Thursday, September 27, 2007

Bush Threatened Chile Over Iraq Vote

Spanish newspaper El Pais has published the transcript of a conversation between former Prime Minister Jose Maria Aznar, George Bush, and Condoleeza Rice at Bush's ranch in Crawford, Texas, four weeks before the invasion of Iraq in 2003. In the conversation Bush announced his intention to be in Baghdad "by the end of March" and also threatened to derail Chile's free trade agreement with the US if the Latin American nation did not back a planned second resolution on Iraq in the United Nations Security Council.

In the conversation, apparently recorded by then Spanish ambassador Javier Rupérez, Aznar asked Bush to help him secure domestic support for action against Iraq and stressed that "it's not the same to act without [the resolution] as with it". Bush assured him that "the text will be made as far as possible to help you. I'm pretty easy on the content". He told Aznar that: "Saddam Hussein is not disarming. We have to get him now...There's two weeks left. In two weeks we'll be militarily ready...We'll be in Baghdad by the end of March".

Discussing the level of Security Council support for a second resolution, Bush said that"countries like Mexico, Chile, Angola and Cameroon (temporary Council members at the time) should know that what's at stake is the security of the United States, and act with a sense of friendship towards us. [Chilean president Ricardo] Lagos should know that the free trade agreement with Chile is awaiting confirmation in the Senate and that a negative attitude in this matter could endanger its ratification".

Chilean newspaper La Nacion said that the story had been confirmed by current Chilean ambassador to the United Nations Heraldo Muñoz, who at the time was a government minister. Muñoz told a Chilean radio station that the account of threats to Chile suggested by the transcript "basically fit the truth". According to Muñoz, after "very serious discussion", the Chilean government concluded that its foreign policy of multilateralism and respecting international law could not be sacrificed.

Muñoz said that in the view of the Chilean government while there was “a certain risk for the TLC", it was decided to trust that "a lot had already been invested by the United States and ourselves in many rounds of negotiation and there weren't going to be backwards steps because if there wasn't a treaty with Chile, with which Latin American country would there be?".

The Chilean government thus agreed that "it was worth defending [our] longstanding foreign policy principles", said Muñoz.

The US-Chile free trade agreement was ratifed by the US Congress in the last week of July 2003.

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Saturday, September 22, 2007

Carbon Trading in New Zealand

The New Zealand government last week announced its latest climate change policy aimed at reducing carbon emissions towards the levels agreed under the Kyoto Protocol. It's a cap-and-trade scheme, which will be phased in for different sectors. Forestry will be the first to participate from next year; transport and major industy enter in 2009 and 2010; while agriculture (responsible for about half New Zealand's emissions) will have no commitments until 2013.

Even with the emissions measures in place, New Zealand is predicted to overshoot its Kyoto carbon emissions targets for the 2008-12 period by about 25.5 million tonnes.

The best analysis is from blogger No Right Turn , who looks at some of the implications as well as identifying some gaps and omissions. There's also a link to the full government document, The Framework for a New Zealand Emissions Trading Scheme. I guess at some point I'll be a good citizen and wade through it.

The Green Party and environmental groups such as Greenpeace criticised the announcement as too little too late, but the policy at least appears to have broad political support. Many of the proposals are similar to those in the 'Blue-Green' position paper released last year by the National Party -- who along with United Future and New Zealand First helped torpedo previous climate change measures such as a carbon tax and a 'fart tax' on animal methane emissions.

There are specific long-term targets for renewable energy and tree planting, as well as vaguer aspirational goals for things such as widespread use of electric cars.

Costs to the fuel and energy sectors are expected to be passed through to consumers, meaning an estimated 4-5% increase in petrol prices and power bills starting in 2009. The government has already promised that it will seek to compensate people on low incomes for these increased living costs.

Instead of further bureaucratically-managed subsidies, one option could be to cut tax from the first $5-10,000 of individuals' income. This is actually a Green party policy, but is also favoured by many economic liberals because it is simple, transparent and provides the right incentives. It removes tax from desirable things (earnings from work) and applies it to undesirable ones (emissions).

