Tag Archives: IMF

Hichilema hopes to win rematch in Zambia’s presidential race

Zambian president Edgar Lungu, pictured here in a meeting with Israel prime minister Benjamin Netanyahu, hopes to win reelection to a full five-year term this week. (Facebook)
Zambian president Edgar Lungu, pictured here in a meeting with Israel prime minister Benjamin Netanyahu, hopes to win reelection to a full five-year term this week. (Facebook)

In a region rife with lopsided one-party democracies dominated by independence-era freedom movements (South Africa, Mozambique, and Namibia) and clear autocracies (Angola, Democratic Republic of the Congo and Zimbabwe), one country stands out for free and fair elections that aren’t also forgone conclusions.zambia

It’s Zambia, a country of 16.2 million people, which will hold its fifth presidential election in ten years on August 11, a rematch of last year’s election that takes place as the Zambian economy, the continent’s second-largest producer of copper, enters a troubled period as global commodity prices remain depressed. That’s meant fewer revenues for the Zambian government over the last two years, a wide increase in public debt and a gaping hole that’s led to power outages, deep rises in the price of food and other economic difficulties.

The winner of the Thursday election will almost certainly be forced to seek a bailout package from the International Monetary Fund this autumn, along with the kinds of conditional austerity that will cause real economic pain in the years ahead.

A re-run of the January 2015 by-election — with higher stakes

The 2016 election amounts to a rematch from the January 2015 by-election to replace the late Michael Sata, who died unexpectedly in October 2014. Sata’s governing party, the Patriotic Front (PF), ultimately chose Edgar Lungu (who is now just 59 years old), who had previously served as Sata’s justice minister and defence minister. Briefly, Sata’s vice president, Guy Scott, a white Zambian, held the title of acting president and, for a short time, considered running against Lungu for the presidency.

Instead, Lungu’s chief competitor became four-time presidential contender Hakainde Hichilema, a businessman and the candidate of the opposition United Party for National Development (UPND).

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Lungu narrowly won — by a margin of less than 28,000 votes, on a populist campaign that rested largely on the record that Sata accumulated before he died. Hichilema campaign largely on a campaign that promised greater fiscal and technocratic competence in a period when copper prices were already falling. They are, to a large degree, running on the same rationales in 2016.

Lungu and the PF dominated in the north, center and east of the country, including the densely populated urban areas in the capital city of Lusaka and, to a lesser degree, Copperbelt province. Hichilema easily won the south, the west and the northwest.

(BBC)
(BBC)

This time around, the two candidates are locked into a rematch, but with much larger stakes — the 2016 winner will govern Zambia for five years, not just 18 months. That, perhaps, explains why the campaign has veered into a troubling amount of political violence this summer. The violence, which forced Zambia’s electoral commission to ban campaigning in Lusaka for 10 days in mid-July, has caused some hand-wringing among both local and foreign observers, who worry that the violence is a sign that the campaign could erode democracy in Zambia. It’s true that the Lungu government shut down the country’s largest independent media organization, the Post, earlier in the spring, eroding the concept of press freedom across the country.

Zambia’s democratic bona fides remain strong

Headlines in Western news outlets about Zambian democracy ‘hovering on the precipice,’ however, are certainly overblown. Democracy is more deeply institutionalized in Zambia than in the rest of sub-Saharan Africa, and it features one of a handful of just a few truly competitive political systems in southern and central Africa. Continue reading Hichilema hopes to win rematch in Zambia’s presidential race

Beyond Cuba: why Caribbean debt crisis could become American security crisis

Cuban president Raúl Castro met US president Barack Obama Monday morning in Havana. (Al Diaz/Miami Herald)
Cuban president Raúl Castro met US president Barack Obama Monday morning in Havana. (Al Diaz/Miami Herald)

It’s not just voters in Spain, Ireland and Greece who are weary of austerity economics.PRjamaicacubaUSflag

Voters in Jamaica last month narrowly ejected their prime minister, Portia Simpson-Miller, giving opposition leader Andrew Holness and the nominally center-right Jamaica Labour Party a razor-thin 32-31 majority in the House of Representatives. Though Jamaican politics has been famous since the 1970s for its polarization, Holness will govern with the narrowest margin in the House since 1949.

What he does with his mandate could matter not only for Jamaica, but the entire Caribbean.

Simpson-Miller, who took power in 2012 and secured yet another IMF bailout in 2013 for the debt-plagued island, marked some success in bringing the country’s debt-to-GDP ratio down from 140% to around 125%. For now, Holness is working with IMF officials, but he won election after pledging to spend more revenues on health care, education and stimulating the economy, part of a generous and populist 10-point plan that will be difficult for him to enact under current fiscal restraints.

The Caribbean’s self-cannibalizing debt crisis

Holness will find himself in a trap all too common in the 21st century Caribbean, where manufacturing, tourism and, in some cases, modest oil production, have not been sufficient to boost economies and incomes. Without higher GDP growth, Holness will face two difficult options. If his government spends too much, he’ll unwind the careful work of his predecessor and send Jamaican debt levels spiraling upwards again. If Holness spends too little, he will alienate the electorate that gave him a majority and that, like Americans and Europeans, are weary of roller-coaster economic uncertainty and a widening inequality gap.

