Cuba Rids of Dual Currency

Cuba has announced it is to end the unpopular dual currency system which has sharpened inequalities on the Communist island, the latest in a series of reforms aimed at relaxing its Soviet-style economy.

Since 1994 a two-tier structure of national pesos and convertible pesos has created a stark divide between most ordinary Cubans and the fortunate few with access to the more valuable tourist currency. The system was initially intended to shield the country’s Communist project from the capitalist ways of the outside world, but under President Raul Castro it has become a key target of the reforms he says are essential to Cuba’s economic survival.

Brazil 2014

Former senator Marina Silva's unexpected decision to join the Brazilian Socialist Party (PSB) and position herself as running mate of governor Eduardo Campos of Pernambuco, president of the PSB, in next year's presidential race, has forced campaign strategists back to the drawing board.

A Man, A Plan, A Canal.... Nicaragua?

NOT since the civil war of the 1980s have so many helicopters been clattering over remote parts of Nicaragua. But now the guys squinting down through the tree canopy are in suits: lawyers and business consultants from the United States, Australian engineers, British environmental auditors, even Chinese executives. Their per diems are being paid by Wang Jing, a Chinese businessman whose $40 billion quest is to build a canal from Nicaragua’s Atlantic coast to its Pacific one.

Brazil Port Fire

SAO PAULO, Brazil — An early morning fire at Brazil's Santos Port hit warehouses Friday, potentially destroying up to 300,000 tons of sugar.

Capture of another Mexican Drug Lord: Progress or no?

YOUR correspondent cannot claim to have met Alberto Carrillo Fuentes, or “Ugly Betty”, the 47-year-old alleged head of the Juárez cartel, whose capture by Mexican authorities was announced on September 1st. But he has probably been in the same house as a much younger (and perhaps less ugly) Mr Carillo Fuentes.

That happened in 1997, at the funeral, attended by a handful of hacks, of his eldest brother Amado, known back then as “The Lord of the Skies”, one of Mexico’s most successful and entrepreneurial kingpins until he died during a botched liposuction operation in Mexico City. One of the things that stood out even more than the snakeskin boots, hats and gold chains of the mourners was the immense size of the Carrillo Fuentes family: their black-clad mother “Doña Aurora”, whom your correspondent interviewed sitting amid Louis XV-style furniture, had at least six sons and five daughters. Since then, none has been as good a steward of the family business as her beloved eldest son, who used jets to fly cocaine from Colombia, via Mexico, to the United States, earning him his sobriquet.

At the funeral, the brothers looked so menacing that interviewing them seemed unwise. But a dark-eyed sister, Alicia (a student at a New York university at the time, if memory serves), was quite friendly—at least until the questions became too intrusive. She recalled of her brother Amado: “He always said they’d never get him alive. When I asked about him, Mama said: ‘That’s what he does and God will look after him.’” Whether God has looked after him or not in the afterlife, the “cartel” that he built into one of the world’s most fearsome enterprises has fallen on hard times since his death. That has been good news for the border city of Ciudad Juárez, cradle of its empire, which appears to be safer than it was a few years ago, when it ranked among the most violent cities in the world.

The Carillo Fuentes family are blue bloods of the Mexican drugs trade. Their uncle is Ernesto Fonseca Carrillo, alias “Don Neto”, one of the godfather’s of the notorious Guadalajara gang in the 1980s. But at times they appear half-hearted drug barons. Vicente, the first brother to succeed Amado as head of the Juárez cartel, is said to have recently bowed out because of poor health. (In a priceless turn of phrase, Proceso, a Mexican news magazine, said that he now remains merely “moral leader” of the Juárez group.) Amado reportedly wanted his eldest son to stay out of the family business. It is said that Amado’s liposuction itself was part of an attempt to change his appearance so he could disappear from the trade—as well as the law enforcers breathing down his neck.

Yet the family’s ill fortune has left terrible bloodshed in its wake. A month after Amado died, a mafia-style murder of six people in a restaurant in Ciudad Juárez marked the start of a bloody turf war. Over the next decade and a half the city became the battleground for drug gangs representing Mexico’s Pacific and Gulf coasts. Raúl Benítez, a security expert at the UNAM, Mexico’s largest public university, says that one of the reasons the violence in Ciudad Juárez hit such depths of depravity a few years ago is that three gangs were fighting for it: the Carrillos' Juárez group; the Zetas, known for their grisliness; and the Sinaloa gang, led by Joaquín “El Chapo” (Shorty) Guzmán. That’s violence cubed.

Such multiplying violence tends to temper any jubilation over the capture of a capo in Mexico. It may be that the removal of the latest head of the Juárez gang leads to more violence (Amado’s younger sons, for example, may fight to take it over). Yet there are also reasons to be upbeat this time. It follows the capture of Miguel Ángel Treviño Morales, alias Z-40, alleged head of the Zetas in July, and Mario Ramírez Treviño, suspected head of the Gulf cartel, in August. Such crime bosses are, indeed, falling like kingpins.