However, such an income tax cut is normally suggested as a tit-for-tat swap in conjunction with a carbon tax, rather than alongside a cap-and-trade scheme. Ironically, while some centre-rightists are now suggesting a carbon tax to be the most sensible anti-emissions measure, it is this part of the political spectrum which has consistently trashed the idea whenever it has been proposed.

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Monday, September 17, 2007

Peruvian Communities Vote Against Mine

Peruvian news sources report on a highly-charged plebiscite in the sierra of Piura, northern Peru, where local communities voted overwhelmingly last Sunday against the development of a planned copper mine, which local farmers and environmentalists say could poison water sources and affect biodiversity in the region .

More than 90 percent of voters in the districts of Ayabaca, Pacaipampa and Carmen de la Frontera, voted against the plans of Chinese-owned company Minera Majaz to mine copper and molibdenum in a project known as Rio Blanco. Around 60 percent of 31,000 registered electors turned out across the three districts, some walking many hours to arrive at a polling station.

The vote, which was organised by the mayors of the three district municipalities, was criticised in advance by Peru's national government, which called it 'illegal' and 'non-binding'. Peru's electoral office (ONPE) and national election jury (JNE) had refused to recognise the plebiscite, and called for the confiscation of official electoral materials that were to be used in the vote.

But the vote went ahead peacefully, despite prior claims of threats against locals who do support the mine. International observers from Ecuador, Bolivia, Canada, Spain, the United Kingdom, Germany, and Switzerland attended.

Majaz Minera is a subsidiary of British company Monterrico Metals, which has recently been acquired by Chinese consortium Zijin. Exploratory work has been occurring in the region since 2002. Preliminary results from a study by the University of Texas suggest that this phase has already caused some damage to the region's biodiversity, which includes the Andean spectacled bear and highland tapir. Local farmers fear that mining operations will diminish the quantity and quality of rivers which irrigate both the western (Pacific) and eastern (Amazonian) slopes of the Andes. The latter is a notable coffee-exporting region.

The Peruvian government has claimed that the vote was promoted by 'anti-mining' NGOs, who along with foreign missionaries it blames for stirring up opposition to the mine. Prime Minister Jorge del Castillo said that 'people who oppose investment can't demand its benefits'. President Alan Garcia called anti-mining activists 'old communists' responsible for 'a conspiracy to stop the country growing and producing'.

But analysts say that opposition owes more to bad historical experiences with mining operations in Peru. They cite lack of direct benefit for mining regions, weak governmental regulatory capability, and a poor record of mining company environmental and labour practices.

Also, Peru doesn't have a Ministry for the Environment or independent environmental agency. The organisation responsible for assessing environmental impact reports for mining projects is the Ministry of Energy and Mining, which is also charged with attracting and promoting mining investment.

Del Castillo is now calling for dialogue between the government, mining company and local authorities. District mayors have said they would be happy to engage in dialogue but that it must include community leaders from the respective districts.

The mining company, whose public face until now has been its English spokesman Andrew Bristow, says it is also prepared to talk. But for now, local communities have had the final say.

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Sunday, September 16, 2007

Trade Agreement in the Final Stretch

After many doubts and delays, there's now a better-than-even chance that Peru's free trade agreement with the United States will be ratified in the near future. According to statements made by US officials to the Peruvian media, the House Ways and Means Committee is set to hold a hearing on the 25 September, after which the agreement would be voted on sometime in October.

Of the four trade deals negotiated by the US government before President Bush's 'fast track' authority expired in June, Peru's will be the first to go to a vote, and the most likely to be approved (the others are with Panama, Colombia, and South Korea). But with some Democrats still unconvinced about the Peruvian government's commitments to enforcing labour standards, there may be yet be stumbles as the agreement goes through Congress.

When I last posted on the topic, Republicans and Democrat leaders had stuck a deal to allow the Peru and Panama agreements to be considered if their labour and environmental conditions were strengthened. Amendments were drafted, and swiftly accepted by Peru's congress. A deputation of US representatives was to visit Lima to offer 'technical assistance' to ensure that Peruvian labour and environmental standards were on the road to acceptability.

