealthy and powerful union head, in prison? The political message in Mexico City is formidable – Peña Nieto wants to reform the telecom and energy sectors, and will either need to face down his opponents or undermine them. In telecom the opponent is Carlos Slim, the world’s richest man, whose companies control 70 percent of Mexico’s mobile phone subscriptions and 70 percent of land lines.[3] In petroleum, it’s Carlos Romero Deschamps, head of the petroleum workers’ union, whose family has also received press for basking in luxury. Mr. Slim’s wealth and influence on Mexican government is well known, and Mr. Romero is a PRI Senator with plenty of followers. Both could be considerable opponents to reform if they choose to be, but Peña Nieto can harness public opinion to press them. Peña Nieto is taking the risk of alienating traditional PRI support bases, but he is following through on a key need for Mexico’s economy. However, as he acts, the ball is also in his opponents’ court to act.[4]

One of the issues with many leftists in Latin America is that while there are a lot of supporters that will never disappear as long as inequality is at one of the highest level worldwide, left-wing leaders often are successful in applying their policies because they are charming and popular individuals. Despite many criticisms of corruption in leftist administrations in Latin America, continued support and the election of leftist leaders comes from their ability to speak to the minds of many in the region who live at the spear’s end of existence in their daily lives in the cities and towns in Latin America.

So who will replace the Castros once they retire? It had been thought that Hugo Chavez in Venezuela would be the natural successor in the region, but recent months has revealed his health as an issue that cannot be avoided, and Venezuela’s ruling party is struggling to keep their hold onto power without the main ingredient that put them in power in the first place, that of Chavez himself. Yesterday, Hugo Chavez met his eventual death, and while expected, it is really the official beginning of the next era of the future of the left in Latin America.

The Economist recently published two interesting articles on Chavez and recently re-elected President of Ecuador Rafael Correa that might shed some light on how the future of the left may develop in the region. The author speaks in great detail about Chavez’s return from his treatments in Cuba. The unnamed author goes into a brilliant discussion on how the parties will deal with the ill president and the division of powers laid out in the constitution. He claims that for the most part the constitution is being ignored in order to keep Chavez in control. It is a wonderfully laid out article, but my final assessment of the situation regarding the presidency of Venezuela after studying many years of Latin American politics and studying constitutional law is that the president was simply very sick, he had aggressive cancer and needed to rest in order to be as healthy as he can be considering his awful illness. He passed away yesterday at 58, leaving his revolution to the party in power that faces an election in 30 days. During his illness, he was extremely limited in being able to stay at the head of government and as the de facto leader of this generation’s left in Latin America.

One of the left’s main weaknesses is its link to populism as a method of support. It is hard to say who will gain power in Venezuela or Cuba now that the leaders of the cause will no longer be available to support it in the future. In a separate Economist article, the victory of Rafael Correa in Ecuador’s election with 57 percent of popular support shows that leftists do not lack support in the region and that their policies can have a future in a country like Ecuador. It is uncertain whether or not Correa or someone like Evo Morales can become the new Castro or Chavez, but if populism can go beyond one person and become a political party with a strong mandate and leaders, it can avoid the eventual collapse of leftist popular movements that are always expected in government and by investors. Populism often creates a revolutionary situation in a country, but chaos at the end of one person’s life does not always have to end ideologies on the left in Latin America. Ideas on the left exist in all countries in Latin America to a very large degree, and populism does not always have to bring an end to social ideas for Latin Americans. For the future left, another populist voice may be needed to further expand a leftist revolution, but the left will always be at the core of social ideas in the region.

At a high-level executive meeting in Mexico City on Feb. 13, the conversation turned, as it often does in Latin American circles, into a guessing game on Chavez´ health. Several participants insisted ¨Chavez is dead, we haven´t heard from him or seen him in weeks.¨ My response? The man is too ornery to pass away quietly. When Chavez goes, the world will know.

I may have to eat my hat.

Less than a week later, early Feb. 18, I got a text message from a close friend in Caracas telling me el Comandante had landed at approximately 5 am, transferred immediately to Hospital Militar. He arrived in the cloak of night, no cameras.

One has to wonder why an international audience is so captivated with morbid fascination. I must admit to tweeting (please note the positive connotation of the word “tweet”) almost every time a contact in Venezuela has sent me death rumors, notes or anecdotal evidence pointing toward death. Why?

Why are we watching the man’s health like an afternoon telenovela? Perhaps the answer isn’t that the general public is on deathwatch, rather that the lack of transparency by Chavez handlers has generated some really fantastic suppositions. If any of them are even remotely true, then Chavez’ 14-year tenure will get the closure it deserves.

The most startling of scenarios is one being promoted by Panama’s former ambassador to the OAS, Guillermo Cochez. In a rather contentious interview with CNN Chile he asserts bluntly that not only is Chavez dead, he has been since Dec. 30, 2012. http://www.youtube.com/watch?v=KB39jYugU4M&feature=player_embedded

Even more bizarre are the assertions that despite being brain dead since Dec. 30, he was flown to Caracas to be kept alive by machines that were unplugged on or around Feb. 24. Obviously this last bit has too many gaps to be plausible, yet other questions remain.

