Bolivia: President Evo Morales Nationalises Airports
By Sabrina Hummel | The Argentina Independent | February 18, 2013
Earlier today, Bolivian president Evo Morales announced plans to nationalise the country’s three largest airports. The airport operator Bolivian Airports Service Company (SABSA), a subsidiary of the Spanish firm Abertis y Aena, is accused of not carrying out agreed investments towards updating its facilities.
The decision to nationalise SABSA was taken after executives refused to increase their initial investment of US$36m, required to maintain and develop the country’s principal airports. The military is set to take control of airport terminals in El Alto (La Paz), Viru-Viru (Santa Cruz), and Wilsterman (Cochabamba). In Bolivia, it is common practice for troops to be dispatched to recently nationalised companies.
SABSA is the third Spanish company to be nationalised in less than a year in what began with the expropriation of Red Eléctrica in May 2012, followed by two electricity distribution companies owned by Spanish utility Iberdrola in December of the same year.
The nationalisation of SABSA reflects attempts by the Bolivian government to reclaim control of the country’s strategic resources, including natural gas, minerals, and public services. It is a move which aims to promote and indeed facilitate state-led development of the country without direct foreign interference. Morales issued the statement from the main city of Cochabamba, accompanied by vice-president Álvaro García Linera and the minister for public works, Vladimir Sánchez.
Reporting Ahead of Ecuadorean Elections Fits a Familiar Narrative
By Dan Beeton | CEPR Americas Blog | February 17, 2013
International media reporting ahead of Ecuador’s elections today has sounded familiar themes, understating the achievements of the Rafael Correa government and attributing Ecuador’s recent economic and social progress to “luck” or happenstance, and high oil prices. Correa is depicted as an enemy of press freedom, despite the fact that Ecuadorean media is uncensored and the majority of it opposes the government; and despite his granting of political asylum to Julian Assange. He is also depicted as a member of Latin America’s “bad left” who has ambitions of regional leadership should “bad left” leader Hugo Chávez succumb to illness or otherwise be unable to continue in office.
A common theme in press accounts is that the Correa administration’s social programs are “funded by the country’s oil proceeds.” While some reporting has gone deeper and noted that “Correa has taken on big business and media groups, imposing new contracts on oil companies and renegotiating the country’s debt while touting his poverty reduction efforts,” others have not. “High prices for oil exports resulted in higher revenues which the government invested in social programs and public infrastructure,” the Christian Science Monitor reported in a Friday article. The New York Times’ William Neuman presented a contradictory picture of the economic importance of Ecuador’s petroleum sector, writing that “Ecuador is the smallest oil producer in the Organization of the Petroleum Exporting Countries, yet oil sales account for about half of the country’s income from exports and about a third of all tax revenues, according to the United States Energy Information Administration,” just before stating in the next paragraph that “Mr. Correa has taken advantage of high oil prices to put money into social programs, earning him immense popularity, especially among the country’s poor.”
Petroleum exports have been important to Ecuador’s economy for a long time; this did not suddenly come about with Correa. While Correa was favored by high oil prices during most of his six years in office, the collapse of oil prices in 2008 was a major blow to the economy. Also, an important change during Correa’s first term has been the Ecuadorean government’s relationship with foreign oil companies. Correa notably has driven a much harder bargain than his predecessors, “imposing a windfall profits tax for concessions made to companies for the exploitation of domestic natural resources” that “raised over $500 million for the government in 2010,” as our latest paper notes. A raft of financial and regulatory reforms have also put a considerable amount of revenue in the government’s coffers, contributing to the increase from 27 percent of GDP in 2006 to more than 40 percent in 2012. Stimulus spending – 5 percent of GDP in 2009 – boosted the economy and allowed Ecuador to get through the global recession with minimal damage, losing only about 1.3 percent of GDP during three quarters of recession, despite being one of the hardest hit countries in the hemisphere by external shocks. Non-petroleum sectors such as construction, commerce and services have also been important drivers of growth in recent years, including in 2011, when Ecuador had some of the highest real GDP growth in the region at 7.8 percent, second only to Argentina in South America.
As we have pointed out, this additional revenue has in turn allowed the Correa government to ramp up social spending in ways that are significantly improving Ecuadoreans’ living standards. While much news coverage has reported that state spending has boosted Correa’s popularity and may explain his huge lead (some 20 – 50 percentage points, according to polls) over his opponents coming into the election, some reporting has characterized this – as with last year’s election coverage of Venezuela’s state spending– as a form of vote-buying. “Public policies and subsidies are needed to temporarily keep certain sectors content,” the Christian Science Monitor quotes an analyst as saying. “[T]hey also give him votes.” The Associated Press described this as state “largesse,” a term that Merriam-Webster’s dictionary defines as “liberal giving (as of money) to or as if to an inferior; also: something so given.” The media seems at times to forget that the purpose of economic development is to raise peoples’ living standards.
The New York Times presented Ecuador’s recent economic progress by using a passive voice: “[Correa] has governed during a period of relative prosperity,” which not only understates the impact of the Correa administration’s policies but also the challenges presented over the past several years – most notably the global recession, which collapsed not only oil prices but remittances, on which Ecuador was also heavily dependent.