That visit in August -- where Democrat Charles Rangel met with president Alan Garcia, representatives of all political parties, and labour unions -- produced warm words and grand statements. Garcia said that the agreement could be the start of a 'new New Deal' in international commerce. Rangel opined that it could be a 'flagship' agreement, noting that 'for the first time, workers' rights will be a part of trade agreements -- to be enforced'.

But not everyone was convinced about the Peruvian commitment to improving labour standards. On the campaign trail in 2006, Garcia had promised the elimination of 'services', companies that provide outsourced labour to other businesses. But a year later Garcia had changed his tune, proposing that such companies merely be regulated rather than eliminated. In August the government announced a law would be prepared with the aim of reducing the number of employees contracted through 'services' from 20% to 10% of the workforce.

According to American magazine Inside US Trade, some Democrats are also unimpressed that their concerns about outsourcing and union rights are being addressed through a series of governmental Surpreme Decrees -- which can be modified later -- rather than through the unfinished General Labour Law. The latter is currently stalled after being negotiated over the last five years. The two largest Peruvian labor federations, CGTP and CUT, have sent an open letter to congressional Democrats asking them to vote 'no' to the trade agreement.

Nevertheless, a hearing of the Senate Finance committee on September 11 on the Peru deal met with few objections. The American labour federation AFL-CIO is agnostic about the deal and has decided to neither promote or actively oppose it, but to concentrate their efforts on opposing the Colombia and South Korea agreements. AFL-CIO policy director Thea Lee said that the new labour and environmental conditions "represent significant progress in crucial areas we have fought to achieve for many years".

Political analysts say that 60 to 120 congressional Democrats are likely to vote in favour of the Peru agreement, meaning that it would pass with a considerably more comfortable margin than the Central American FTA, which passed by 2 votes with just 15 Democrats in favour. But after all the twists and turns that have occurred so far, nothing is certain yet.

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Saturday, September 15, 2007

Fujimori to Be Extradited?

Although it hasn't been officially anounced, Chilean news sources are saying that the Chilean Supreme Court has ruled in favour of extraditing former Peruvian president Alberto Fujimori to Peru to face trial on two charges of human rights abuses and one of corruption.

Chilean daily La Nacion said that judges from the criminal wing of the Supreme Court had voted 3 to 2 in favour of extraditing Fujimori, and claimed that one of the judges had changed his opinion, reversing an earlier majority decision to reject the extradition plea.

An official announcement on the ruling is likely to be made on the 20th or 21st of September.

More to come.

Stop! I'm With APEC

Speaking of the APEC conference, one of the funniest things I've seen in a long time is this video from Australian comedy show The Chaser. The show found that people would be surprisingly accommodating to 'random security checks' in the name of the APEC conference in Sydney. Even when they were in Melbourne.

Sunday, September 09, 2007

The Nuclear Option

Around two years ago, I posted my dilettante-ish opinion that nuclear energy would need to be increasingly important if the world is to reconcile the goals of reducing carbon emissions and continuing international economic development.

That view is now firmly in the mainstream, as evidenced by the discussions at the APEC meeting in Sydney last week. Although it's a rare day when a liberal internationalist finds himself more or less in agreement with George W Bush and John Howard, this one groaned at statements by various New Zealand politicans that they would seek to 'water down' references to nuclear energy in a conference statement on climate change.

These comments were seemingly intended for a domestic audience, one that might by now be dwindling. New Zealand's 'anti-nuclear' stance was a flagship, nation-unifying policy in the 80s. But as I said in the previous post, surely that was "more a stroppy assertion of foreign policy independence than a reasoned rejection of nuclear technology".

The climate change declaration negotiated at the APEC meeting ended up being pretty motherhood-and-apple pie, with only 'aspirational' targets set But with the range of political, social and economic situations faced by the APEC countries, it's better than nothing for a week's work. While it's easy to be critical of non-binding targets, it has to be acknowledged that New Zealand and Canada, which ratified the Kyoto Protocol, have done worse at reaching their emissions target than Australia, which didn't.

However, some credit should be given to the New Zealand contingent at APEC for practicing what they preach. New Zealand prime minister Helen Clark was one of the five leaders who arrived on normal commercial flights The others were the prime ministers of Papua New Guinea and Singapore, the chief executive of Hong Kong, and, yes, Peru's austerity-promoting Alan Garcia.

