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Led by resource-rich Brazil, the region is forecast to enjoy 4.1% growth next year, far outpacing the U.S.

By Chris KraulLos Angeles Times

From appliance stores in Brazil to auto assembly lines in Mexico, signs are evident that Latin America has seen the worst of the global economic crisis and is poised for solid expansion.

The region is expected to post economic growth of 4.1% next year, according to a forecast released Thursday by the United Nations’ Economic Commission for Latin America and the Caribbean. That’s a stronger rebound than previously anticipated.

Emerging powerhouse Brazil is expected to lead the way with projected gross domestic product growth of 5.5% in 2010. It should be helped by strengthening foreign demand for its oil, soybeans and other commodities, as well as increased spending by an emerging consumer class that’s helping to keep Brazilian factories humming.

“The most encouraging signs are a recuperation of manufacturing and in foreign trade over the last two quarters,” said Alicia Barcena, the U.N. commission’s executive secretary. “Brazil began to show progress six months ago.”

The agency, which is based in Santiago, Chile, also expects strong growth of 5% from Peru and Uruguay next year. The economies of Bolivia, Chile and Panama are projected to expand 4.5% in 2010.

Even Mexico, whose deeply troubled economy could contract as much as 6.7% this year, will probably outpace the U.S. in 2010. The U.N. commission expects the Mexican GDP to expand 3.5% next year. The U.S. economy is projected to grow at just a 2% rate, according to a recent UCLA forecast.

Hit hard by the global banking crisis and a drop in global demand for commodities earlier this decade, Latin America’s total output of goods and services is expected to shrink 1.8% this year, the commission said.

But the region should recuperate faster this time compared with past global crises, Barcena said. She credited swift government intervention throughout the region to keep credit flowing and to boost public spending.

Those policies included reducing interest rates, increasing lending by state-owned banks, expanding public expenditures and implementing a broad array of social programs, such as consumer subsidies and support for low-income households.

Still, next year’s expansion won’t be enough to fully address social challenges and keep pace with population growth. That would require 5% annual growth, which the region nearly averaged (4.7%) during its boom years from 2003 to 2007, Barcena said. Unemployment in the region will remain a trouble spot, topping 8% this year.

The rosy growth projection for Brazil is just the latest in a string of positive news for the South American giant in recent months. In October, Rio de Janiero was selected to host the 2016 Olympics, while billions of barrels of new oil reserves have been discovered off the nation’s coast.

Meanwhile, Mexico has been slammed by the downturn in the United States, the biggest customer for its manufactured goods. The drop in U.S. auto sales has hit Mexico particularly hard because it is a major producer of vehicles sold in U.S. showrooms.

Slumping remittances have hurt as well. Through October, Mexican laborers working outside the country, mostly in the U.S., sent home $18.1 billion to their families in Mexico, 16% less than in the same period in 2008.

Other remittance-dependent economies, including Honduras, Guatemala, Nicaragua and El Salvador, are forecast to lag behind the region with anemic growth of 2% or less next year, the United Nations commission said.

The report highlighted some unusual winners.

Bolivia had the best-performing economy this year, growing a projected 3.5%. Barcena cited rising prices for minerals, including silver in the San Cristobal mine.

She also credited the government of President Evo Morales for being “very careful with its public finances” and investing wisely in social and fiscal stimulus programs, including monthly welfare checks to its poorest families, which in turn has boosted consumption.

Barcena said Latin America still faced challenges and could be hurt from the fallout from developing crises in countries such as the United Arab Emirates and Greece.

“We see things as improving, but there could be stagnancy as well if the world recovery isn’t as dynamic as we’d like,” Barcena said.

Kraul is a special correspondent.

By Fiona Harvey, Ed Crooks and Andrew Ward in Copenhagen
The Financial Times

The United Nations climate change summit in Copenhagen ended in apparent disarray last night with some world leaders hailing a “meaningful agreement”, while others said no deal had been struck.

The US, China, Brazil, India and South Africa claimed, after a four-hour meeting, to have secured a partial pact. But their optimism was quickly undermined by a string of more pessimistic assessments.

Barack Obama, US president, acknowledged that the deal was “not sufficient to combat the threat of climate change but [was] an important first step” on cutting greenhouse gases.

“We have made a meaningful and unprecedented breakthrough. For the first time in history, all of the major economies have come together to take action [on global warming],” he said after a meeting with Wen Jiabao, the Chinese premier, Manmohan Singh, India’s prime minister, Luiz Inácio Lula da Silva of Brazil and Jacob Zuma, South African president.

No senior UN officials were available to comment on Mr Obama’s announcement.

Mr Obama said further talks were needed to secure a formal treaty to replace the 1997 Kyoto accord. “What we have achieved in Copenhagen will not be the end but the beginning of a new era of international action,” he said. “This is going to be hard.”

The agreement contained a commitment to try to hold global warming to no more than 2°C, a level scientists have suggested is probably the limit of safety, beyond which climate change could become catastrophic and irreversible.

Rich countries have also included commitments to cut their emissions and developing countries to curb the growth of theirs. There were also promises to transfer money from rich to poor countries, to help them tackle climate change.

But there was confusion as some countries appeared to be less optimistic than Mr Obama. While he was leaving for the airport, European officials were denying a deal. “If there had been a deal, the prime minister [of Sweden] and the president [of the Commission] would have been here. They still have not formalised the deal,” said Roberta Alenius, spokeswoman for the EU presidency.

Some poorer countries made clear support was far from unanimous. Lumumba Di-Aping, Sudanese head of the G77 group of developing countries, said the US-backed plan represented the “lowest level of ambition” and would be devastating for the world’s poor. “This is an idea not a deal,” he said.

His remarks raised doubts over whether a deal brokered by a small group of big industrialised and emerging economies would win the support needed to turn it into a binding treaty.

One key sticking point was China’s refusal to allow monitoring of its emissions. But in a last-minute compromise, Beijing and Washington agreed to a process of “international consultation and analysis”.