It’s a story that is increasingly familiar across the region and, today, it’s not just Jamaica that is falling into the debt trap. Barbados and Grenada have both marked 60% increases in their debt/GDP ratios in the last 15 years, and the Bahamas, Bermuda and other countries, not typically associated with imprudence, are also struggling with rising debt. Islands like Martinique and Guadeloupe thrive as fossils of France’s colonial empire, thriving due to hefty subsidies from Paris. Trinidad and Tobago, only recently flush with the promise of offshore oil drilling, has watched its expectations plummet with global oil prices. Puerto Rico, a commonwealth of the United States, endures a grinding debt default amid prolonged economic misery with little hope that legislative action can fix its economy. Despite years of advanced warning, neither Democrats nor Republicans have the inclination or ability to provide relief from Capitol Hill.

Taken together, the spiraling debt and economic stagnation of the Caribbean represents an overlooked security challenge in the years ahead that China, Russia or even the Middle East might exploit.

Cuba, Cuba, Cuba

Jamaica’s election didn’t generate the same excitement in the American media as U.S. President Barack Obama’s historic trip this week to Havana, the first since Calvin Coolidge visited in 1928. But it’s only the third time that Obama himself has traveled to the Caribbean at all – he visited Jamaica in April 2015, and he went to Trinidad and Tobago in 2009, when it hosted the 5th Summit of the Americas. Continue reading Beyond Cuba: why Caribbean debt crisis could become American security crisis

Holness sworn in after JLP win narrow victory in Jamaica

Former prime minister Andrew Holness has narrowly returned to power after Thursday's vote in Jamaica. (Facebook)
Former prime minister Andrew Holness has narrowly returned to power after Thursday’s vote in Jamaica. (Facebook)

It’s not just European voters who are tired of austerity.jamaica

In Jamaica, after years of a budget-cutting IMF bailout program, the famously polarized electorate narrowly ousted the country’s first female prime minister, Portia Simpson-Miller, in office since early 2012, and her nominally center-left People’s National Party. Instead, on February 26, voters chose the nominally center-right Jamaica Labour Party, bringing Andrew Holness, who briefly served as prime minister from November 2011 to January 2012, back to power.

Holness was sworn in as prime minister last Thursday.

The JLP won just 50.13% of the vote to the PNP’s 49.66%, and they hold only a narrow lead in the Jamaican House of Representatives, winning  just 32 seats to the PNP’s 31 seats — a narrow result even by the standards of the razor-thin divide of Jamaican politics.

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Holness pledged on the campaign trail to devote more resources to boost jobs and health care, though it wasn’t incredibly clear how that would necessarily work in light of ongoing obligations to rein in government spending. Jamaica is one of many Caribbean countries facing a difficult debt burden, despite the fact that economic growth has slowed throughout this decade as recession-weary Americans and Europeans shunned the opportunity for tourism.

Continue reading Holness sworn in after JLP win narrow victory in Jamaica

If Grexit comes, Greece will have wasted five years in depression

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Photo credit to Orestis Panagiotou / EPA.

If you think the past nine days have been tense, just wait.Greece Flag Icon

For all the uncertainty and mistrust that have characterized Greek-EU relations since Greek prime minister Alexis Tsipras suddenly announced a snap referendum last Friday, the week ahead promises to reach ever dizzying heights of suspense after Greek voters delivered a strong endorsement to Tsipras by rejecting the terms of the most recent deal on offer from the Eurogroup — over 61% of the electorate voted no (or ‘oxi’). The result, whether Tsipras admits it or not, essentially begins the process by which Greece will eventually leave the eurozone.

There are no winners here.

Tsipras and the far-left SYRIZA (Συνασπισμός Ριζοσπαστικής Αριστεράς, the Coalition of the Radical Left) took power after January’s parliamentary elections on the mutually incompatible pledge of keeping Greece in the eurozone while demanding more lenient conditions from the country’s creditors. In so doing, Tspiras miscalculated European goodwill. It wasn’t unreasonable for Tsipras and finance minister Yanis Varoufakis to argue that Greece’s debt load is unsustainable. Moreover, even plenty of orthodox economists, including many at the International Monetary Fund, one of Greece’s creditors, admit that years of austerity have exacerbated economic conditions — GDP contraction of nearly 30% since 2008, a 26% unemployment rate and a nearly 50% youth unemployment rate. But the erratic and amateurish approach of the Greek government, capped by Tsipras’s 11th-hour decision to call the July 5th referendum, destroyed what little goodwill remained for his government.