Mexicans increasingly criticise their president, Enrique Peña Nieto, for following the same strategy as his predecessor, Felipe Calderón, whose war on drugs was widely blamed for the violence that mushroomed every time a druglord was seized. Yet the strategy may at last be bearing fruit. That said, however much the government plays down the talk of drug violence in Mexico, it has not abated. The only real proof of a decisive turn in the drug war would be if the Sinaloa gang’s Mr Guzmán, who has evaded capture for so long that many people suspect he enjoys official protection, is also apprehened. But don't hold your breath.

Crime in Mexico "Out of Sight, Not Out of Mind"

A HUMAN hellhole lies under the noses of American tourists driving from California into Mexico. Below the bridge leading into Tijuana is a dry canal strewn with heroin syringes that is home to countless migrants and vagrants, most of them thrown out of the United States for not having the right papers. Jesús Alberto Capella, Tijuana’s chief of police, says their numbers have included about 10,000 ex-convicts turfed out of American jails this year. They live under tarpaulins and in foxholes dug into the side of the canal. The place is a cauldron of violence. It is also a focal point for President Enrique Peña Nieto’s strategy of applying what officials call “social acupuncture” to some of the most dangerous parts of Mexico.

Brazil oil auction: Lone bid wins exploration rights

The rights to explore Brazil's biggest oilfield have been won at an auction by a consortium led by Brazil's state-run Petrobras, backed by Total, Shell and Chinese firms.

Tempo of Economic Reform in Cuba Accelerating

AT 9.01am one morning earlier this month, Marino Murillo, a member of Cuba’s ruling Politburo, strode on to the stage at the International Press Centre in Havana, gave a concise account of the government’s economic plans, and took questions for 45 minutes. What would have been routine elsewhere was remarkable in communist Cuba, for three reasons. Gone is the interminable waiting around for the late-night rants of Fidel Castro: punctuality is one of the hallmarks of the government led since 2006 by his younger brother, Raúl. And after internecine political battles over liberalising economic reforms, the government is confident enough of its message to have invited a small group of foreign journalists to hear it—the first such initiative in many years.

Third was the message itself. Mr Murillo, a burly economist who is in charge of implementing economic reforms (officially dubbed “updating”), stressed that the core of the system remained “social property”. But he also talked of “wealth creation” and the need for “price signals” and “market factors”. “Life has shown that the state can’t do everything,” he said. “Success will lie in how to maintain macro balance while giving space to the market and wealth creation.”

Under 313 “guidelines” approved by a Communist Party Congress in 2011, Raúl Castro is trying to revive the island’s moribund economy by transferring a chunk of it from state to private hands and by streamlining a cumbersome central-planning system. So far the changes have centred on farming and small business.

Removing Cuba's Twin Currencies

"ONE country, two currencies" is one of Cuba's more peculiar idiosyncrasies. The Cuban peso (CUP) and the Cuban convertible peso (CUC) are both legal tender on the island, though neither is exchangeable in foreign markets. The CUC is pegged to the dollar and worth 25 times as much as the CUP. But whereas most Cubans are paid in CUP, nearly all consumer goods are priced in CUC. The system, which highlights divisions between those with access to hard currency and those without, has proved unpopular. On October 22nd state media published an official announcement that it is finally going to be scrapped. Cuba’s Council of Ministers, it said, had approved a timetable for implementing “measures that will lead to monetary and exchange unification”. 

Raúl Castro had promised to tackle the issue on taking over as President from his brother Fidel in 2008. The unusual scheme has been in place since the collapse of the Soviet Union. In 1993, after decades of benefiting from generous trade arrangements with the Eastern bloc, Cuba found itself desperately short of hard currency. With few other options, Fidel made the momentous decision to legalise the American dollar (possession of which had previously been punishable by prison). Dollar stores mushroomed to capture the money flowing in from newly welcomed tourists and Cubans living abroad. Meanwhile, all Cuban state workers were still paid a pittance (less than $20-worth a month) in the old Cuban peso. 

Initially the dollar stores sold only "luxuries", such as perfumes and fancy kitchen utensils. But the Cuban government increasingly took to pricing anything from toothbrushes to cooking oil in dollars. In 2004 the greenback was officially removed from circulation, and replaced by the convertible peso. For Cuban shoppers this amounted to but a name change.

Other countries have managed to unify twin exchange rates in their economies (most notably China when it devalued the yuan in 1994). But unravelling twin currencies with such diverging values will be trickier. That is perhaps why details of the timetable have not been made public, as one Havana-based businessman wryly notes. The transition is in any case likely to begin cautiously, with selected state enterprises being allowed to trade using a variety of hypothetical exchange rates. Some shops are also expected to start accepting payments in either CUCs or CUPs (at the current real rate of 25 CUPs to one CUC).

The government has declared that the transition will not hurt holders of either currency. Cubans, though, are understandably wary. Any increase in the value of the unified peso would increase their spending power. This could stoke inflation and lead to widespread shortages. The concomitant fall in the value of the CUC, meanwhile, would be fiercely resisted by those with savings in the harder currency. 