Brazilian representatives said negotiators would continue their work into next year in the hope of having a legally binding document that can be signed by the end of 2010.

RIO DE JANEIRO (Reuters) – Brazil’s president will propose a truth commission this month to investigate torture during the country’s 1964-85 military dictatorship.

The move by President Luiz Inacio Lula da Silva could mark a rare step by Brazil towards tackling the thorny question of dictatorship-era abuses.

Unlike neighbouring countries such as Argentina and Chile, Brazil has never tried anyone for the murder and widespread torture of dissidents during its dictatorship, which pushed an amnesty law through a weak Congress in 1979.

The human rights minister, Paulo Vannuchi, said in an interview over the weekend that Lula will sign a decree next week to create the truth commission, which must be approved by Congress. A spokesperson for the minister confirmed those details to Reuters on Monday.

Brazil would be unable to tackle its modern-day human rights problems, which include widespread abuses by police, without addressing past abuses, Vannuchi said in the interview with the UOL Noticias Internet news site.

“We believe there is a relationship between torture today and the impunity of all the torture that went before, including during the dictatorship,” he said.

The truth commission proposal would be released next Monday, he said.

Brazil’s Supreme Court is now considering a case that argues that torture is not covered by the amnesty law.

The popular Lula, who by law may not run for a third term next year, has emphasized forgiveness over prosecution. Former union leader Lula and several members of his Cabinet were arrested and tortured during the dictatorship.

A justice ministry commission toured Brazil this year, asking victims and their families for forgiveness and awarding many financial compensation.

But some members of Lula’s government have pushed for trials against former military officers. Brazil’s still-influential military strongly opposes further torture investigations or revising the amnesty law.

Jose Miguel Vivanco, the Americas director for U.S.-based Human Rights Watch, said a truth commission was a welcome step but it remained to be seen what kind of process it would begin. A commission aimed at reconciliation rather than justice could be a means to prematurely draw a line under the past without accountability, he said.

“In general, truth commissions are very much welcome as long as they are understood as the beginning of a process that no one really controls,” he said.

(Editing by Doina Chiacu and Cynthia Osterman)

ASUNCION, Paraguay (AP) — It’s been nearly five months since the presidents of Brazil and Paraguay agreed on a breakthrough deal to triple Paraguay’s income from the world’s second-largest hydroelectric dam, but the money won’t be flowing anytime soon.

The treaty would increase Paraguay’s income from energy generated by the Itaipu dam on the shared Parana River to $360 million, money that Paraguay’s President Fernando Lugo wants to spend on agrarian reform to benefit 300,000 landless peasant families.

It also calls for Brazil to invest in high-capacity power lines across Paraguay, creating an energy grid that could help one of South America’s poorest countries reshape its agricultural economy.

The treaty, signed by Lugo and Luiz Inacio Lula Da Silva on July 25, was quickly approved by Paraguay’s congress, but lawmakers in Brazil have yet to move the plan out of the first of four committees due to consider it — partly because what Brazil mostly gets from the deal is good relations with its poorer neighbor.

”It is controversial. It’s not a simple matter, because it carries more benefits for Paraguay than Brazil,” Brazilian Rep. Severiano Alves, a member of the lower house’s foreign relations committee, told The Associated Press.

He said both houses of Congress would probably vote on it in the first half of 2010.

Carlos Mateo Balmelli, Itaipu’s Paraguayan director, has lobbied for the agreement, but Alves says Brazil should not be pressured.

”They didn’t pay anything to build the dam — they just provided territory and water from the river. Brazil was the one that assumed the cost of financing Itaipu,” Alves said.

Itaipu’s 20 huge turbines generate electricity divided equally between the neighbors, but Paraguay’s much smaller population and economy consumes the energy of only one turbine. The current treaty forces Paraguay to sell its excess capacity to Brazil until 2023, without the possibility of selling the energy elsewhere, at far less than market prices.

The new treaty would increase Paraguay’s income from $5.10 to $15.30 per megawatt/hour for excess power sold to Brazil. Lugo said the proposal has already succeeded in overcoming Paraguay’s

isolation, a legacy of Alfredo Stroessners 1954-1989 dictatorship.

The existing treaty was signed in 1973, before the dam was built. Both countries took on loans to build it — debt that now totals $17 billion. But Paraguay doesn’t recognize $8 billion of it because it considers the debt to be illegally obtained by corrupt officials of the former government.

——

Associated Press Writer Marco Sibaja in Brasilia, Brazil contribued to this story.

By SAM ROBERTS – The New York Times

Published: December 15, 2009
India will become the world’s most populous country in 2025, surpassing China, where the population will peak one year later because of declining fertility, according to United States Census Bureau projections released Tuesday.

The bureau suggests that the projected peak in China, 1.4 billion people, will be lower than previously estimated and that it will occur sooner. With the fertility rate declining to fewer than 1.6 births per woman in this decade from 2.2 in 1990, China’s overall population growth rate has slowed to 0.5 percent annually.

In contrast, India’s 1.4 percent growth rate is being driven by a fertility rate of 2.7 births per woman.

The bureau’s International Data Base projects that China’s labor force will peak at 831 million — 24 million more workers than today — in 2016. That is because the number of newcomers to the labor force in their early 20s is expected to start declining in 2011 after reaching 124 million.

In India, the number of new entrants to the labor force is expected to reach 116 million in 2024 before decreasing.

China and India alone account for 37 percent of the world’s population of about 6.8 billion. Every minute, the bureau’s estimates, 250 people are born worldwide and 107 die, for an increase of more than 75 million annually.

By the time the 21st century is a quarter over, the bureau estimates, the population of the United States will be more than 350 million. The United States fertility rate, about 2.1 births per woman, is higher than in most developed countries, in part as a result of higher birthrates among immigrants.

After China and India, the most populous countries are, in order, the United States, Indonesia, Brazil, Pakistan, Bangladesh, Nigeria, Russia and Japan.

The worldwide population estimates include more than 11 million people over the age of 90 and more than 326,000 centenarians.