There’s still time — even now — for Greece and the rest of Europe to reach a deal. But the complete lack of trust between Tsipras’s government and the entirety of the rest of the eurozone’s leadership makes it much less likely to happen. The complete breakdown in trust between Tsipras and even sympathetic European leaders must certainly rank among the most troubling casualties of the past nine days. Continue reading If Grexit comes, Greece will have wasted five years in depression

IMF report backs up Tsipras in Greek referendum

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Did the International Monetary Fund’s latest proposal just basically admit Greek prime minister Alexis Tsipras is right? Greece needs, under still-optimistic growth projections, at least € 50 billion through 2018 and debt restructuring. If Berlin admitted this even a week ago, we’d have avoided a lot of trauma. So while the Greek government is still amateur-hour, Tsipras, finance minister Yanis Varoufakis (picutred above with IMF managing director Christine Lagarde) and the rest are fundamentally correct — Greece can’t meet its debt burden.Greece Flag Icon

All of this should have been easily foreseeable five years ago. The answer is that this deal, like the eurozone’s creation in the 1990s, was more about politics than economics. I don’t know if that means ‘nai’ or ‘oxi’ or what ‘nai’ or ‘oxi’ generally even mean anymore.

Greek referendum — the right step at a dangerously wrong time

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For the past 48 hours, the rest of Europe and, indeed, the rest of the world have watched Greece come unhinged. Greece Flag Icon

In a speech shortly after midnight Friday night, prime minister Alexis Tspiras announced that instead of continuing negotiations between the Greek government and the Eurogroup of eurozone finance ministers, he would call off talks to hold a referendum next Sunday, July 5, thereby putting the question to the Greek people — will they accept the terms of the latest deal with Greece’s creditor institutions or will they reject it?

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RELATED: Seven lessons from the Greek election results
RELATEDMeet Greece’s new economic policymakers
RELATED: As Schäuble sneers, Greeks agree four-month debt deal
RELATED:  What are the chances of snap elections (again) in Greece?

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Never mind that the creditors’ offer could be moot by next Sunday.

Never mind that Greece faces, at best, a technical default on Tuesday.

Never mind that the referendum caught everyone else in Europe off guard, eliminating what little goodwill Greece had left.

Never mind that Greece’s constitution seems to forbid direct referenda on fiscal matters.

Never mind that it seems to be accelerating a financial crisis now mandating extraordinary measures in Athens.
Continue reading Greek referendum — the right step at a dangerously wrong time

What are the chances of snap elections (again) in Greece?

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It’s a sign that fiscal affairs in Greece are bad when the sensible Plan B to cover the Greek government’s looming shortfall involves loans from Moscow (despite protests to the contrary).Greece Flag Icon

Greek prime minister Alexis Tsipras has dismissed European sanctions against Russia, and he met Russian president Vladimir Putin in Moscow earlier this week, signaling to the European Union that Greece is keeping its options open if ongoing debt talks fail. Though Tsipras didn’t seek any financial assistance from Putin, he failed to convince Putin to lift a ban on Greek agricultural exports.

The even more outlandish Plan B involves demanding reparations from Germany for World War II damages, amounting to €278.7 billion. Perhaps not coincidentally, that’s just a little more than the €240 billion in financing that Greece has received in the last half-decade under two bailout programs from the European Commission, the European Central Bank and the International Monetary Fund.

Today, Greece’s government, not even three months old, will repay a €460 million portion of its debt to the International Monetary Fund. But that doesn’t mean that all is well in Athens, where last year’s green shoots of economic recovery are now obscured by the uncertainty of a leftist administration that’s engaged in brinksmanship over Greece’s financing and, ultimately, over the wider question of national fiscal sovereignty in today’s eurozone.

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RELATED: EU should give Tsipras a chance to govern

RELATED: What a Eurogroup-brokered deal with Greece might look like

RELATED: Seven lessons from the Greek election results

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 Why Tsipras can’t (and won’t) make a deal on Berlin’s terms

Without a deal, Tsipras will go down in history as the prime minister who led Greece out of the eurozone, willingly or not. Politically, however, Tspiras can’t agree to any deal that the Eurogroup seems to be offering. That’s increasingly a recipe for Tsipras to call fresh elections early this summer, but there’s no guarantee the results will solve the Greek-EU political quagmire.

Tsipras and his anti-austerity SYRIZA (the Coalition of the Radical Left — Συνασπισμός Ριζοσπαστικής Αριστεράς) were elected three months ago on a pledge to renegotiate the terms of Greece’s debt with its European lenders and end the harsh austerity measures that have exacerbated Greece’s contracting economy and growing unemployment. But the EU’s leaders, including Commission president Jean-Claude Juncker, German chancellor Angela Merkel and, presumably, ECB president Mario Draghi, no longer fear the ‘contagion’ effect of a Greek eurozone exit.  Continue reading What are the chances of snap elections (again) in Greece?

Greek parliament prepares for 3rd and final presidential vote

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In the second of three presidential votes, the Greek parliament failed to elect the government’s center-right choice for president, Stavros Dimas (pictured above), a former foreign minister and European Commission member, in voting on Tuesday.Greece Flag Icon

Though it was the second time that Greek prime minister Antonis Samaras, both failures were expected, given that Dimas needed 200 votes in the 300-member Hellenic Parliament (Βουλή των Ελλήνων) in order to win the presidency outright in either of the first two rounds. That threshold drops to just 180 votes in the third and final round that will take place next Monday, December 29. Samaras is waging an all-out campaign over the weekend to convince enough legislators to support Dimas and, by extension, his government.