Some reporting has understated some of the ways in which the government’s policies have impacted Ecuadoreans’ lives. For example, the Associated Press reported that “The bulk of [Correa’s] backers are poor and lower-middle class Ecuadoreans who in 2010 represented 37 and 40 percent, respectively, of the country’s population according to the World Bank.” Bloomberg’s Nathan Gill, meanwhile, wrote:
As the head of a nation where about one in three of its 15.4 million citizens live in poverty, Correa defaulted on $3.2 billion of bonds in 2008 and pushed through laws nationalizing the country’s oil reserves during his first two terms in office. While the moves provided short-term gains, the 49-year-old Correa, an ally of Venezuela’s Hugo Chavez, is now paying the cost with stagnant crude output and declines in private investment needed to boost slumping growth.
In fact, as we noted in our new paper, “The national poverty rate fell to 27.3 percent as of December 2012, 27 percent below its level in 2006,” (before Correa came to office). (The New York Times’ Neuman noted this accomplishment: “In a country of 14.6 million people, about 28 percent lived in poverty in 2011, down from 37 percent in 2006, the year before Mr. Correa took office, according to World Bank data.”)
Nor are Ecuador’s recent gains “short term,” as Gill described them. The data shows sustained progress on reducing unemployment and poverty, for example.
Other common themes include that Correa has clamped down on freedom of press. Such statements are often ironically followed by mention of Correa’s granting of political asylum to Wikileaks founder Julian Assange, such as in the Christian Science Monitor sub-header “President Correa has been criticized internationally for limiting press freedoms and granting Julian Assange asylum in Ecuador’s London embassy.” Readers of AFP might be led to believe Assange was granted asylum in order to “irritat[e] the United States …after the anti-privacy group released tens of thousands of secret US military and diplomatic reports.”
Press coverage has emphasized that Correa is “an ally of Venezuela’s Hugo Chavez,” rather than a friend or “ally” of Brazilian President Dilma Rousseff, for example. This meme positions Correa as “part of a group of leftist presidents in the region that include Mr. Chávez in Venezuela and Evo Morales in Bolivia,” also known as the “bad left” in Washington policy circles and among media commentators. (Brazil has always been considered part of the “good left,” despite the Brazilian government’s longstanding support for Chávez, Morales and other “bad left” leaders and opposition to various U.S. government projects and policies.)
Another theme has been whether Correa seeks to be – or has the potential to be – a “successor” to the “ailing” Hugo Chávez in a “regional leadership role.” The New York Times’ Neuman wrote on Friday that “[A new four-year term] may also give Mr. Correa a chance to raise his international profile. With the ailing president of Venezuela, Hugo Chávez, sidelined by cancer, Mr. Correa is arguably the most vocal leftist leader in the region.” No evidence for Correa’s supposed regional leadership ambitions is presented, other than that “He made international headlines last year when he defied Britain by granting asylum to Julian Assange, the founder of WikiLeaks.”
Related article
- Ecuador’s Correa breezes to 2nd re-election (businessweek.com)
Correa wins re-election by a landslide
MercoPress | February 18, 2013
President Rafael Correa swept to a re-election victory on Sunday promising to strengthen state control over Ecuador’s economy and continue using booming oil revenues to build roads, hospitals and schools in rural areas and shanty towns.
Correa won 58% of the votes compared with 24% for runner-up Guillermo Lasso, according to preliminary results released by the electoral authority based on almost 40% of the votes counted. Correa was so confident of his victory that he appeared on state TV less than an hour after polls closed.
“Nobody can stop this revolution,” a jubilant Correa told supporters from the balcony of the Carondelet presidential palace, after claiming victory. He added “we are making history; we are building our own homeland which is Ecuador and the great homeland which is Latin America.“
The populist US-trained economist took power in 2007 and has won strong support among the majority of the population of the country which is poor.
Correa, 49, may now be in line to become Latin America’s main anti-American voice and de facto leader of the ALBA bloc of populist governments as Venezuelan President Hugo Chavez has been silenced during his battle with cancer. Correa said he dedicated his victory to Chavez.
The principal challenge in Correa’s new four-year term will be wooing investors needed to boost stagnant oil production and spur the mining industry. A 3.2 billion dollars debt default in 2008 and aggressive oil contract negotiations scared many off.
Critics view Correa as an authoritarian leader who has curbed media freedom and appointed aides to top posts in the judiciary.
But the fractured opposition failed to make a consolidated challenge. It fielded seven candidates, making it easy for Correa, and he is now on track for a decade in office.
That is rare stability in a country where three presidents were pushed from office by coups or street protests in the decade before Correa took power in 2007. He is already the longest-serving president in Ecuador since the return to democracy in the 1970s following a military dictatorship.
Correa’s success has hinged in part on high oil prices that allowed for liberal state spending, including boosting cash handouts to 2 million people, and spurred solid economic growth.
He has promised to diversify the economy away from its dependence on oil, in part by bringing in new investment for the mining sector. Despite promising reserves of gold and copper, mining operations have barely gotten off the ground.
In a news conference on Sunday after polls closed, Correa played down the need for more foreign investment. He insisted the ultimate goal was to ensure economic growth rather than ”mortgaging“ the country to bring in cash from abroad.
”We welcome foreign investment, and we’re already getting plenty of it,“ Correa said. ”Ecuador is one of the most successful economies in Latin America.”
Ecuadorans also chose a new Congress on Sunday.
The ruling Alianza Pais party was expected to win a majority in the legislature, which would let Correa push ahead with controversial reforms, including a media law and changes to mining legislation, without having to negotiate with rivals.
The results of the vote for Congress are not expected to be known for several days.