On the other hand, the US contingent brought three special 747s, while they, China and Russia, demanded 'sovereign immunity' for their aircraft, exempting them from being inspected by Australian customs officials. So much for international co-operation.

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Saturday, September 08, 2007

Policy Good, Implementation Hard

The always-pithy Economist has had a couple of good dispatches recently on Peru. Both deal with the tough challenge facing the administration of Alan Garcia in delivering on his election promise of 'responsible change' to reduce poverty and develop a more inclusive economy.

As much as it was slightly bewildering to an outsider that Peru would elect Garcia again after his disastrous first term in the 1980s, it was hard to argue with most of his stated policies: austerity in central government, devolution of more resources and responsibility to the regions, rationalisation of overlapping social programmes, improvement of education standards, investment in infrastructure such as water and roads, warmer relations with Chile, free trade with the US (with a better deal struck for Peru), and the 'Sierra Exportadora' programme to help link highland farmers with coastal exporters.

The swift move to implement popular actions within the first 100 days, such as cutting his own and other politicans' salaries, suggested that Garcia might actually carry through with an ambitious programme of reform.

But with the best will in the world, turning policies into action can be harder than it looks. The first challenge described in the June 9--15 Economist is actually implementing the infrastructure and poverty reduction programmes. As anyone who has worked in government will tell you, availability of money isn't always the problem-- 'getting it out the door' can be the hardest part. The challenge is to balance the requirements for transparent process, and value for taxpayer dollars, with the need to get a move on.

The Economist reports that of the $1 billion 'investment shock' earmarked for water, roads, school and clinics, only 30% is on track to be spent in the first year. This is largely due to inexperience in local government, and there's apparently been a lot of argument about whether financial controls should be loosened to allow quicker spending. As much as rapid progress is desirable, giving too much scope for corruption in a place with Peru's history may be worse than doing nothing.

The more general challenge, as summed up by the July 28--August 3 Economist, is maintaining the confidence of the population while the benefits of economic growth are gradually distributed more widely. Peru has averaged 5% growth over the last six years -- the steadiest in Latin America. But much of the interior of the country has yet to see any real benefit, and while poverty rates are now slowly coming down, in the some parts of the sierra they have actually got worse.

During July the country was racked by protests, led by the powerful teachers union SUTEP, and there was controversy over a government decree that local government leaders were not allowed to incite or lead protests.

When I lived in Peru, strikes and protests were as regular as a Friday trip to the pub, and it was de rigeur to call for the resignation of president Alejandro Toledo. This was partly due to Toledo himself, who appeared muddling, technocratic, and out of touch. President 'Alan' has all the popular touch you could want -- as even his critics admit -- but a silver tongue is not enough to soothe the frustrations of people facing ongoing hardship. Prior to the earthquake, Garcia's approval ratings had plummeted from a year earlier, especially away from the more prosperous coast.

The real problem is that people in the Peruvian sierra have been poor and excluded for so long; any government is not just dealing with the legacy of the previous administration, but approximately 500 years of social division and neglect. Protest and atagonistic politics, as exemplified by the likes of Ollanta Humala, have become ingrained as the only way to engage.

This creates a vicious circle where people and businesses who do have some chance of making progress are hindered by the disorder and lack of confidence. Hence the attraction of an almost Blair-ist promise of 'responsible change'. But for the large mass of people struggling as much as always, 'responsible' is coming to be seen as a euphemism for 'too slow'.

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Saturday, September 01, 2007

That's My Piece of Sea

Like grownup siblings still embittered by a childhood dispute, Peru and Chile seem determined to draw out the consequences of the 19th-century War of the Pacific as long as possible.

Domainating the attention of politicians and media at the moment -- especially in Peru -- is the question of the maritime border.

Peru maintains that, while its land border with Chile was set by the Treaty of Arica in 1929, the maritime limits have never been satisfactorily settled. However, Chile says that the maritime border was defined by two fishing treaties signed in 1952 and 1954.

The technical controversy is over whether each country's 200-mile exclusive economic zone should be delimited by the geographical parallel, as agreed in the fishing treaties, or by a bisection of imaginary lines perpendicular to the respective coastlines, as established by the 1982 United Nations Convention on the Law of the Sea (see diagram, taken from Wikipedia entry on the topic.)