More boys are being born than girls, but women begin to outnumber men among people in their late 40s.

Rio and Brazil stand to benefit even more from holding the 2016 Olympics than China and Beijing did in 2008, experts say.

CHRONICLE SPECIAL
Knowledge@Wharton

For Brazil, winning the opportunity in late September to host the 2016 Summer Olympics in Rio de Janeiro probably represents many of the same things that the 2008 games did for China: a chance for the world to see that it is now an influential, modern country and a way to showcase — domestically and internationally — its remarkable economic growth. But do cities benefit as much from hosting the games as local residents and businesses alike are led to believe? Is the return on investment high enough to warrant the months, if not years, of preparation? And what lessons, if any, can Beijing offer Rio and other future Olympic hosts?

There are no easy answers. One year after Beijing was host to sports stars from around the world, some analysts question whether China’s capital city and all the stakeholders involved benefitted greatly from the games. Yet the feel-good factors are hard to ignore. For one thing, the Olympics seem to have been useful for China from a marketing perspective, in terms of rallying people within the country and raising global awareness about “Brand China.” Simon Anholt, a government-reputation adviser who produces the 50-country Anholt-GfK Roper Nation Brands Index, a global public opinion poll on country reputations, says early results from his latest research suggests that after several years of decline, China’s index ranking has begun to improve following its Olympics experience.

GOOD TIMING

Observers also note that the timing of the 2008 event augured well for the organizers, saying the combination of public and private spending for the games may have acted as an early stimulus program before the global economic downturn began making a deeper impact later that year. “The global financial crisis overshadowed the Olympics, but from a Chinese perspective, the crisis was an external threat and the nationalistic orgy of the Olympics gave [Chinese] leadership an extra boost in fending it off,” says Edith Terry, managing director of Cotton Tree Productions, a Hong Kong-based consultancy for East Asian business and public affairs.

The government also used the games as a catalyst to clean up many environmentally unfriendly industries all over the country and to increase spending on public infrastructure, including transportation. “The Chinese government very cannily used the Olympics as a way to push environmental change in China,” says Shaun Rein, managing director of the China Market Research Group, a Shanghai-based market research consultancy. Even Greenpeace, the activist environmental non-profit, gives Beijing high marks for its clean-up efforts, including new standards for vehicle emissions, five new subway lines and a fleet of nearly 4,000 buses running on clean-burning compressed natural gas.

GETTING THE JOB DONE

But is this simply blurring the lines between what was the result of the Olympics and what should have been on the government’s to-do list anyway? “It is true that Beijing is cleaner and more so because of [the Olympics]. But the government did not need an excuse to do all these [things],” says Lin Bo Qiang, a professor at the Center of China Energy Economics Research at Xiamen University.

Jonathan Anderson, head of Asia-Pacific economics for UBS, says that Beijing is such a small city relative to the rest of the country — representing 2.5% of national GDP and 1% of the population — that the economic impact of the event was limited. “It was just too small of an event to really matter.”

And not all public relations was good. “The China brand got a lift as a result of the games mainly because of the flawless execution. So the positive perception is definitely one about Chinese capabilities in getting things done,” says Minxin Pei, a professor of political science at Claremont McKenna College in Claremont, California. “The facilities were finished on time and the games went on without a hitch. That’s good news. The bad perception is about credibility — the use of the ‘fake’ girl during the opening ceremonies [who lip-synched a song] and the controversy over the underage women gymnasts. People wonder whether there is something funny going on with the China brand.”

Other incidents put the PR acumen of various global sponsors to the test. Threatening to scupper their well-choreographed sponsorships, pre-game protests outside China over human rights issues in Tibet and Darfur, Sudan, with disruptions to the global torch procession in Paris and elsewhere. In what became a politically sticky double threat, some sponsors found themselves caught between the risk of an international boycott of their products for supporting the Beijing games and the risk of a domestic backlash by the Chinese if they withdrew.

Opinions regarding the return on investment for corporate sponsors are also divided. “Consumers didn’t really care and they didn’t really know who the official Olympics sponsors were,” says Rein, who says many sponsors weren’t happy with their return on the Olympics. Yet Scott Kronick, president of the Ogilvy Beijing Group of Ogilvy Public Relations Worldwide, notes that sales for two of the firm’s clients who sponsored the Olympics – Adidas and UPS – grew dramatically during the games, and UPS has already signed on for the 2012 Summer Olympics held in London. “Post Olympics, I did not hear any sponsors regretting the sponsorship,” he says.

For Sam Taylor, president of Reputation Dynamics, a New York-based corporate social responsibility (CSR) consultancy, part of the difficulty for sponsors was the result of an ad hoc approach to CSR. “At the last Olympics, some companies had fragmented approaches toward developing social responsibility programs and aligning them around causes,” she says. One of her key lessons: Clear, consistent communications about the aim of their CSR programs at such events is critical. “While the Darfur situation clouded the Olympics, sponsors should not have been pressured by the activists and [should have] continued to communicate and vouch for their commitments to the CSR agenda,” she says.

Domestic and regional sponsors may have received a greater return on their investment. “For companies in emerging markets, Olympics sponsorship has become a badge of honor and ‘graduation party’ — much the way it has long served for national governments,” says Terry of Cotton Tree Productions. “At least one of my clients, Chaoda, which supplied vegetables to the Olympic village and other venues, has made its ‘Olympic mission’ central to its marketing before and after. I suspect others are doing the same.”

THE GAMES PEOPLE PLAY

For host cities generally, sponsorship seems to be a mixed blessing. A number of studies by academics and consultants suggest that Olympics-related economic growth is often a case of wishful thinking, and that positively-spun scenarios often don’t differentiate short-term consumer spending from long-term growth. Notably, cities are often left with costly yet unusable Olympics infrastructure once the party is over — dormitories, specialized facilities, an oversupply of hotel rooms, to name a few. Although cities have learned from past mistakes and there is more effort to convert facilities to new uses — Atlanta, host of the 1996 Olympics, for example, ended up with $500 million of new, privately funded public buildings and a 21-acre park — the ability to cut losses is different from a genuine economic gain.