Unifying the currencies would also end a bizarre anomaly in Cuban accounting, whereby state companies pretend in their balance sheets and domestic trading books that one CUP equals one CUC. The practice has prevented CUP inflation. But it has made imports seem artificially cheap and exports unprofitable. It also obfuscated inefficiencies that plague Cuba's predominantly state-owned businesses. Ending the charade could have dire consequences for many firms.

Over the past twelve months rumours that unification is being seriously considered have led to an appreciable weakening of the CUC. In Havana’s main tourist hotels bank clerks offer to buy dollars, off book, at above market rates. An illegal network of currency traders, which almost disappeared when the dollar was legalised in 1994, is re-emerging. Unpicking the bizarre system is a good idea. Cubans will be hoping that the island's authorities can implement it better than they have socialism.

Improving Relations between Canada and Gulf Nations

The first direct flight from Saudi Arabia landed in Toronto Monday morning. There are now four airlines connecting Canada to the Gulf nations. These flights will service passengers going on hajj and umrah, last year an estimated 3,400 Canadians took the same pilgrimages. In the last year relations between Canada and the United Arab Emirates have improved drastically and after Gulf airlines demanding more landing rights and the refusal from Ottawa was causing a diplomatic row. In the last year visa restrictions have also been loosened on Canadian travelers. This development is hoped to open new accesses to travelers and that section of the world.

Protesting Fracking at the New Brunswick Legislator

Following protest against fracking exploration on native lands in the last few weeks the First Nation has erected a traditional long house near the New Brunswick Legislator. The structure is planned to be there indefinitely and has a traditional scarred flame going. Protesters marched to the long house  on the weekend and step up in it. “If they want to come in and talk and listen and just find out what our culture is all about, they’re more than welcome,” says Harry Laporte, Grand Chief of the Maliseet Grand Council. Protesters plan to stay in the public eye and maintain a peaceful approach.

Anti-Fracking Protests in Canada

Anti- fracking protests breaks out in violence and bring up tension with aboriginal Canadians in mid-October. Protesters set fire to police cars and it quickly broke into around 100 officers attempting to control hundreds of protesters. It started when RCMP (Mounties) came in to take down barricades put up by the Elsipogtog First Nation Tribe of New Brunswick. Tribe members and protesters had been there for a week fighting against a shale gas exploration in the region. Fracking be environmentally controversial everywhere because even more of a hot button issue when being proposed on native land. 40 people were arrested for fire arms violations, mischief and various other offences, among the 40 was Aaron Sock, a First Nation Chief. Sock had issues and eviction notice to the gas company two weeks before demanding them to leave native land. The First Nation took action believing that the company was in violation of indigenous land rights and blocked of a highway connecting to major towns. When police where brought in the move protesters it quickly became a people vs. police situation. The RCMP said they were forced to take action when shots were fired and the protesters said that guns were drawn on them first. Susan Levi-Peters, former chief, said that    “It is really very volatile…It’s a head-to-head between the people and the RCMP right now and the warriors are in the middle surrounded by the RCMP and then the RCMP are surrounded by the people.” She also said things exculpated after Sock was arrested, pictures of him in handcuffs quickly going up on social media.

Trade Agreements between Canada and the European Union

Trade agreements between Canada and the EU are hoped to carry over into other non- trade related side agreements. On Oct. 18 Canadian Prime Minister Stephan Harper signed an Agreement in Principle with European Commission president Jose Manuel Barroso after being in negotiation for four years. It is expected to be official within the next 18 to 24 months after being approved by both sides affiliated provinces and countries. The deal is intended to improve exchanges of goods, services, investments and labor. A related and incomplete negotiation is the Strategic Partnership Agreement which negotiation for began in 2011 and deals with boarder trade and investment pacts. Canada is hesitating to affirm the agreement at the final text including the importance of human rights and non-proliferation efforts. The EU insist that all such arrangements include promotions of human rights and the fight against weapons proliferation and doesn’t want to make an exception for Canada. Marie- Anne Coninsx, new EU ambassador to Canada, says that the pacts are linked and one will not be affirmed without the other. At the moment one both sides its thought that things are moving in the right direction although a few hurdles remain. In a government statement its predicted that the partnership will "enable us to act together to project our shared values to third countries on key issues such as international peace and security, non-proliferation, democracy and the rule of law." Although the EU’s concern is that if it allows Canada to pass on the human rights portions of the deals other smaller less democratic countries will want the same exemption 

Crisis with Canadian Indigenous Populations

A UN expert states that Canada has major social issues with their aboriginal population. James Anaya, a UN rapporteur on indigenous rights, recently visited Canada and said that the country has not narrowed its disparities between aboriginal citizens and other Canadians, often fueled by disputes over land and resources furthering tension and distrust. This has become even more evident recently with protests regarding gas companies becoming violent. Anaya has said "There's a crisis in Canada with regard to indigenous issues, notwithstanding some important developments within Canada over the last decades”. Anya said that the conditions that the indigenous people often live in are more comparable to poor and lesser developed countries. 

Legalizing Drugs all across south America

MONTEVIDEO, Uruguay — The agricultural output of this country includes rice, soybeans and wheat. Soon, though, the government may get its hands dirty with a far more complicated crop —marijuana — as part of a rising movement in this region to create alternatives to the United States-led war on drugs.