Dimas won just 160 votes in the first round, but Samaras, who governs a coalition that includes his own center-right New Democracy (Νέα Δημοκρατία) and its traditional center-left rival, PASOK (Panhellenic Socialist Movement – Πανελλήνιο Σοσιαλιστικό Κίνημα), increased that total to 168 in the second vote after winning over a handful of independents.

If the Hellenic Parliament fails to elect a new president, Greece will hold snap elections next spring and New Democracy might lose, as polls currently suggest, to the hard-left SYRIZA (the Coalition of the Radical Left — Συνασπισμός Ριζοσπαστικής Αριστεράς). That could put Greece’s financial future in doubt as SYRIZA’s leader, Alexis Tsipras, pledges to reverse the austerity measures of the past six years and negotiate a bond haircut to lower the country’s debt burden, from the ‘troika’ of the European Commission, the European Central Bank and the International Monetary Fund that provided Greece two bailouts worth €110 billion and €130 billion, starting in June 2010. 

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RELATED: Markets shouldn’t be freaking out about Greek elections

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Samaras starts with the existing ND-PASOK governing coalition, which controls 155 votes, there’s a theoretical bank of 46 additional votes, including 24 independents, 12 legislators from  Panos Kammenos’s Independent Greeks (ANEL, Ανεξάρτητοι Έλληνες), an anti-austerity spinoff from New Democracy and 10 additional legislators from the Democratic Left (DIMAR, Δημοκρατική Αριστερά), a new social democratic party and SYRIZA spinoff that joined Samaras’s coalition between the June 2012 elections and June 2013 (when it eventually withdrew to the opposition in the face of further austerity measures). Though DIMAR leader Fotis Kouvelis has indicated he will support SYRIZA’s call for early elections and will support a SYRIZA-led government, not all of the party’s members agree. Negotiations with the Independent Greeks have been equally tenuous, and one of its members accused the government of attempting to bribe him in exchange for his support in the presidential vote.

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Snap elections would coincide with the end of Greece’s bailout program in February 2015. The the next Greek government already faces a €22 billion budget shortfall between 2015 and 2016. Among the solutions currently under discussion is a short-term credit line from the troika or the IMF, though the troika is already demanding additional wage cuts and other fiscal contraction as part of the deal. Another potential solution might be to extend the repayment period by 20 years, equivalent to writing off around €50 billion in debt. Continue reading Greek parliament prepares for 3rd and final presidential vote

Is Yatsenyuk’s resignation good or bad news for Poroshenko?

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Another week, another crisis in Ukraine.Ukraine Flag Icon

Just days after the downing of Malaysian Airlines flight MH17, Ukraine’s prime minister Arseniy Yatsenyuk offered to resign after two parties left the five-month ruling coalition that formed in the wake of Viktor Yanukovych’s flight from office back in February.

Those five months have witnessed an incredible amount of activity in Ukraine: Russia’s annexation of Crimea, the rise of Russian-backed rebels in eastern Ukraine, the May election of Petro Poroshenko as the country’s new president, and the crash of Flight MH17.

Those two parties, the right-wing nationalist All-Ukrainian Union “Svoboda” (Всеукраїнське об’єднання «Свобода») and the Ukrainian Democratic Alliance for Reform (UDAR, Український демократичний альянс за реформи) of newly elected Kiev mayor and former heavyweight boxing champion Vitaliy Klychko, ostensibly left the government over the onerous conditions that Yatsenyuk was trying to enact into law pursuant to the $17 billion loan package provided by the International Monetary Fund, which contemplates that Ukraine will bring its budgets closer into balance. It’s understandable that lawmakers aren’t keen to introduce austerity measures with an ongoing insurgency in eastern Ukraine and with the economy still in shambles — it could contract by as much as 6.5% this year, and the Ukrainian hryvnia has lost nearly 30% of its value so far in 2014.

But Svoboda and UDAR, which joined the pro-Western government alongside Yatsenyuk’s own  ‘All Ukrainian Union — Fatherland’ party (Batkivshchyna, Всеукраїнське об’єднання “Батьківщина), knew the strings attached to the IMF loan from the outset.

Why now?  Continue reading Is Yatsenyuk’s resignation good or bad news for Poroshenko?

Jamaican government targets legalizing ganja by September

jamaica ganja

It may seem natural that Jamaica should have relatively lax rules on marijuana use, given the association among the country, Rastafarians and smoking ganja.jamaica

Nevertheless, cannabis has been illegal on the island since 1913, when it was still a British colony, and under the Dangerous Drugs Act, possession, sale and cultivation of cannabis is illegal.

That may change soon, with the government of prime minister Portia Simpson-Miller preparing to loosen Jamaica’s drug laws.

Last week, the Jamaican government introduced a proposal that would, to a significant degree, decriminalize cannabis use on the island. Notably, the reforms would decriminalize possession of up to two ounces of cannabis (though users would still be subject to ticketing and a fine if caught) and use for all religious, medical and scientific purposes. Though just between 1% and 10% of Jamaica’s 2.9 million people are Rastafarians, they believe the use of ganja in religious ceremonies is sacred.