For Beijing, the financial and human costs of the 2008 Olympics were enormous:

More than 600,000 residents were displaced as old neighborhoods were razed to make way for the Olympic venues. And while the legacy includes new subway lines, a new state-of-the-art stadium and a swimming and diving center, so far, only one event has been held in the 91,000-seat stadium — a massive opera production — and there is some talk that it could eventually be converted into a shopping center.

Other host cities have much less to show for their efforts. The games in Athens — costing approximately $14 billion — went so far in the red that the bills are still being paid, amounting to the equivalent of $70,000 per household, according to an estimate by U.K. newspaper The Independent. It took Montreal’s residents until 2006 to pay off the $1 billion their 1976 Olympics cost.

GREEK TRAGEDY

For the hosts’ countries, the value may be more positive, given that PR is managed well. Anholt says tourism in Australia jumped after the 2000 summer games in Sydney, in part because of a post-event publicity campaign touting the games’ success. But for every Australia, there’s a Greece, he notes. Greece failed to capitalize on the twin successes of the Athens 2004 games and its hosting of — and victory in — the European football championship that same year, “its greatest PR opportunity since the sack of Troy,” he says. “The only messages Athens gave me when I watched the games were: We can afford a lot of fireworks; we are very proud of our heritage; we are better organized than you think” — in other words, nothing that raised its profile among other countries.

But despite the risks — such as PR campaigns coming unstuck — the upsides of hosting the Olympics outnumber the downsides, particularly as the world climbs out of the economic downturn. A recent study by two economists — Andrew Rose of the University of California, Berkeley, and Mark Spiegel of the Federal Reserve Bank of San Francisco — found that after an Olympics, host countries’ export trade generally increases. In an examination of 196 countries’ economic performance between 1950 and 2006, they found that former Olympic host countries tend to have 30% more exports than the average, non-hosting country, a correlation they found to be “statistically robust, permanent and large.” Not only that, “the games do not seem to act as simple export promotion, but are instead associated with an increase in two-way trade between the host and the rest of the world,” they write in their April 2009 paper, “The Olympic Effect.” Rose and Spiegel speculate that the games constitute a positive — albeit expensive — global signal that the country is serious about attracting foreigners and foreign business.

Another big event, soccer’s World Cup, has similarly attractive results. Non-sporting spectaculars, such as a World’s Fair — which Shanghai is hosting in 2010 — are also positively associated with national economic growth. Timing is important, however. The Olympic findings seem to hold true only for games held in the summer rather than winter. The economists suggest that the effect is partly because the spending and TV viewership of the winter games tend to be smaller, and the events are hosted by relatively small towns, such as Lake Placid in New York or Albertville in France.

BRAZIL’S RISKS — AND OPPORTUNITIES

If Rose and Spiegel are right, Brazil has already won. However, as the apparently differing fortunes of Athens and Beijing suggest, there is still a lot of room for an Olympics to be more or less successful, particularly at the city level.

Economically, the risks for Rio seem higher. In terms of GDP, Rio is more important to Brazil than Beijing is to China. Rio is Brazil’s second-largest city and is home to about 3 percent of the country’s population — about six million people out of a total of 174 million. Beijing has a population of 17 million, but China’s total population tips the scales at 1.3 billion. Indeed, UBS’s Anderson agrees that the Rio games are likely to have a “relatively” greater impact on the country.

In public relations terms, Brazil’s prospects seem good. The country will have already hosted the World Cup in 2014, giving it a chance to build on its successful experience with the 2007 Pan American games. A growing number of first-rate Brazilian multinational companies will be able to use the Olympics as a showcase for investors. Finally, the games will also be an important opportunity to introduce Brazil to more tourists, both within and outside of Latin America.

Unfortunately, the tourist potential may also be the Rio games’ key risk. As in the rest of Brazil, Rio has extremes of wealth and poverty. Despite a growing middle class, it still has vast numbers of poor people, and crime against tourists — particularly during high-profile, public events like the annual Carnaval celebration — has increased steadily. (According to a report on the U.S. Department of State’s web site, in the weeks leading up to this year’s Carnaval, “robbers ransacked two tourist hostels.”) Guaranteeing the safety of visitors without oppressive security will be difficult, observers predict. “I think this is potentially something that is going to tarnish the games,” says Mauro Guillén, a Wharton management professor.

INFRASTRUCTURE PUSH

Eduardo Musa, president of Caloi, a Brazilian sporting goods retailer, says he thinks hosting the games will be useful politically because it’s a project that comes with a deadline, giving the government a push to complete the necessary infrastructure on time. Unlike China, which has undertaken vast improvements in its infrastructure over the past decade, such improvements are still a pressing need for Brazil, experts say. Infrastructure upgrades are needed not only within Rio, but around the country. For instance, most international flights are routed to Sao Paolo, 350 km (220 miles) to the south, not Rio, partly because of the size of the airport. In general, it’s not easy for middle class tourists from other South American countries to visit Brazil because of the country’s poor infrastructure.

Making those improvements won’t be easy. While civic pride may take hold in Rio as it did in China, the governments are quite different. China is an authoritarian state, but Brazil is a federal democracy, subject to the kind of political and economic power struggles familiar to Americans. Building the infrastructure for the games — particularly infrastructure that will disproportionately benefit one state — may not be easy, warns Gerald McDermott, a former Wharton professor who is now a professor of international business at the University of South Carolina.

RIO RETURNS

On the ground in Rio, the games are viewed by some as a ‘coming-of-age’ party for both the country and the city. For the past 50 years, since losing its status as Brazil’s capital to the new city of Brasilia, Rio has foundered somewhat as it tried to find a new identity for itself, according to Arminio Fraga, CEO of Rio-based Gávea Investimentos. With the Olympics, he hopes that’s going to change. “It’s very hard for a lost city … to find a new way,” Fraga notes.