Across Latin America, leaders appalled by the spread of drug-related violence are mulling policies that would have once been inconceivable.

Decriminalizing everything from heroin and cocaine to marijuana? The Brazilian and Argentine legislatures think that could be the best way to allow the police to focus on traffickers instead of addicts.

Legalizing and regulating not just drug use, but also drug transport — perhaps with large customs fees for bulk shipments? President Otto Pérez Molina of Guatemala, a no-nonsense former army general, has called for discussion of such an approach, even as leaders in Colombia, Mexico, Belize and other countries also demand a broader debate on relaxing punitive drug laws.

Uruguay has taken the experimentation to another level. United Nations officials say no other country has seriously considered creating a completely legal state-managed monopoly for marijuana or any other substance prohibited by the 1961 United NationsSingle Convention on Narcotic Drugs.

Doing so would make Uruguay the world’s first marijuana republic — leapfrogging the Netherlands, which has officially ignored marijuana sales and use since 1976, and Portugal, which abolished all criminal penalties for drug use in 2001. Here, in contrast, a state-run industry would be born, created by government bureaucrats convinced that opposition to marijuana is simply outdated.

“In 1961, television was just black and white,” said Julio Calzada, secretary general of Uruguay’s National Committee on Drugs. “Now we have the Internet.”

But kicking the prohibitionist habit, it turns out, is no easy task. Even here in a small, progressive country of 3.3 million people, the president’s proposal has hit a gust of opposition. Doctors, political rivals, marijuana users and security officials have all expressed concern about how marijuana would be managed and whether legalization, or something close to it, would accelerate Uruguay’s worsening problem of addiction and crime.

Mr. Mujica, 78, a bohemian former guerrilla who drives a 1981 Volkswagen Beetle, seems to be surprised by the response. He said this month that if most Uruguayans did not understand legalization’s value, he would suspend his plan while hammering out the details and building public support. But this is a defiant leader who spent more than a decade in jail as a political prisoner, so even as he discussed postponement, he signaled that he might not be willing to give up, emphasizing that drug users “are enslaved by an illegal market.”

“They follow the path to crime because they don’t have the money,” he said, “and they become dealers because they have no other financial means to satisfy their vice.”

His government, which has a slim majority in Parliament, is moving forward. One of the president’s advisers said this month that draft legislation would be submitted within a few weeks, and Mr. Calzada, among many others, has been hard at work. His desk is covered with handwritten notes on local drug markets. A career technocrat with the long, wispy hair of an aging rocker, he said he had been busy calculating how much marijuana Uruguay must grow to put illegal dealers out of business. He has concluded that with about 70,000 monthly users, the haul must be at least 5,000 pounds a month.

“We have to guarantee that all of our users are going to be able to get a quality product,” he said.

He added that security would be another challenge. Drug cartels protect their product by hiding it and with the ever-present threat of violence. Uruguayan officials, including Mr. Sabini — one of several lawmakers who openly admits to having smoked marijuana — favor a more neighborly approach. They imagine allowing individuals to cultivate marijuana for their own noncommercial use while professional farmers provide the rest by growing it on small plots of land that could be easily protected.

The government would also require users to sign up for registration cards to keep foreigners away — an idea influenced by a new policy in the Netherlands, which restricts marijuana sales to residents — and to track and limit Uruguayans’ purchases (to perhaps 40 joints a month, officials say). Finally, there would be systems set up to regulate the levels of THC, the active ingredient in marijuana, and levy taxes on producers, relying for enforcement on the agencies regulating tobacco, alcohol and pharmaceuticals.

Officials acknowledge that by trying to beat kingpins like the Mexican Joaquín Guzmán, known as Chapo, at their own game, Uruguay would need to co-opt old foes and join forces with the same drug aficionados it has been sending to jail for years.

That means cozying up to people like Juan Vaz. A thin, dark-haired computer programmer and father of three who is perhaps Uruguay’s most famous marijuana activist, Mr. Vaz spent 11 months in prison a few years ago after being caught with five flowering marijuana plants and 37 seedlings. In an interview, he compared marijuana to wine, and expressed both interest and alarm at the government’s plans. He said he was pleased to see the Mujica administration tackle the issue, but like many others, he said he feared government control.

Personal marijuana use is already decriminalized in Uruguay, so Mr. Vaz, 45, said the idea of a registry for producers and users amounted to an Orwellian step backward. “We’re concerned about the violation of privacy,” he said.

Other growers and smokers, who spoke on the condition that they were not fully identified, appeared more eager to take part. Martín, 26, a bearded programmer whose closet full of marijuana plants added a unique aroma to his apartment complex, said his friends had been talking about starting a small marijuana farm.

Gabriel, 35, a dealer and user who lives downtown, said that he welcomed a legal market and hoped it would hamper the darker side of the drug business. He said that he had been selling marijuana on and off for 15 years — moving a little more than two pounds a month — and that the people he bought from had often pressured him to take on more dangerous drugs like cocaine paste, a cracklike substance that has spread wildly through the region since 2001.