The Rastafari movement arose in the 1930s, and it worships the late emperor of Ethiopia, Haile Selassie, as a central sacred figure (before he became emperor, he was born Tafari Makonnen Woldemikael, hence the reference to Ras ‘prince’ Tafari). It was popularized in the late 20th century largely through the influence of reggae music, most particularly by Jamaican songwriter Bob Marley, an adherent of Rastafarianism.

Simpson-Miller’s center-left People’s National Party (PNP) controls a two-thirds majority (42 out of 63 seats) in the Jamaican House of Representatives, and a nearly two-thirds majority (13 of 20 seats) in the Jamaican Senate, so the proposals are very likely to be enacted as law in a vote that the government hopes will take place in September.

As in many Latin American countries, Jamaica has resisted liberalizing its drug laws out of fear of US retribution, including the withdrawal of aid and other support. A former Jamaican commission on ganja recommended decriminalization years ago, but no Jamaican government wanted to risk the wrath of the United States.

Today, however, two US states — Washington and Colorado — have decriminalized the personal use of marijuana after ballot initiatives in November 2012 and the US justice department under president Barack Obama and US attorney general Eric Holder are largely allowing, and even encouraging, the state-level experimentation.

Like many Caribbean countries since the 2008-09 financial crisis, Jamaica is suffering from lower tourist revenues and stagnant economic growth, as well as extremely high debt loads — in Jamaica’s case, public debt of nearly 140%. Jamaica also suffers fromextremely high crime level, with the sixth-highest homicide rate in the world, and the highest of any Caribbean island country, according to a new UN report.  Continue reading Jamaican government targets legalizing ganja by September

How Hungary’s Viktor Orbán got his groove back

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Despite a united opposition front, prime minister Viktor Orbán is headed to a crushing victory in Hungary’s April 6 parliamentary elections this weekend, consolidating his hold on power in the emerging central European country of 10 million.Hungary Flag Icon

Orbán’s victory looks so assured that it’s hard to believe anyone ever thought that his chances for 2014 reelection would be much tougher.

Only a year ago, Orbán appeared to have a much more troubled path to victory.

For example, an Ipsos poll from January 2013 shows that the three largest of the five parties that comprise the opposition, Osszefogas (‘Unity’), would win a combined 43% of the vote, compared to just 41% for Fidesz – Magyar Polgári Szövetség (Fidesz – Hungarian Civic Alliance). The largest opposition party, the Magyar Szocialista Párt (MSzP, Hungarian Socialist Party) won 32% of the vote.

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RELATED: Hungarian left unites, but will it be enough to stop Orbán?

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But the most recent March 31 Századvég poll gives Fidesz 51% of the vote, with just 25% for Unity. The far-right, anti-Semitic, ultra-nationalist Jobbik Magyarországért Mozgalom (Jobbik), which has surged over the past six months, would win 18%, and there’s a chance that it could actually win more seats on Sunday than the center-left Unity.

In early 2013, despite an uphill challenge under new election rules, designed to benefit Fidesz, the opposition had a strong case against Orbán, who has isolated Hungary from the rest of the European Union, increasingly chipped away at democratic checks and balances and the rule of law, and nearly torpedoed an already struggling economy with tax increases, further budget cuts, and a haphazard nationalization of Hungry’s private pension system.

What happened? Continue reading How Hungary’s Viktor Orbán got his groove back

Hernández takes office with agenda already largely in place

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What’s most unusual about today’s inauguration of Juan Orlando Hernández as the next president of Honduras is that so much of his agenda is already in place.honduras flag icon

Upon taking office today, Hernández (pictured above) will face daunting security, economic and political challenges.

But on at least a few matters, he’ll take office with key elements of his agenda already in place, thanks to the efforts of the outgoing administration of Porfirio Lobo Sosa and the wide majority of the Partido Nacional (PN, National Party) in the outgoing Congreso Nacional (National Congress).  Hernández served as president of the National Congress from 2010 to 2014.  The transition from Lobo Sosa to Hernández marks the first time since the return of democracy to Honduras in 1981 that the conservative National Party will hold two consecutive presidential terms (Honduran presidents are constitutionally ineligible to run for reelection).

Hernández takes office today, but he does so after enacting several key security and fiscal policies in the final months and weeks of the Lobo Sosa administration, including a new, less controversial national police chief, a new military police force, landmark fiscal reforms (including a wide tax increase) and a plan to privatize Honduras’s public electricity company.  Last weekend, the new National Congress was sworn in, which means that the National Party will control just 48 seats in the 128-member unicameral parliament, a sharp reduction from the 75-seat bloc that Hernández commanded during the Lobo Sosa era.

From ‘whatever it takes’ to ‘the party is over’

Even before the election campaign reached full swing, Hernández last September pushed through legislation authorizing the creation of a new policia militar (‘military police’) that will deploy in full force early this year, and he campaigned on a slogan to do ‘whatever it takes’ (¡voy hacer lo que tenga que hacer!) to make Honduras safe.  The controversial legislation creates an elite militarized unit loyal to Hernández that (hopefully) won’t be corrupted by organized crime and drug traffickers, which have already infiltrated much of the Honduran police and military. Critics worry that the new military police could trample human rights in a country barely three decades removed from death squads.  Many Hondurans fear the police more than drug traffickers and criminal gangs.