Peruvian governments have been trying to begin negotiations on the matter since 1986. The Chilean response has always been that the matter is settled by the fishing treaties, so there's nothing to discuss.

In 2005 the Peruvian congress drew up a law to define the 200-mile maritime zone over which it has sovereignty. This included about 38,000 sq km of water currently under Chilean adminstration -- the shaded area in the map.

With no progress possible through diplomatic channels, Peru decided to take the case to the International Court of Justice in The Hague, a decision announced by president Alan Garcia in his discourse to the nation on 28 July this year.

A preparatory step was to draw up a a cartographic map illustrating the area claimed as sovereign by Peru. The map was published in the official daily El Peruano on 12 August, prior to being presented to the United Nations

Chile's response to the publication of the map was one of official surprise and offense, claiming that the map was a unilateral action that 'ignored' the existing treaties. Chilean foreign minister Alejandro Foxley sent a formal note of protest to the Peruvian ambassador and called the Chilean amabassador to Peru back to Santiago for consultation.

But Peruvian representatives responded that there had been plenty of warning of the process that was to be followed, and Chile had been forewarned of publication of the map

Rising tensions were defused when the earthquake struck southern Peru on August 17, and Chile was among the first countries to send aid to the victims.

However on 23 August Foxley further complicated the matter, stating that settlement of long standing Bolivian claims for access to the sea could be prejudiced by Peru's claims. But this was brushed aside by Bolivian president Evo Morales, who said on a visit to the eathquake zone in Pisco that "I know the Peruvian government isn't going to be an obstacle to resolving this matter with Chile".

The whole debate is put into perspective by an entertaining piece of reportage from Rodrigo Barria Reyes of Chilean paper El Mercurio. Barria Reyes describes the fruitless search by a 518-tonne, 33-man Chilean navy vessel for a tiny 4-man Peruvian fishing vessel suspected of entering Chilean-controlled waters without permission.

The main target for Peruvian fisherman from the port of Ilo is the blue shark, whose fins are considered in some Asian markets to have potent aphrodisiac properties To reach international waters where the sharks are abundant, boats have to cross the Chilean-patrolled zone. Those that don't request permission, or fish in Chilean waters, are towed back to Arica where their cargo is dumped and they are fined and deported.

In this case the Peruvian boat was trespassing, but made a quixotic dash back into Peruvian waters before the Chilean navy could catch it. El Mercurio reports that the fisherman braving the high seas in search of shark fins make $600 for a 15-day trip. Meanwhile, Peru has set aside $2 million USD to fight the court case in The Hague.

To an outside observer, it seems incredible how much importance is attached to a patch of ocean. It's appropriate that the El Mercurio article described the tiny fishing boat as 'Lilliputian', because the way in which arcane details of geography are being scrutinised by politicians, lawyers, historians and bloggers in both countries is reminiscent of something from Gullivers Travels.

To be fair, the leaders of both countries have been at pains to stress that border issue is completely separate from the two nations' economic and social relations. Both governments have tricky balancing acts to maintain. Foxley and president Michelle Bachelet need to placate the hawks in opposition who accuse them of having a muddled and over-accommodating foreign policy, while Garcia needs to stay a step ahead of Peruvian nationalists like Ollanta Humala who are always ready to stir up anti-Chilean feeling.

Far more than the material value of the territory itself, the current fuss is a reflection of the place that the War of the Pacific continues to play in both countries' collective psyches. And while it seems to be Peru that continues to obsess over the past, some Chileans argue that there's a lot their country could do to restore good will. In a guest column in La Republica, Chilean journalist and university professor Felipe Bianchi Leiton said that Chile should formally apologise to Peru for selling arms to Ecuador during its border dispute with Peru in 1995 -- when Chile was supposed to be a guarantor of the peace.

He further argued that Chile should return the books stolen from the library of Lima during the War of the Pacific, and give up disputing denomination of origin rights for pisco. Finally, Leiton stated that Chile must accede to the Peruvian request to extradite ex-president Alberto Fujimori to face trial in Peru.

But the effort to make Fujimori face trial is a different question altogether.

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