McDermott says he hopes Brazil will also be savvy in using the games as a way to tighten relations with its key trading partners — the MERCOSUR group, which includes Argentina, Paraguay and Uruguay. Most of South America’s other major countries are also associated with Mercosur: Venezuela is applying for full-member status, and Bolivia, Chile, Colombia, Ecuador and Peru are associate members. Musa, however, believes that hosting the games is not likely to bring Brazil closer to other countries in Latin America — and he argues that this is a good thing. “Brazil is on such a different level from the rest of Latin America; a project like this will [magnify] even more the difference between Brazil’s potential and the other countries’,” he says. In his view, seeing a successful Olympics may encourage places such as Hugo Chavez’s Venezuela to rethink their present path.

Ultimately, observers say, how successful the Olympic games are depends on how well Brazil can execute the program. “One knows from the other countries that these things are what you make of them, and it is no different here,” says Fraga. “There are risks and challenges, but my impression, being here, is that enough people are engaged for this to be a significant positive in the end.”

Republished with permission from http://www.knowledge.wharton.upenn.edu — the online research and business analysis journal of the Wharton School of the University of Pennsylvania.

By Reuters

RIO DE JANEIRO (Reuters) – Brazil’s president will propose a truth commission this month to investigate torture during the country’s 1964-85 military dictatorship.

The move by President Luiz Inacio Lula da Silva could mark a rare step by Brazil towards tackling the thorny question of dictatorship-era abuses.

Unlike neighbouring countries such as Argentina and Chile, Brazil has never tried anyone for the murder and widespread torture of dissidents during its dictatorship, which pushed an amnesty law through a weak Congress in 1979.

The human rights minister, Paulo Vannuchi, said in an interview over the weekend that Lula will sign a decree next week to create the truth commission, which must be approved by Congress. A spokesperson for the minister confirmed those details to Reuters on Monday.

Brazil would be unable to tackle its modern-day human rights problems, which include widespread abuses by police, without addressing past abuses, Vannuchi said in the interview with the UOL Noticias Internet news site.

“We believe there is a relationship between torture today and the impunity of all the torture that went before, including during the dictatorship,” he said.

The truth commission proposal would be released next Monday, he said.

Brazil’s Supreme Court is now considering a case that argues that torture is not covered by the amnesty law.

The popular Lula, who by law may not run for a third term next year, has emphasized forgiveness over prosecution. Former union leader Lula and several members of his Cabinet were arrested and tortured during the dictatorship.

A justice ministry commission toured Brazil this year, asking victims and their families for forgiveness and awarding many financial compensation.

But some members of Lula’s government have pushed for trials against former military officers. Brazil’s still-influential military strongly opposes further torture investigations or revising the amnesty law.

Jose Miguel Vivanco, the Americas director for U.S.-based Human Rights Watch, said a truth commission was a welcome step but it remained to be seen what kind of process it would begin. A commission aimed at reconciliation rather than justice could be a means to prematurely draw a line under the past without accountability, he said.

“In general, truth commissions are very much welcome as long as they are understood as the beginning of a process that no one really controls,” he said.

(Editing by Doina Chiacu and Cynthia Osterman)

A toast to the caipirinha

By Jessica Gelt
Los Angeles Times

Now that Brazil is slated to become the first South American country to host the Olympics, maybe Americans will pay more attention to one of its finest exports: cachaça. Made from fermented sugar cane juice, the clear, fiery liquor puts the defining kick in Brazil’s national cocktail, the caipirinha.

Made with cachaça, muddled lime and sugar, a caipirinha is a profoundly simple beverage that perfectly captures the restless, vibrant spirit of the nation that loves it. Unfortunately, though, we don’t seem to have much of an appreciation for it in the States.

“I’m still amazed how challenging it is for people to say caipirinha and cachaça,” says Steve Luttmann, the founder of Leblon Cachaça, one of the new boutique brands that have been making inroads in the U.S. in recent years. (Don’t be one of those people. Say kye-peer-EEN-yah and ka-SHAH-sa.) Luttmann cites a study by BuzzBack Market Research in New York indicating that awareness in the U.S. of the caipirinha among cocktail drinkers is 30%, compared with 85% for the mojito, the caipirinha’s closest cousin.

As someone who quit her job and moved to Rio de Janeiro for a month because she loved caipirinhas so much (OK, I also loved the beach, the music and the churrascarias), I am here to say: You’re missing out, America.

I sipped my first caipirinha in July 2004 on a drizzly Brazilian winter evening. I was 28 and sitting at an old wooden table inside a dimly lighted Italian restaurant called La Trattoria just off Copacabana beach. The waiter brought me a caipirinha by default after I failed miserably at ordering a vodka and soda in Spanish. (Note to everyone who told me otherwise: Spanish and Portuguese are not “practically the same thing.”)

The drink came in a small cone-shaped glass with a flat bottom. Round ice cubes mingled with shaggy slices of freshly muddled lime inside a pear-colored liquid. A fat lime wheel served as garnish. The concoction smelled rich and earthy with overtones of burnt sweetness. The taste was a revelation: a silky mixture of sweet and sour, with bitter notes balanced by an arresting freshness. It hit my tongue with smooth precision and burned its way down my chest.

Before my first night in Rio was over, I had ordered two more caipirinhas. Melting into the evening with each sip, I became increasingly aware of the bustling city streets around me. The smell of sea salt, tropical vegetation and roasted meat drifted through the damp air. Scruffy teenagers played guitar on a curb, couples danced by and vendors peddled black bean soup, candied nuts, boiled corn and plastic tubes filled with flavored cachaça.

“Unfortunately and fortunately, cachaça comes kind of early in one’s life when you live in Brazil,” says Francisco Carvalho, the founder of Pampas Grill, a Brazilian churrascaria with two L.A. locations. Carvalho moved to Los Angeles more than 20 years ago from Belo Horizonte, Brazil, when he was 24, but says he drank his first caipirinha when he was 17. Although he favors margaritas these days, he has never forgotten how to make a caipirinha.