“Pasta base,” as it is called here, is generally blamed for Uruguay’s recent rise in drug addiction and violent crime, and Mr. Mujica has said that legalizing marijuana would break the cycle of addiction and delinquency that begins when users become dealers.

Many in the drug treatment community have their doubts. “You’re never going to get rid of the black market,” said Pablo Rossi, director of Fundación Manantiales, which runs several residential treatment centers in Montevideo.

But Gabriel said that big dealers would inevitably adapt. The question is: for good or ill? Maybe they would start selling cocaine cheaper, he said, causing more problems. Or maybe they would be pushed out of the drug business entirely. For now, at least, they mostly seem to be afraid of change: he said a kilogram of marijuana (2.2 pounds) now costs about $470 in Uruguay, up from around $375 before the legalization proposal was announced.

“They are trying to make as much money as they can,” Gabriel said. “They think legalization is imminent.
”

Controversial Dolphin Fishing in Mexico

The fight over Mexican tuna, and whether it is truly fished using dolphin safe practices, rages on. Mexico recently won a two decade long fight to get its tuna labeled dolphin safe. The WTO this month ruled in its favor. But the U.S. still refuses to allow Mexican tuna with a dolphin safe label on store shelves. Mexico says it's had enough and is preparing to retaliate with trade sanctions on U.S. imports. Ensenada, Baja California, was once the thriving heart of the Mexican tuna industry.

http://www.npr.org/2013/10/03/228941329/trade-dispute-with-mexico-over-dolphin-safe-tuna-heats-up

Argentina Agriculture

A spike in shipping costs and lower profits resulting from a series of union protests at Argentina's Rosario port, one of the world's biggest grain export centers, has raised concerns among the country's agricultural companies.

Strikes by powerful unions representing river pilots, longshoremen and soy crushing workers have been frequent at the port, about 300 kilometers (200 miles) north of Buenos Aires, where some of the world's top grain traders - such as Cargill , Bunge and Louis Dreyfus - operate.

Port reliability is key to the country, which relies heavily on farm export taxes to fund government spending, since the country has been locked out of international bond markets since its massive 2002 sovereign default.

Grains powerhouse Argentina - the world's No. 3 corn and soybean exporter - will be counted on to help meet rising food demand as global population grows toward 9 billion by 2050. So world consumers also hold a stake in the health of its ports.

Protestors have been demanding pay increases to compensate for eroding purchasing power caused by inflation in Argentina, one of the world's highest rates, estimated by private analysts at about 25 percent.

Union protests, among other things, have blocked bean deliveries to soyoil processing plants and help guiding ships into port.

Delays in loading ships can be costly. Docking a Panamax-sized vessel with a capacity of 65,000 tonnes of grain costs about $13,000 to $17,000 a day, according to the Capym port industry chamber.

"Argentina, as a net exporter of grains, is subject to international prices, so any additional costs that the sector faces implies a reduction in the price that producers receive in the field, affecting the profitability of the agro-industrial chain as a whole," said Capym director Guillermo Wade.

Wade added that "the delay in shipments causes uncertainty among foreign banks that pre-finance Argentine exporters, due to the risk that the latter will default."

The port handles nearly 80 percent of the grains and derivatives shipped from Argentina, the world's top soymeal and soybean oil exporter.

Ship captains, grains inspectors and watchguards have also taken collective action recently, in some cases because of disputes among unions vying for power.

Up to 100 ships have been left waiting when strikes have gone on for more than a few days. Normally, 2,400 ships pass through the Rosario area each year.

Businesses in the sector have also complained that a range of bureaucratic hurdles, such as changes in rules governing how deep ships are allowed to go as they pass through port, have made operating in the area even more difficult.

Argentina harvested 49.3 million tonnes of soybeans and a record 32.1 million tonnes of corn in the 2012/13 season, far exceeding volumes a decade ago. Specialists say those numbers should continue rising in coming years.

Agriculture exporters have complained, however, that the sustained growth in Argentine farm output has not been accompanied by adequate port development. And they say the problem may get worse before it gets better.

The wage tensions that have led to most strikes are not likely to go away anytime soon, considering the approach that President Cristina Fernandez has taken toward Argentine inflation.

With two years to go before the end of her second term, Fernandez says consumer prices are rising at about half the rate estimated by private analysts. The disparity in statistics has been an ongoing source of tension between her government and the International Monetary Fund.

Bolivia Drug Trafficking

Suspected members of a drug trafficking gang in Bolivia have thrown a bag containing more than $1m (£615,000) from a low-flying plane.

The cash was supposed to be collected by other gang members on the ground in eastern Santa Cruz province, said Interior Minister Carlos Romero.

But they missed the target and the bag was seized by Bolivian anti-drugs police, who later made several arrests.

Bolivia is one of the world's top three cocaine producers.

The authorities say the money - in US dollar bills of various denominations - was wrapped with a seal from a bank in neighbouring Paraguay.

They believe it was going to be used either to build a cocaine production centre or to set up a fake commercial enterprise in Bolivia.

"Three Bolivian citizens have been detained in the operation," said Mr Romero.

Guns and vehicles were also seized near the town of Rincon del Tigre.