Why are Chavez’ daughters dressed medio-luto (Venezuelan tradition of wearing half black half white)? Why has the Cuban Embassy in Caracas suddenly beefed up security (as of 13:30 Feb. 27)?

The facts are not good. Chavez has not been seen since Dec. 10 when he flew to Cuba for a fourth round of surgery. He was unable to return to the country for his scheduled swearing-in as president on January 10, due to on-going medical treatment in Havana. Some pictures surfaced mid-February of him with his daughters reading a newspaper, but their authenticity has come under question.

One does not need to be a conspiracy theorist to sense that new elections (required by the Venezuelan constitution in the event of death of the president) are possible in the spring of 2013. It will be interesting to see what the Henrique Capriles campaign does differently this time around now that the (likely) foe will be current vice president Nicolas Maduro. Does the Hay un Camino campaign still have momentum or will they start afresh? Has the (supposed) postponement of Chavez’s death been in an effort to bolster Maduro’s popularity ratings before a new election is announced?

News out of Venezuela will certainly accelerate over the next few weeks and people will wait with baited breath to see what twists and turns come up next.

Latin America is often seen as in the lower echelon of State Department priorities, and many experts think this is appropriate, given the world’s current hotspots. However, Latin Americans are our closest neighbors, much of our immigrant population, and our partners in solving major domestic issues. Christopher Sabatini, Editor-in-Chief of Americas Quarterly, wants the Obama Administration to be imaginative, if not exhaustive, with its Latin American foreign policy.[1] One of his suggestions, which is near and dear to me, is expanding the North American Free Trade Agreement (NAFTA) to cover trade in energy goods.

The NAFTA section on Energy and Petrochemicals is quite short, which makes it easy on bloggers, but nonexistent in actual policy. Mexico, which has always had a protectionist bent toward its state oil company Pemex, “reserves to itself” basically all energy exploration, refining, and distribution of crude oil and natural gas. The US has similar de-facto restrictions in the area of natural gas exports; only recently have licenses been granted (the Cheniere facility in Louisiana is one example). Today, Pemex needs foreign investment to reverse falling production, and help the Mexican government cut fuel subsidies, which exceed $25 billion annually.[2] As for the U.S., it needs logistical access to new gas markets.[3]

So how would a revitalized NAFTA treat energy? I propose allowing any company based in the region a license to transport fuel over any part of the NAFTA zone. If Pemex can implement better exploration and drilling practices, and produce a glut of oil, then Pemex can sell to distributors who can re-sell the oil anywhere in Mexico or up North. This gives integrated U.S. oil majors, such as Chevron or ExxonMobil, an incentive to invest in Pemex’s upstream business.

One obvious drawback – a growing Pemex would have to compete with increasing production from Canada. Due to discoveries in Alberta’s oil sands, Canada has the third-highest proven reserves in the world (Source: EIA). However, the point is not to create inter-NAFTA competition, but to make NAFTA a unified production bloc and an easily accessibly exporter of oil and gas. As I will detail, there are plenty of customers out there – other nations, North America’s chemical manufacturers or governments (New York City will use natural gas to fuel the Staten Island Ferry due to low gas prices). In the words of MIT Professor John Deutch, “North America’s massive resources are going to shift market power away from OPEC and Russia and to consuming nations.”[4] Professor Deutch understandably puts the ball into the U.S.’ court, given American reluctance to permit natural gas exports, and the ban on construction of the Keystone XL Pipeline, which would transport oil from Alberta, Canada, to refineries in Houston. It is best for the NAFTA nations to have a borderless energy system that ensures abundance for both local supply and for exporting companies. This will aid the Mexican Government in attracting investment to Pemex – Mexican oil can be sold locally, or shipped by Exxon to Asia. The reform will also accomplish a major goal within the strategic thinking of Professor Deutch, who also served as Undersecretary of Energy and Deputy Secretary of Defense – to stabilize the energy supply of U.S. allies.

By becoming a reliable resource for energy-needy democratic nations in Asia and Europe, the NAFTA countries can increase both commercial profits and political clout. Japan, a key ally and the world’s largest importer of natural gas, has heavily lobbied the Obama Administration to sell gas across the Pacific. I hope the environmental lobby doesn’t have enough of a chokehold on the Democratic Party to stop this (America’s petrochemical industry is also frustratingly against exports). Another close-by ally, South Korea, is also hugely dependent on energy imports, and is not connected to any international pipelines. Cheniere Energy Partners LP, of which Professor Deutsch is a Director, became the first U.S. facility licensed to export gas, and has lined up customers in South Korea, as well as India, Britain, and Spain. If any energy company – Mexican, Canadian, or American – misses out on customers in the Far East, this company can still turn to Europe, particularly in light of renewed U.S.-EU free trade negotiations. Liam Denning of The Wall Street Journal points out that Europe would love to substitute North American gas for coal to lower harmful greenhouse emissions.[5] And how about a supply alternative to Russia? This is where energy can become a foreign policy tool for NAFTA – all the recipient states are democracies, and the current providers – Russia, Venezuela, Iran, and OPEC states – are not.