“You develop your own taste. But for me, I use one regular soupspoon of white sugar and one nice juicy lime. You squish them together in a cup — you don’t need any special cup — and then you add a nice shot of cachaça with a little extra for the saints,” he says. “That’s the excuse that they have there. Then you stir it very well and add maybe four or five cubes of ice and that’s it. It’s a basic drink, very simple.”

For me, the taste of that simplicity turned to love, and when I returned to Rio in 2004, I rented an apartment near the beach. There I drank many more caipirinhas (easy now, I also did some writing). And I spent a good deal of time prowling the streets of Rio neighborhoods — bohemian Lapa, tony Ipanema and the hills of Santa Teresa — for the perfect caipirinha, which roughly translates as “little countryside drink.”

I thought I found it in a graffiti-ridden pool hall in Lapa, where the dirty front desk served as both ball rental spot and bar. But it was actually at a fine restaurant in the Rio neighborhood of Leblon (a restaurant that I am sorry to say I no longer remember the name of) that I finally hit on it.

The bartender — a short, muscular man with a very business-like demeanor — mixed caipirinhas like it was his religion. His secret: less sugar than most places used and a devotion to cutting out every vestige of the white pith in the center of the lime. That eliminates all the bitterness from the lime, he said. And it really works. It’s a crucial step that is often left out.

Key limes were traditionally used in Brazil, until disease wiped them out in the 1950s. Though the drink is now often made with Persian limes, Key limes are best. (And you should use fine white sugar.)

Carvalho says that ordering a caipirinha in Los Angeles is a hit-or-miss proposition, just like ordering a margarita. But surely, our odds of getting a good one here will go up as people familiarize themselves with cachaça.

Luttmann makes an apt analogy: “A caipirinha tastes kind of like a margarita, but it’s made like a mojito, and it’s a cocktail platform that mixologists can mix in all sorts of ways.”

But what exactly is it? “Cachaça is cachaça. A caipirinha is a caipirinha. In some ways, both are metaphors for Brazil,” Luttmann says. “A lot of people don’t understand Brazil yet, but that’s changing.”


Preliminary work on the Santo Antonio dam
Photograph: Luciane Simões / Amigos da Terra – Amazônia Brasileira.


By Reuters

PORTO VELHO, Brazil (Reuters) – Straddling one the Amazon’s main tributaries and flanked by dense jungle, a construction pit the size of a small town bustles with bulldozers and nearly 10,000 workers blasting huge slabs of rock off the river bank.

While blue-and-yellow macaws fly overhead, a network of pipes fed by a constant flow of trucks pours enough concrete to build 37 football stadiums.

The $7.7 billion (4.7 billion pound) Santo Antonio dam on the Madeira river is part of Brazil’s largest concerted development plan for the Amazon since the country’s military government cut highways through the rain forest to settle the vast region during its two-decade reign starting in 1964.

In the coming years, dams, roads, gas pipelines, and power grids worth more than $30 billion will be built to tap the region’s vast raw materials, and transport its agricultural products in coming years.

The Santo Antonio dam in the western Amazon’s Rondonia state, which goes online in December 2011, will pave the way for a trade route between the Atlantic and Pacific oceans by making more of the Madeira river navigable.

But the behemoth project may also make it tougher for the nation to steer a new course as a leader of the global green movement.
Brazil’s government says such development is needed to improve the lives of the region’s 25 million inhabitants, who remain among the poorest in Latin America’s biggest economy.

With the economy expected to grow at 5-6 percent annually in coming years and the country preparing to host the 2014 soccer World Cup and 2016 Olympics, the government wants to ensure ample energy and adequate infrastructure.

Critics say not all projects make economic sense and many energy-saving measures — such as switching from electric to solar water heaters — have not been explored.

They also argue that the drive for development in the world’s biggest forest highlights a policy contradiction as Brazil tries to play a top role in forging a global deal on climate change at the U.N. climate summit in Copenhagen.

Brazil reversed years of opposition to greenhouse gas targets this year, saying it intended to reduce Amazon deforestation by 80 percent and curb projected 2020 greenhouse gas emissions by 40 percent.

“They talk about reducing deforestation and boosting controls but they invest in these mega-projects,” said Israel Vale, director at the Kaninde environmental advocacy group in Porto Velho, capital of Rondonia.
“The rhetoric doesn’t fully match reality,” he said.

President Luiz Inacio Lula da Silva, a pragmatic former factory worker, has acknowledged the importance of tackling climate change and the heavy contribution that destruction of the forest makes to carbon emissions.

But he has consistently backed infrastructure projects in the Amazon and hits out at foreigners he says want to preserve the forest like a park, ignoring the needs of its inhabitants.

“I don’t want gringos asking us to leave Amazon people to die of hunger under the canopy of a tree,” Lula said in the Amazon city Manaus in November.

He says Brazil needs more international financial aid for sustainable development in the region, something he will push for in Copenhagen.

PROJECTING JOBS

New shopping malls, supermarkets and hotels reviving the decrepit centre of Porto Velho showcase the new wealth the Santo Antonio dam brings to an otherwise impoverished region.

Santo Antonio Energia, the consortium building and operating the dam, is made up of Brazilian power and construction companies, a pension fund, as well as domestic and foreign banks.

The investment boom has helped many people get their first job with proper benefits.

“The people who want to protect the forest have never been hungry or needy,” said Antonia Meyrilen, a 27-year-old mother training to be a carpenter. Porto Velho is not new to boom and bust cycles, previously driven by rubber, gold, and timber.

The town of Jaci-Parana, halfway between Santo Antonio and a second dam similar in size being built further upstream on the Madeira, shows how wealth doesn’t always equal progress.

Aside from the pick-up trucks with company logos, the scene is reminiscent of a Wild West boom town during the California gold rush.

Bars and brothels hammered together overnight with rough-cut boards line the muddy main strip, with pool tables and prostitutes luring customers. Jukeboxes and video games blare into the night and swinging doors reveal back-parlour gambling.

Talk abounds that landowners have hired a gunman to kill tenants who could otherwise claim part of their compensation for houses that will be flooded by the dam.