Bolivian police had been monitoring the gang, which is believed to be well organised and with links to several countries.

Peru, Bolivia and Colombia are the world's biggest coca leaf and cocaine producers, according to the United Nations Office on Drugs and Crime.

Coca leaf production is legal in small amounts in Bolivia, where it is used to alleviate the effects of the high altitude. But the production of cocaine is banned.

US to expel Venezuelan diplomats in retaliation

Three Venezuelan diplomats are being expelled from the US after Caracas expelled three American officials, the US State Department says.

The diplomats, who include charge d'affaires Calixto Ortega Rios, have been given 48 hours to leave.

On Tuesday, Venezuelan President Nicolas Maduro accused the US diplomats of plotting to sabotage the economy.

He said he had evidence they took part in a power-grid sabotage in September and had bribed firms to cut production.

He gave the three - charge d'affaires Kelly Keiderling, David Moo and Elizabeth Hoffman - 48 hours to leave, saying: "Yankees, go home!"

However, the US State Department rejected the allegations.

An official told the BBC: "It is regrettable that the Venezuelan government has again decided to expel US diplomatic officials based on groundless allegations, which require reciprocal action.

"It is counterproductive to the interests of both our countries and not a serious way for a country to conduct its foreign policy."

As well as Calixto Ortega Rios, the Venezuelan diplomats being expelled are Second Secretary Monica Alejandra Sanchez Morales at the Washington embassy, and Consul Marisol Gutierrez de Almeida at the Houston consulate.

The United States and Venezuela have been without ambassadors in each other's capitals since 2010.

The late President Hugo Chavez accused the US of "imperialism" in Latin America.

In December 2010, he denied a visa to the man appointed to be US ambassador to Caracas, Larry Palmer, over remarks he had made about involvement between the Venezuelan government and Colombian Farc rebels.

The US retaliated and expelled the Venezuelan ambassador to Washington.

Mexico City violence at Tlatelolco massacre anniversary

Riot police have clashed with protesters in Mexico City during a demonstration commemorating the 45th anniversary of a student massacre.

Protesters, some of them masked, threw firebombs, bottles and rocks at police who battled to disperse the crowd.

At least 40 people were injured, Mexico's El Universal newspaper reported.

The rally marked the anniversary of the 1968 killings of student protesters in Tlatelolco Square.

Official reports at the time said 25 people died, although rights activists say as many as 350 may have been killed.

The anniversary of the killings is often marked by protests and violence.

In the latest clashes, police said 20 officers had been injured and 20 people were arrested. Authorities said anarchists had infiltrated the march.

Earlier, thousands of teachers and students blocked the city's main roads during rush hour to honour victims of the massacre.

The deaths in Tlatelolco Square took place during months of pro-democracy protests by students and workers.

The killings took place a few days before the Mexican capital hosted the 1968 Olympic Games.

Brazil invests in Mexico

Brazilian conglomerate Odebrecht ODBES.UL plans to spend $8.1 billion in Mexico in the next five years in what appears to mark the biggest investment pledge yet from a Brazilian firm in Latin America's No. 2 economy.

Tension grow Between Brazil and U.S. over spying

Brazilian President Dilma Rousseff used her position as the opening speaker at the U.N. General Assembly to accuse the United States of violating human rights and international law through espionage that included spying on her email.

Rousseff had expressed her displeasure last week by calling off a high-profile state visit to the United States scheduled for October over reports that the U.S. National Security Agency had been spying on Brazil.

In unusually strong language, Rousseff launched a blistering attack on U.S. surveillance, calling it an affront to Brazilian sovereignty and "totally unacceptable."

"Tampering in such a manner in the lives and affairs of other countries is a breach of international law and, as such, it is an affront to the principles that should otherwise govern relations among countries, especially among friendly nations," Rousseff told the annual gathering of world leaders at the United Nations.

She also proposed an international framework for governing the internet and said Brazil would adopt legislation and technology to protect it from illegal interception of communications.

"Information and telecommunication technologies cannot be the new battlefield between states. Time is ripe to create the conditions to prevent cyberspace from being used as a weapon of war, through espionage, sabotage, and attacks against systems and infrastructure of other countries," Rousseff said.

U.S. President Barack Obama was en route to the United Nations while Rousseff spoke. Speaking immediately after Rousseff, he avoided direct reference to her criticism.

"We have begun to review the way that we gather intelligence, so as to properly balance the legitimate security concerns of our citizens and allies, with the privacy concerns that all people share," said Obama, who concentrated mostly on the crisis in Syria and the prospects for a diplomatic opening with Iran.

Rousseff rejected the U.S. government reasoning that the NSA surveillance was aimed at detecting suspected terrorist activity and she accused the agency of engaging in industrial espionage.

Rousseff said she had asked Washington for explanations, an apology and promises the surveillance would never be repeated.

Postponing the state visit was a rare and diplomatically severe snub by Brazil. While foreign leaders frequently visit the White House, state visits are reserved for special occasions and include an elaborate state dinner. No new date has been set.

Rousseff's state visit was conceived to highlight cooperation between the two biggest economies in the Americas and Brazil's emergence over the past decade as a regional power.