Late in December 2013, Lobo Sosa fired the head of Honduras’s national police, Juan Carlos Bonilla, known as ‘El Tigre.’  Bonilla had become a controversial figure, given alleged ties to the death squads of the 1980s.  Since becoming the head of Honduras’s national police force in August 2012, Bonilla became linked to a trend of humanitarian violations at the hands of the national police, including beatings, illegal detentions and other harassment of gay and lesbian Hondurans, journalists and leftists in political opposition to the current administration.  Bonilla also seemed either unwilling or unable to crack down on rampant corruption within his ranks.  Given that police salaries are a pittance, however, reforming the national police force could prove just as difficult in the Hernández era as well.

Bonilla’s removal represents one less headache for Hernández, who would have continued to face ongoing skepticism  from both within and outside Honduras over Bonilla’s leadership.  But there’s no sign that the future will be any less corrupt or any more respectful of human rights — and no clear sign that Bonilla’s successor, Ramón Sabillón, previously the commander of the national police’s special investigations division, will do any better.

Stabilizing Honduras will be Hernández’s top challenge in the next four years, and he’s staked his presidency on doubling down with a military solution rather than a strategy of community-based policing.  Though the United Nations The United Nations Office on Drugs and Crime recorded a rate of 91.6 per 100,000 in 2011, but the Violence Observatory at the National Autonomous University of Honduras estimated a rate of 85.5 in 2012 and just 80 per 100,000 in 2013.  While that’s a significant drop, it still means that Honduras has the world’s highest homicide rate.

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In his inaugural address today, Hernández declared that for criminals, se le terminó la fiesta (‘the party is over), and he wasted no time in announcing a massive military operation, Operácion Morazán, named after Honduras’s founding father.  To that end, Hernández indulged a demonstration at his inauguration earlier today of Los Tigres, one unit of Honduras’s increasingly militarized network of squads and paramilitary police forces (pictured above).

Rigoberto Chang Castillo, a top Hernández ally, has become Honduras’s new interior and population minister, and rising National Party star Reinaldo Sánchez will become the minister of the presidency.

Bilateral relations with the United States and drug policy

One of the most surprising aspects to Hernández’s inaugural address, however, was a stern admonishment of US drug policy.  Declaring a double standard, Hernández spoke out against the United States for its role in Honduras’s state, noting that North American demand for drugs has fueled so much violence throughout Latin America, and that while drugs are merely a ‘health’ issue for US consumers, it’s a matter of life and death for Honduras, which fights traffickers with limited resources — and the blood of its own people: Continue reading Hernández takes office with agenda already largely in place

Why Stanley Fischer is such an inspired choice as US Fed vice chair

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It’s really quite incredible that there’s been more ink spilled over the decision of the American Studies Association, a US-based academic group, to boycott Israel than the potential nomination of Stanley Fischer, the former governor of the Bank of Israel, to become the next vice chair of the US Federal Reserve.ISrel Flag IconUSflag

It’s somewhat ironic that at a time when many critics are attacking the ASA’s decision (is it morally right to boycott the exchange of ideas, academic debate and discussion?), Fischer’s transition from Israeli central banker to US central banker would be a spectacular opportunity — for Fischer, for the Fed, for Israel, for the United States and, if the initial reaction holds, world markets, too.  Reuters reported late last week that Fischer was offered the spot, though there’s not been an official announcement.

Janet Yellen, the current Fed vice chair, is US president Barack Obama’s nominee to chair the Fed after Ben Bernanke completes his second term on January 31, 2014, and she is expected to be confirmed as the new Fed chair by the US Senate in a vote later this week.

Fischer, as the number-two official at the Fed, would bring with him eight years of experience setting monetary policy for Israel and the rock-star status of one of the world’s most accomplished economists.  As a longtime professor at the Massachusetts Institute of Technology, he not only served as thesis supervisor to Bernanke, the current Fed chair, but also Mario Draghi, the chair of the European Central Bank.

As The Financial Times reported last week, Fischer has a ‘dream resumé’ for the position, topped off by an eight-year stint as Israel’s central bank governor that is universally acclaimed:

Some clues to how Mr Fischer thinks about monetary policy come from his tenure as governor of the Bank of Israel. He was one of the country’s most respected public figures; when he announced he would be stepping down earlier this year, one commentator said the country was losing its last ”responsible adult”.

His eight years as governor coincided with fast economic growth, low unemployment – currently 6 per cent – and low inflation. Israel survived the financial crisis in 2008-9 without seeing a single bank collapse.  Unlike his predecessor Jacob Frenkel, who had a tight focus on fighting inflation, Mr Fischer is credited with broadening the Bank of Israel’s remit to influence growth and employment. His decisions were marked by pragmatism: he slashed interest rates in the wake of the financial crisis, then abandoned economic dogma to try to hold down Israel’s currency, before raising rates as the economy recovered.

Fischer was so successful in stabilizing Israel’s economy that the Bank of Israel was already raising interest rates by September 2009 — if it hadn’t been for his age (he’s 70 today), he would have been a strong candidate to succeed Dominique Strauss-Kahn as managing director of the International Monetary Fund in 2011.