“Our town’s been turned upside down,” said Irene Nascimento, 47, who runs a bar and convenience store.

“The price of land trebled in a few months, everything is expensive — some people gain, others lose,” she said.

Santo Antonio Energia has donated millions of dollars to philanthropic projects, including blackboards and computers for schools, the revival of an old railway and the installation of a much-needed sewage system in Porto Velho.

When the dam is complete, most jobs related to the project will go and financial benefits will be limited to tax payments to public coffers, raising the risk that boom may again turn to bust.

“If the residents here don’t keep watch and define the public policies they want, they won’t get much out of this,” said Ricardo Alves, head of sustainable development at Santo Antonio Energia.

ENVIRONMENT

Santo Antonio and most of the other 10 dams on the drawing board for the Amazon region require a much smaller water reservoir than older dams did and therefore flood a far smaller area per unit of generated energy.

The company says it is minimizing environmental impact by treating sewage from the construction site, combating malaria, and relocating affected flora and fauna. It also donated trucks and equipment to government environmental services.

Still, on both sides of the river as many as 1,000 families will see their homes flooded and their cemeteries moved. Indians and fishermen fear the land they hunt on and the river they fish in won’t be the same.

The roughly 200 families that agreed to move to a model housing project with running water, electricity, and an already planted vegetable garden are mostly content.

Several of the others prefer their simple but familiar surroundings — often wood shacks with no amenities.

“We have no choice. They want to pull us out, so they have to pay,” said Leonardo Fonseca da Cruz, a 63 year-old fisherman who lives along the picturesque Teotonio rapids.

His neighbours said the Santo Antonio consortium was offering too little to compensate for lost revenue from fishing.

Company officials admit they don’t know how many fish species will be made extinct or what impact a growing population will have on the environment.

“In order to build a dam, you need to move the river. Of course, it’s going to have an impact,” said Antonio Cardilli, Santo Antonio Energia’s head of employee training.

“There are people in society who want to eat an omelette without breaking the eggs,” he adds.

Throughout the world hydro energy is still an attractive option because it is much cheaper than nuclear or fossil fuel-fired power plants.

New technologies, accumulated experiences, and heightened awareness have eased but not eliminated the social and environmental risks in building dams, says Carlos Tucci, who has advised the United Nations, World Bank and others on dam construction for 40 years.
“We have the ability to create better projects today but there is always an inevitable local impact and there are still other risks — design or implementation problems, unforeseen changes in water flow,” said Tucci.

A series of dams on Brazil’s Sao Francisco river and an unexpected change in water volume caused sedimentation problems that led to dramatic algae growth and a 50 percent reduction in fish stock, said Tucci.

At Santo Antonio, a different dam design and water quality should avoid such problems, though the impact of heavy sedimentation accumulation is uncertain, said Tucci, adding that the company’s original sedimentation and hydrology impact study was poor.

Critics say the government pressured the environmental protection agency Ibama into rubber-stamping the environmental licence in 2007 and waived the need for certain impact studies. At the time, two Ibama officials resigned over the standoff.

“The government used political and not technical criteria,” said Roberto Smeraldi, head of Friends of the Earth in Brazil, which sued Ibama for allegedly breaking environmental law in the licensing process.

NATIVE INDIANS

Leaders of native Indians living on nearby reservations are sceptical, saying government development projects usually make life worse for them.

“The arrival of the white man, the road, the time they threw chickens at us and said it was a farming project to ensure us income — are we better off today?” asked Antenur Caritiana, of the Caritiana tribe.
He is concerned that rising water levels of tributaries will flood bridges and roads, and that their women will be drawn to prostitution as their lands are invaded by loggers and wildcat miners.

Most Indians in his jungle town understand little of the dams and their potential impact, despite company briefings.

But according to village elder Delgado Caritiana, they won’t object if given education, health and farm aid.

“The main concern is the problem of monitoring and protecting Indian lands,” said Santo Antonio’s Alves.

Forest guards are to help protect reservations but Indians don’t trust the government Indian foundation Funai, which negotiates with Santo Antonio Energia on their behalf.

“The Funai doesn’t listen to us, they bring their projects ready-made from the capital,” said Antenur.

The number of Indians over the last two decades has more than doubled to nearly 1 million, out of Brazil’s population of 195 million people. Their lands account for 12 percent of Brazil’s territory. But whether on a spacious reservation in the Amazon or cramped on ghetto-like reserves in the south, most of their land is under pressure from ranchers, loggers, wildcat miners, or power and construction companies.

POLITICAL PRESSURE

Such challenges are likely to be multiplied with the planned construction of the much larger Belo Monte dam on the upper Xingu river. The region is home to numerous Indian tribes and the dam would directly impact 120,000 people.

The environmental agency Ibama is again under pressure, this time to speed up the Belo Monte approval process. Again, two officials resigned and conservationists cried foul.

“They want them to turn a blind eye to technical and legal procedures, and sometimes even to ethics,” said Marina Silva, former environment minister and renowned Amazon defender.

Perhaps the biggest worry for environmentalists is the planned pavement of the BR 319 motorway between Porto Velho and Manaus, which leads through one of the most pristine areas of the Amazon with a high biodiversity and many endemic species.

Satellite images showing fish-bone shaped patterns of deforestation show how roads attract settlers to set up farms and cattle ranches.(See:http://maps.google.com.br/maps?hl=pt-BR &ie= UTF8&ll=-3.899878,-54.165344&spn=1.254997,1.7276&t=h&z=9)

Deforestation of the Amazon has fallen to the lowest rate in over two decades, due in part to stepped up controls on illegal ranching and logging but also to weaker global demand for farm products from the region, such as beef, soy and timber. Still, nearly 20 percent of the Amazon has already disappeared and large chunks of the forest are still destroyed every year. In the year through July 2009 an area the size of the U.S. state of Delaware was chopped down.

Supporters of the road say it would reduce the cost of merchandise in Manaus but studies show transportation costs to and from Manaus are cheaper by river than road.