Ties between the United States and Brazil had been improving steadily since Rousseff took office in 2011. The cancellation could harm cooperation on trade, regional affairs and other issues at a time of growing influence from China, which has surpassed the United States as Brazil's leading trade partner.

The trip had been seen as a platform for deals on oil exploration and biofuels technology, and Brazil's potential purchase of fighter jets from Chicago-based Boeing Co.

A report by Brazil Globo's news program Fantastico on National Security Agency spying was based on documents that journalist Glenn Greenwald obtained from former NSA contractor Edward Snowden. Greenwald, who lives in Rio de Janeiro, was one of the journalists to first report Snowden's leaks of classified information on previously secret U.S. telephone and internet surveillance efforts.

The report also said the United States intercepted communications of Brazilian state oil company Petrobras and Mexican President Enrique Pena Nieto before he assumed office.

"Personal data of citizens was intercepted indiscriminately," Rousseff said in her U.N. speech.

"Corporate information, often of high economic and even strategic value, was at the center of espionage activity. Also, Brazilian diplomatic missions, among them the permanent mission to the United Nations and the office of the president of the republic itself, had their communications intercepted."

Brazil Economy Levels

FOUR years ago this newspaper put on its cover a picture of the statue of Christ the Redeemer ascending like a rocket from Rio de Janeiro’s Corcovado mountain, under the rubric “Brazil takes off”. The economy, having stabilised under Fernando Henrique Cardoso in the mid-1990s, accelerated under Luiz Inácio Lula da Silva in the early 2000s. It barely stumbled after the Lehman collapse in 2008 and in 2010 grew by 7.5%, its strongest performance in a quarter-century. To add to the magic, Brazil was awarded both next year’s football World Cup and the summer 2016 Olympics. On the strength of all that, Lula persuaded voters in the same year to choose as president his technocratic protégée, Dilma Rousseff.

Since then the country has come back down to earth with a bump. In 2012 the economy grew by 0.9%. Hundreds of thousands took to the streets in June in the biggest protests for a generation, complaining of high living costs, poor public services and the greed and corruption of politicians. Many have now lost faith in the idea that their country was headed for orbit and diagnosed just another voo de galinha (chicken flight), as they dubbed previous short-lived economic spurts.

The world’s most burdensome tax codeThere are excuses for the deceleration. All emerging economies have slowed. Some of the impulses behind Brazil’s previous boom—the pay-off from ending runaway inflation and opening up to trade, commodity price rises, big increases in credit and consumption—have played themselves out. And many of Lula’s policies, notably the Bolsa Família that helped lift 25m people out of poverty, were admirable.

But Brazil has done far too little to reform its government in the boom years. It is not alone in this: India had a similar chance, and missed it. But Brazil’s public sector imposes a particularly heavy burden on its private sector, as our special report explains. Companies face the world’s most burdensome tax code, payroll taxes add 58% to salaries and the government has got its spending priorities upside down.

Compare pensions and infrastructure. The former are absurdly generous. The average Brazilian can look forward to a pension of 70% of final pay at 54. Despite being a young country, Brazil spends as big a share of national income on pensions as southern Europe, where the proportion of old people is three times as big. By contrast, despite the country’s continental dimensions and lousy transport links, its spending on infrastructure is as skimpy as a string bikini. It spends just 1.5% of GDP on infrastructure, compared with a global average of 3.8%, even though its stock of infrastructure is valued at just 16% of GDP, compared with 71% in other big economies. Rotten infrastructure loads unnecessary costs on businesses. In Mato Grosso a soyabean farmer spends 25% of the value of his product getting it to a port; the proportion in Iowa is 9%.

These problems have accumulated over generations. But Ms Rousseff has been unwilling or unable to tackle them, and has created new problems by interfering far more than the pragmatic Lula. She has scared investors away from infrastructure projects and undermined Brazil’s hard-won reputation for macroeconomic rectitude by publicly chivvying the Central Bank chief into slashing interest rates. As a result, rates are now having to rise more than they otherwise might to curb persistent inflation. Rather than admit to missing its fiscal targets, the government has resorted to creative accounting. Gross public debt has climbed to 60-70% of GDP, depending on the definition—and the markets do not trust Ms Rousseff.

Fortunately, Brazil has great strengths. Thanks to its efficient and entrepreneurial farmers, it is the world’s third-biggest food exporter. Even if the government has made the process slower and costlier than it needed to be, Brazil will be a big oil exporter by 2020. It has several manufacturing jewels, and is developing a world-class research base in biotechnology, genetic sciences and deep-sea oil and gas technology. The consumer brands that have grown along with the country’s expanding middle class are ready to go abroad. Despite the recent protests, it does not have the social or ethnic divisions that blight other emerging economies, such as India or Turkey.

Venezuela's government: A Circus Without a Ringmaster

DURING the presidency of Hugo Chávez, who ruled from 1999 until his death from cancer in March, the domineering personality of the comandante left no doubt as to who was in charge of Venezuela. By contrast Chávez’s successor, Nicolás Maduro, a former foreign minister, has yet to convince people that he is the one running the show. His disputed, razor-thin election victory on April 14th undermined his legitimacy (indeed, the supreme court has yet to resolve the opposition’s claim of fraud). Now the president faces problems within the ranks of the ruling coalition, and in particular his United Socialist Party of Venezuela (PSUV). In the absence of Chávez, there are worries that the PSUV will turn out to be held together, as the colourful Venezuelan metaphor has it, “with parrot spit”.