Born in what is today Zambia, Fischer spent his childhood there and in what is today Zimbabwe (and what was then the colonial apartheid state of southern Rhodesia).  Fischer first came to the United States in 1966 for his Ph.D in economics at MIT, and he remained there as a professor through 1988, when he took a position as the World Bank’s chief economist for two years.  From 1994 to 2001, he served as the first deputy managing director of the IMF during the Asian currency crisis of the late 1990s and other financial crises from Mexico to Argentina to Russia.  After a brief stint in the private sector with Citigroup, he was appointed governor of the Bank of Israel in 2005 by then-prime minister Ariel Sharon — and recommended by the finance minister at the time, Benjamin Netanyahu.  He holds dual Israeli and US citizenship, and he would have been as credible a candidate to lead the Fed as either Yellen or former treasury secretary Lawrence Summers.

As Dylan Matthews wrote earlier this year for The Washington Post, Netanyahu and Sharon took a big chance on Fischer, who wasn’t an Israeli citizen at the time of his nomination:

No matter — Fischer’s results were more than enough to assuage any doubts. No Western country weathered the 2008-09 financial crisis better. For only one quarter — the second of 2009 — did the Israeli economy shrink, by a puny annual rate of 0.2 percent. That same period, the U.S. economy shrank by an annual rate of 4.6 percent. Many countries, including Britain and Germany, fared even worse.

So what would his appointment mean for the Fed?  Continue reading Why Stanley Fischer is such an inspired choice as US Fed vice chair

Hernández edges toward Honduras presidency with no mandate, no majority and no money

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I write today at Americas Quarterly that even as Juan Orlando Hernández closes in on the Honduran presidency, he’ll do so with nearly historic obstacles to governing Honduras — in short, he’ll take over the leadership of his countryhonduras flag icon with no mandate, no majority and no money:

In light of Honduras’s single-round, first-past-the-post electoral system, [leftist party] LIBRE’s advent made it a near-certainty that the next president would win with less than an absolute majority. If Hernández wins with just 34 percent of the vote, it will mean that nearly two-thirds of Honduran voters rejected his approach.  Both [opponent Xiomara] Castro de Zelaya and fourth-place candidate Salvador Nasralla (who’s polling a higher-than-expected 15.64 percent)—a populist sports broadcaster who started a rival right-wing “Anti-Corruption Party”—have already alleged fraud.  It’s too soon to know if those accusations have any substance, but there’s certainly enough doubt—not least of all due to the National Party’s disputed 2012 primary elections—to take them seriously.

But even if it turns out that Honduras’s election was “free” in a technical sense, there’s wider doubt that it was a truly fair election.  LIBRE candidates, along with journalists and various other activists, have been killed, attacked and harassed with alarming frequency since the 2009 coup.  On Saturday night, two LIBRE leaders were assassinated near Tegucigalpa, Honduras’ capital. They weren’t the first LIBRE activists to be killed in Honduras and they won’t be the last—with little apparent ability to combat the world’s highest homicide rate, the Honduran state is unable to investigate murderers who can kill with impunity.

I argue further that it will also be difficult for Hernández to form (or buy) an alliance if, as expected, a four-way parliamentary election leads to the result that no party wins an absolute majority in the Congreso Nacional (National Congress):

LIBRE is certain to oppose Hernández at every step, especially if Castro de Zelaya digs in with her refusal to concede the election and especially if she has good reason for protest. Even without Castro de Zelaya, the new party seems to have sparked a genuine political realignment that isn’t likely to disappear with one election or the political stardom of the Zelayas.

With a disappointing third-place finish, the Partido Liberal (PL, Liberal Party) is likely to want to win back many of the supporters that left it to support the Zelayas and LIBRE.  There’s a strong argument that the last thing that the Liberals will want to do is join forces with Hernández at a time when their party’s raison d’être is under siege — instead, the Liberals would be smart to draw contrasts with Hernández.

Notably, Hernández pushed through the centerpiece of his campaign, a controversial military police force, in August, when his conservative Partido Nacional (National Party) held 71 of the Congress’s 128 seats.  Even if the National Party somehow wins an unlikely majority when the results of Sunday’s parliamentary vote are known, Hernández certainly won’t have 71 seats — it’s more likely that he’ll have a caucus in the 50s.  That comes at a time when it’s almost certain he’ll seek a loan from the International Monetary Fund, with terms that will impose spending limits on Hernández’s administration:

Honduras’ precarious finances will also clip Hernández’ wings. With a nearly 4 percent budget deficit in 2012 and a public debt of 35 percent of GDP, Honduras can barely pay its public employees.  Financial strains have also limited the ability of both the national and municipal governments to pay police and military officials enough to discourage collusion with drug traffickers.  Financing a new military police force, too, means less money for reducing poverty and unemployment, building roads and hospitals, and crafting economic policy to reduce income inequality in Honduras.