Jorge Viana, former governor of the Amazon state Acre and a leading voice in Lula’s Workers’ Party last month sent a letter to Lula along with a group of prominent scholars saying there was “no economic justification that can compensate for the environmental cost” of the road.

The government pledges to create new national parks to buffer the environmental impact of the road but experts point to numerous parks in the region that have been invaded by ranchers and loggers.

“The road makes no sense. We are not against development and infrastructure but it needs to be intelligent,” said Paulo Moutinho, coordinator at the independent Amazon research Institute, Ipam.
He said projects like the road could fuel deforestation, which makes up 75 percent of Brazil’s carbon emissions.

“If the (infrastructure) plan is not changed, it will put at risk Brazil’s deforestation and emissions targets.”
(Editing by Claudia Parsons)

A slow maturing of democracy

More Latin Americans now trust the government than the army

From The Economist print edition

DESPITE the recession which rippled across the region over the past year, Latin Americans are more supportive of— and satisfied with—their democracies and their governments. More of them favour the market economy, and most take a dim view of Hugo Chávez, Venezuela’s radical leftist president. Those are among the findings of the latest Latinobarómetro poll taken in 18 countries across the region and published exclusively by The Economist. Because the poll has been taken regularly since 1995, it tracks changes in attitudes across the region.

This year’s poll was taken in late September and October, when many countries in the region were starting to pull out of the downturn. Latin Americans felt the recession, but in most places only moderately. Respondents describing the economic situation as “bad” or “very bad” increased from 35% last year to 40% this year, while those calling it “good” or “very good” fell to 43% from 47%. Unemployment edged ahead of crime as respondents’ main concern, as it was in all the previous polls except last year’s (though in seven countries crime remains the number one worry).

Yet this did little to diminish Latin Americans’ increasingly sunny mood. Support for democracy is at its highest level since the late 1990s, up 11 points from its trough in 2001. A clear majority across the region are now committed democrats (see table 1 and chart 2). Elections that ushered new presidents into office brought the customary boost in support for democracy in El Salvador and Panama.

In Honduras so, seemingly, did the coup in June against Manuel Zelaya, the elected president. Among respondents in that country, 58% disapproved of the coup; in the region as a whole, only 24% of respondents approved of it. (But 61% of those polled in Brazil, 58% in Mexico and 42% in the region agreed that the army should remove a president if he violates the constitution, as the coup leaders in Honduras claimed of Mr Zelaya.) Meanwhile, there were big falls in support for democracy in Colombia and Ecuador.

Even more strikingly, satisfaction with the working of democracy has increased sharply, to its highest level since the polls began (chart 3). Trust in democracy’s basic institutions is also growing steadily, albeit from low levels (chart 4). Those saying that democracy cannot exist without political parties have increased steadily, to 60% from 49% in 2001, when amid economic collapse protesting Argentinians shouted at their politicians, “Que se vayan todos” (“kick them all out”). For the first time since Latinobarómetro began polling, more respondents now approve of their governments than trust the armed forces—a milestone in a region with a long history of military interventions in politics.

All of this is in marked contrast to the last recession in the region in 2001-02, which undermined Latin Americans’ faith in democracy. One difference this time is that many do not seem to blame their governments for the downturn. Another is the sense of greater well-being generated by five years of faster economic growth until 2008 and, in many countries, more effective social policies and some income redistribution. The fact that democracy has brought political change, allowing the left to come to power in many countries for example, also has an impact.

All this seems to point to a slow maturing of democracy in Latin America. “There’s an important increase in the legitimacy of governments, which is good for democracy,” says Marta Lagos, Latinobarómetro’s director, though she cautions that it is also providing fuel for the spreading habit of presidents seeking re-election.
Greater faith in democracy has gone hand-in-hand with more support for the market economy—despite the financial crisis (chart 5). But there is disenchantment with markets in Colombia, even though the country all but escaped recession. That may be because of the collapse of several big pyramid-savings schemes, or because unemployment has risen sharply. One in three of those polled across the region now say that privatisations were beneficial for their country, up from 22% in 2003.

There are hints, too, of greater social liberalism. Those who say they would not like to have homosexuals as neighbours have fallen from 59% in 1998 to 29% this year. On the other hand, 36% say that women should stay at home, rather than go out to work, the same number as in 1997. A similar proportion say that men make better political leaders than women.

The upbeat mood is particularly striking in Brazil and Chile, where two-thirds of respondents said their country was progressing (Panamanians and Uruguayans were not far behind). Even the notoriously curmudgeonly Peruvians have warmed a bit to democracy. But Mexicans are gloomier, unsurprisingly given that the economy shrank by 10.1% in the year to June. So in some ways are Argentinians: not only do only 25% approve of their government, only 4% of those polled thought the distribution of income was fair and only 13% think any progress has been made over the past two years in reducing corruption (compared with a regional average of 39%).

The poll offers a warning to Mr Chávez. Though 45% of Venezuelan respondents still support his government, that is down from 65% in 2006. And although he has nationalised many businesses, 81% of them say that private enterprise is indispensable for economic development, a big increase on previous years. Support for the market economy among Venezuelan respondents has also surged.

The poll also suggests that Mr Chávez’s image in the region is much less favourable than that of many other leaders, and especially than that of Barack Obama (chart 6). The advent of Mr Obama has boosted his country’s standing in the region: 74% of respondents had a favourable opinion of the United States, up from 58% last year and the highest figure since the polls began. Nevertheless, more respondents now see Brazil as the most influential country in the region, ahead of the United States and Venezuela. But the influence of the United States is ranked higher than Brazil’s in the northern part of the region.

Latinobarómetro is a non-profit organisation based in Santiago, Chile, which has carried out regular surveys of opinions, attitudes and values in Latin America since 1995. The poll was taken by local opinion-research companies in 18 countries and involved 20,204 face-to-face interviews conducted between September 21st and October 26th 2009. The average margin of error is 3%. Further details at http://www.latinobarometro.org