Another extension of NAFTA Energy Policy, and another initiative important to Sabatini, is the engagement of Brazil. Conservative estimates suggest that in the Atlantic’s pre-salt rock, Brazil has oil reserves equivalent to 7 years of U.S. consumption. China will be a very willing customer, but Brazil also has free trade aspirations with Mexico, and needs help with its infrastructure – industrial output fell 2.7% in 2012. Brazil has traditionally squared off with NAFTA countries for diplomatic influence in Latin America, but to truly become a global power it needs their support. In exchange for a permanent seat on a reformed U.N. Security Council, Brazil could offer energy transportation and distribution rights to NAFTA companies. NAFTA+Brazil could become an abundant source of cheap fuel for democracies abroad, Canadian school buildings, American pharmaceutical companies, Mexico’s aviation industry, or that new job-creating thing that will pop up next.

In the past, countries like Mexico sought to link itself not to the U.S., but to the EU. Dependence on the U.S. economically for Mexico was frowned upon before NAFTA, but with European interests and funds being focused on Eastern Europe in the early ’90s, Mexico accepted it would have to make an agreement with the U.S. and Canada for NAFTA. The rest of Latin America sought a comprehensive trade agreement with the United States under the Free Trade Agreement of the Americas that effectively died after 2001 when the U.S. turned its focus to the Middle East after the 9/11 attacks. The result of these bouts of trade agreements were that NAFTA partners sought out many bi-lateral trade agreements with the rest of Latin America and Asia, and now with Europe. The EU-Canada agreement currently being negotiated is an outcome of years of stalled collectively ambitious trade agreements since FTAA in the Americas, and is the best example highlighting some of the issues that might come about in a EU-U.S. agreement.

Since 2009, Canada has been negotiating a FTA with the EU. With the economic collapse of many economies in Europe and worldwide, the concerns of past agreements between competing developed economies becoming a method to undermine the US economy were no longer a main concern. As a result, Canada took the opportunity to expand its own bi-lateral trade relationship with the EU. As always, agriculture issues are a barrier to all FTAs, and this is no exception between the Canadians and the EU. Agreements like the FTAA made the agro sectors in the U.S. and Canada nervous to the prospect of South American agricultural products overwhelming their own, reflecting concerns from the French agro industries during EU expansion that thought that the large Polish agro sector would effectively eliminate France’s unique agro industry. The result was that Poland had to give up some of its power as a EU member state to gain some approval from France during the admission process. As for the, FTAA, it never came to fruition.

One of the sticking points between the Europeans and Canadians, as well as a recognized point of interest for the Americans in dealing with the EU, are the agricultural trade boards on both sides that predetermine the level of production in some agro industries. Competing with foreign agro products that might also have a predetermined level of production will cause serious legal complications related to fair market practices. Calculated market value will likely cause many clashes and will establish many lawyer’s careers. Please see the 28.00 min in the video in the link here.

A major issue related to agricultural products between the Canadians and Europeans is one that might hold up a U.S.-EU agreement as well. Genetically modified products in the EU, whether it be fruits or beef, are restricted to some degree and are labelled as modified products if it is allowed in the EU. In North America, there are no concrete regulations to label genetically modified products (called GMOs), and under EU regulations, those products would not be able to be sold in the EU without consumers in Europe knowing what has been done to their food. While agricultural companies will protest this regulation for years under the agreements between the U.S. and Canada and the EU, speaking as someone who has lived in all the aforementioned regions and considering the rights of consumers in a legal perspective, I believe that GMO labels should be standard in the EU as well as everywhere else. There is some evidence that GMO foods might be a cause of some long term illnesses, and with the EU label on GMO products consumers would have a legal right to know what has been done to their food. This trade issue may become one that expands past the negotiators, as agro consumers will likely give little support for the companies that promote GMO in their food.

Brazil and the rest of Latin America were always focused on trade with both the U.S. and EU. South American trade flows are not reflective of those of Mexico, with the U.S. and EU trade taking similarly large portions of the region’s trade percentage. Chinese trade has been gaining ground to the detriment of the U.S. via the purchase of agricultural products from South America. A unique trade situation that has impeded trade between the EU and South America has been the fact that the EU was reticent to South American agro products blighting out similar products in France. In addition, the countries in Mercosur wished to move beyond being a sole commodities producer and benefit from R+D and increased manufacturing production in South America. Agreements for trade often seek to promote increased manufacturing industries in Latin America, with agro products being sold at high demand linked to the market value. While bi-lateral agreements with the US and Canada and has made some progress for countries like Chile and Colombia, the agro issues between emerging markets and Western nations are a massive barrier, ones that cannot be handled as simply as the GMO issues between similarly developed economies. Unlike China, Brazil will likely not be treated as a threat to either the US or EU manufacturing base because of the destiny it holds as an agro exporter that may allow Brazil to enter into a comprehensive, yet bilateral treaty with the EU and the U.S. With the new EU-U.S. Agreement, the floodgates to bi-lateral trade in the Americas with Europe will be a likely future outcome.