Fourteen years of chavismo have left the country in a mess. Despite the high price of oil, growth this year will be minimal or negative. Thousands of private companies have gone under, dragged down by regulations and threatened with fines, temporary closure or expropriation. Others have switched from production to importing. Even that is losing its appeal, now that foreign-exchange control mechanisms have seized up and dollars are scarce. Mr Maduro has sought to deal with the concerns of ordinary Venezuelans, as well as striking radical poses to please hard-core chavistas. Crime, poor public services, corruption and food-scarcity have been targeted with loudly trumpeted initiatives. But actually solving these problems will mean confronting powerful interests, and here Mr Maduro has little room for manoeuvre.

Moderates were encouraged when early in his presidency Mr Maduro sidelined Jorge Giordani, Chávez’s Marxist finance minister, and brought in Nelson Merentes, a former governor of the Central Bank who is seen as more ideologically flexible. But subsequent appointments seem designed to appease other interests. Amid talks with the private sector on how to get the wheels of commerce turning again, Mr Maduro last month reappointed Eduardo Samán head of the powerful consumer-protection body, a post he held under Chávez. A self-proclaimed “ultra-radical”, Mr Samán believes that inflation (heading for 40% a year) and empty supermarket shelves are caused by private-sector hoarding and speculation. “Humanity”, he has written, “will succeed in solving the food crisis only with the end of capitalism.”

Tentative efforts to tame corruption have also been undermined by a need to stay on friendly terms with the Chávez clan. On June 12th Argenis Chávez, the late president’s crafty youngest brother, was appointed head of the body that controls the administration of the justice system. On his brother’s watch, the younger Chávez had led the electricity ministry as well as Corpoelec, the graft-riddled state-run electricity giant. On becoming president, Mr Maduro quickly booted him out of both jobs. His return to office demonstrates the enduring power of the Chávez clan, as well as Mr Maduro’s willingness to subordinate the justice system to his political requirements.

Managing these rival factions has forced the PSUV to suspend internal party democracy. Grass-roots chavista radicals had backed Mr Samán’s bid to stand for mayor of Caracas. But party leaders, who see Mr Samán as a loose cannon, ruled out holding a primary that he might have won. Now the PSUV has cancelled all the primaries that were to have been held ahead of local elections, which have been postponed until December 8th. It remains to be seen whether choosing candidates by executive fiat will ruffle fewer feathers than the primaries would have done.

Our man in Havana

Rumours swirl that Mr Maduro could face a more immediate challenge to his own leadership. In a recorded conversation that was leaked on May 20th Mario Silva, the presenter of a state-television talk-show called “The Razor Blade”, was heard apparently passing information to a Cuban intelligence officer. In the recording Mr Silva warned the spy that Diosdado Cabello, the speaker of the National Assembly, wanted to overthrow Mr Maduro. It was a matter of urgency, he said, to cut off Mr Cabello’s sources of income, including the tax authority, which is run by his brother, José David Cabello. A few weeks later police arrested members of an alleged gang within the customs agency, which is part of the tax authority.

A former lieutenant who took part in a failed coup by Chávez in 1992, Mr Cabello has powerful friends in the army. The annual round of military promotions, due to be announced as The Economist went to press, may strengthen his hand. Henrique Capriles, the leader of the opposition, jeers that Mr Maduro’s role is confined to signing the promotions list. “Nicolás, you’re a laughing stock in the armed forces,” Mr Capriles tweeted.

During the presidential election campaign, Mr Maduro was seen as the favoured candidate not just of his predecessor but also of Cuba, Venezuela’s closest ally. A month ago, however, Mr Cabello made a three-day visit to Havana, holding meetings with President Raúl Castro and his brother, Fidel. The trip came shortly after the leaking of the Silva recording. No one knows what sort of deal the Cubans may have struck with Mr Cabello. For the moment, he and Mr Maduro are locked in a macho Latin embrace, of the kind some say was devised as a way for each man to frisk the other for weapons.

Castrocare

Call it "Castrocare" Cuba's former leader Fidel Castro sent doctors abroad for decades to work throughout Latin American and as far away as Africa

Venezuelan President Maduro’s balancing act

IT IS a remarkable achievement. Amid the longest oil boom in history Venezuela has in many respects the worst-performing economy in the Americas, even though it has (it claims) the world’s biggest reserves of the black stuff and gets 94% of its export earnings from it. That is the legacy of 14 years of “21st-century socialism” under the late Hugo Chávez. Inflation is over 45% a year and supermarket shelves are bare of many staple goods. Even Nelson Merentes, the finance minister, concedes that Mr Chávez’s revolution has yet to achieve economic success. But oil revenues of $90 billion a year allow Nicolás Maduro, Mr Chávez’s successor as president, the luxury of debating whether or not to change course.