 

An interview with Rasel Tomé, LIBRE party founder and congressional candidate

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TEGUCIGALPA — Rasel Tomé, a tall attorney with striking blue eyes, slick jet black hair and a mustache to match, and dressed in a pastel guayabera shirt, looks every part the leftist Latin American revolutionary that you might have thought belonged to a radical generation from half a century ago.honduras flag icon

Tomé, whose roots are in Olanchito on Honduras’s north coast and whose family worked in the ubiquitous banana companies that dominated the Honduran economy and captured its government for much of the early and mid-20th century, was a legal adviser to former president Manuel ‘Mel’ Zelaya, who was ousted by the military from the Honduran presidency in June 2009.  Ostensibly due to his push to amend the Honduran constitution to allow for presidential reelection, Zelaya spent much of his presidency edging further to the left, away from the United States and toward Venezuela and its ‘Bolivarian’ socialist allies within Latin America.

But Zelaya is back.  His wife, Xiomara Castro de Zelaya, is one of two frontrunners in this weekend’s general election, and she represents one side of a choice so polarizing that both sides speak about the take-no-prisoners campaign as if it’s a civil war.  Even if it’s a cold civil war, there’s no doubt that the 2009 coup still dominates the political debate here.

‘In Honduras, there’s a debate of two thoughts,’ said Tomé, a congressional candidate running on the Castro de Zelaya ticket, comparing the election to the choice that Abraham Lincoln faced during the US civil war. ‘The ones that believe that this model of inequity and inequality should keep going, with the privileges to the elites, holding onto the constitution that was created in 1981 and that has been violated and destroyed by the coup d’état.  And there are the ones that consider that to move society forward, we need a new social pact… we can abide by it generation by generation into the future, that it will be the starting point for our country.’

Tomé helped found the Movimeinto Resistencia Progresista (Progressive Resistance Movement) that opposed the 2009 coup, one of five popular movements that joined forces to form the Partido Libertad y Refundación (Party of Liberty and Refoundation) two years ago — popularly known as LIBRE, an acronym that plays on the Spanish word for ‘free.’  LIBRE, in many ways, is the first truly leftist party in Honduran political history with a chance of winning power in Honduras, and its candidate is Zelaya’s wife, Xiomara Castro de Zelaya.

Throughout much of the 20th century, including after the return of regular elections in 1981, Honduran politics has been mostly a contest between two competing elites — those in the conservative Partido Nacional (National Party) and those in the more centrist Partido Liberal (Liberal Party).  Manuel Zelaya, a wealthy rancher from eastern Honduras, was himself part of the Liberal Party elite when he was elected president in 2005.

Though I met several LIBRE activists over the course of a week in Tegucigalpa, none were quite as compelling as Tomé — in a country where politics has often been a cynical game of spoils between competing sets of elites (including, by the way, the Zelayas, whose family members are rumored to have profited handsomely by Zelaya’s first term in office), many Hondurans see both the Zelayas and their chief opponent, Juan Orlando Hernández, the candidate of the governing Partido Nacional (PN, National Party) as two sides of the same ineffective coin — and they have little hope for the other main candidate in the race, Mauricio Villeda of the Partido Liberal (PL, Liberal Party).  Tomé admitted as much.

‘Villeda is the son of an ex-president,’ Tomé said.  ‘[Outgoing president Porfirio] Lobo Sosa’s father was a congressman many times over.  Juan Orlando, his father was the governor of a sector of the country. Manuel Zelaya has been in the political running for the last 30 years.  So people who have a panoramic view see them as people who belong to the same category.’

Tomé added, however, that the Zelayas have now put themselves in the service of the people as a vector for change.

It was an impressively honest answer, but it also highlights the tension between the Zelayas and the activists who could power Xiomara into  the Honduran presidency on Sunday.  If she succeeds, she’ll have a dozen interest groups with high hopes of social and economic transformation, all of whom will want her to push for more change than any one president could possibly deliver at a time of joint security and economic crises — especially with the possibility that no party will win an absolute majority in the unicameral Congreso Nacional (National Congress).

When I met Tomé two weeks ago, he showed up with another associate, and they unfurled their campaign banner.

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Tomé held forth for nearly an hour on over a dozen issues relating to the Honduran campaign — in contrast to the controlled and stilted interviews that LIBRE’s presidential candidate has given to the media (often alongside her husband, which has done nothing to dispel notions that her candidacy represents a second term for Mel Zelaya), Tomé has a compelling style that makes you wonder if he might not be LIBRE’s presidential candidate in four years’ time.

Tomé spoke earnestly on several topics — economic opportunity, the role of the military, LIBRE’s position in favor of community-based policing, the Central America Free Trade Agreement, and US-Honduran relations.  When I spoke to Tomé on November 6, it was the morning after Bill de Blasio overwhelming won the New York City mayoral election, running on a platform that emphasized reversing income inequality perhaps more than any US politician in recent history.  Though inequality is a global trend, you might say Honduras is in the vanguard of that trend.  As of 2009, the World Bank recorded a Gini coefficient of 57 in Honduras, the highest in Latin America and one of the highest in the world, outpacing Brazil (55), one the poster child for income inequality, Mexico (47) and the United States (45, as of 2007).  That’s staggering for Honduras, where people once joked the country was so poor it didn’t even have a proper oligarchy.  Continue reading An interview with Rasel Tomé, LIBRE party founder and congressional candidate