Monday, October 19, 2009

ALBA Abandons Greenback, Endorses Regional Commitments

(digitalwarriormedia)– The Seventh Bolivarian Alliance for the Americas (ALBA) Summit concluded on Saturday in Cochabamba, Bolivia. Leaders from Latin America and the Caribbean signed a final declaration that supports the legitimate government of Honduras, creates a new regional currency and calls for respect for Mother Earth.

Hosted by Bolivia’s Evo Morales, the presidents attending ALBA were: Hugo Chávez (Venezuela), Rafael Correa (Ecuador), and Daniel Ortega (Nicaragua), prime ministers Roosevelt Skerrit (Dominica); Ralph Gonsalves (Saint Vincent and the Grenadines); and Baldwin Spencer (Antigua and Barbuda), as well as Vice President of the Council of Ministers Jose Ramon Machado (Cuba).

ALBA member countries invited delegations from Paraguay, Uruguay, Dominican Republic, Haiti and Russia to attend as summit observers.

ALBA was created in 2004, as an initiative between Cuba and Venezuela. The brain-child of Venezuelan President Hugo Chavez, the regional bloc emerged as a trade alternative to the U.S.-sponsored Free Trade Area of the Americas (FTAA or ALCA in Spanish).

In 2006, Bolivia’s Morales proposed the People’s Trade Agreement (PTA) – a treaty that is based upon cooperation and reciprocity with respect for the well being of people, their history and cultures. The PTA rejects the trade liberalization policies of the FTAA and is considered the cornerstone of trade agreements within ALBA.

Regional In(ter)dependence

In their declaration, the nine-nation bloc committed to greater regional economic integration and increased independence from U.S. trade influence, spearheaded by the creation of a regional currency - the Sistema Único de Compensación Regional (Unified System of Regional Compensation) or sucre.

The sucre will go into effect in 2010 and may eventually develop into a regional currency similar to the euro – enabling trade within the bloc as well as with non-member countries. It would be used in commercial exchanges between ALBA countries in order to gradually reduce dependency on the U.S. dollar.

When SUCRE was approved at an ALBA meeting in April, Chavez said, “This will help us to overthrow the dictatorship of the dollar, imposed on us from over there, from Bretton Woods."

The proposed compensation system will also establish a regional monetary council, central clearinghouse, and a regional reserve and emergency fund.

According to Bolivian Finance Minister Luis Arce, there are plans for the group to develop an import-export business (Alba Exim), an agriculture business (Alba Alimentos), and also an energy company.

Bloomberg reports Arce’s announcement that the companies will seek “sovereignty and the development of food security in all member countries.”

International Priorities

Leaders demanded the return of democratically elected Honduran President Manuel Zalaya and resolved that ALBA members will deny any representatives of the de facto government to enter their respective countries.

The group approved new economic sanctions against the current government of Honduras led by Robert Micheletti. They called on the international community to reject the upcoming presidential election planned by the interim government in November.

Colombia's plan to extend use of its bases to the U.S. military was denounced."The government of Colombia must reconsider the installation of these military bases,” read the member statement, calling it a threat to the region's security.

ALBA member countries also unanimously adopted a special resolution to reject the U.S. embargo against Cuba.

President Morales called for the establishment of an "International Tribunal of Climate Justice" to hold rich countries responsible for paying damages that stemmed from their disproportionate consumption of fossil fuels.

A joint resolution from ALBA member countries will be taken to the summit on climate change that will be held in Copenhagen this December.

Including the Grassroots

One of ALBA's more unique features is the status permitted to social organizations of member countries.

During the Fifth ALBA Summit in 2007, members accepted a new organizational structure which created a space for the inclusion of social movements and grassroots participation in decision-making.

The revised ALBA model consists of a Council of ALBA Presidents, a Council of ALBA Ministers and a Council of Social Movements.

On Thursday, more than 700 delegates from social and indigenous movements across Latin America gathered for the First Summit of the ALBA Council of Social Movements, according to Cuba’s Radio Nuevitas.

Joined by representatives from 40 European, African and Asian countries, the social organizations met to draft priorities and guidelines on subjects such as climate change, autonomies, defense of the planet, and natural resources. Their recommendations were presented to heads of delegations from member countries on Saturday.

Thousands of social movement representatives joined in the summit’s closing ceremony at the Felix Capriles Stadium in Cochabamba where the final declaration was presented.

The most recent ALBA Summit was the fourth meeting held by the body this year. The next meeting is scheduled for December in Cuba.

Photos: ABI, Telesur


Tuesday, October 13, 2009

Bolivia....An Island of Economic Stability

(digitalwarriormedia) Three and a half years after the ascension of the Movement Toward Socialism party (MAS) and the election of President Evo Morales, state participation in the national economy has increased and the central government’s influence in private enterprises continues to rise.

According to Vice President Alvaro Garcia Linera the state's participation in the national economy has grown three-fold.

"In 2005… the state {was} involved with 8 or 9% of the country's wealth. Today, in 2009, the Bolivian state, participates…with about 27% to 28% of the country's economy," Garcia Linera said in an interview with the Patria Nueva radio network on Sunday.

There are domestic and foreign business interests who caution that Bolivia’s economic approach is scaring off foreign investment. Private investment as a share of Gross Domestic Product (GDP) remains among the lowest in Latin America.

However Bolivia’s economic and fiscal policies - including greater state intervention - are shielding Bolivia’s economy during the global economic downturn.

Bolivia’s Economic Outlook

It is among the least developed countries in Latin America and poorest in per capita GDP, but under pressure of the current world credit crisis, Bolivia’s economy is faring better than other nations, even with inflation reaching almost 12% and a national unemployment rate at 7.5%.

Its economy grew over 6% last year and is likely to be among the few countries in the region to register positive growth in 2009, according to Moody's Investor Service. The United Nations Economic Commission for Latin America and the Caribbean (ECLAC) forecasts 3% growth for Bolivia this year, with the International Monetary Fund predicting a more conservative 2.2% increase.

With $7.8 billion in foreign reserves - now close to 50% of GDP - and government savings that surpass 10% of GDP, Bolivia is “well-positioned to manage any foreseeable economic or financial challenges in the near future," said Gabriel Torres, a Moody's vice president and sovereign analyst for Bolivia.

One of the most significant policies impacting the health of government coffers was the passage of legislation that nationalized Bolivia’s hydrocarbon industry in May 2006. This mandated a renegotiation of oil and gas contracts which drew higher royalties and taxes from multinational energy companies operating in Bolivia.

A boom in commodity prices, which brought higher revenues for hydrocarbon and mining exports, also drove the national current account balance into a financial surplus over the past three years, after years of substantial deficits. Last year, Bolivia’s exports reached a record $6.2 billion – with the caveat that this number was driven by high prices, not necessarily greater productivity.

Fiscal accounts are expected to deteriorate for 2009, as extensive drops in commodity prices continue this year. Bolivia’s economy is heavily dependent upon export of its commodities from its energy, mining and agriculture sectors. Almost 70%of Bolivian exports in 2008 were either natural gas or minerals (zinc, tin and silver).

There is also the significant drop in remittances from Bolivians working overseas. That number is expected to contract 50% from $1 billion in 2008 to around $500 million this year.

But there are still good economic indicators going into the 4th quarter of 2009.

In September Bolivia received a boost when Spain agreed to write off $80 million in debt. Spanish Prime Minister Zapatero said 60% will be cancelled outright and the remaining 40% deposited into a fund for education projects.

While in Madrid, President Morales met with executives of Spanish oil giant Repsol. And despite ongoing claims that Bolivia is scaring off private investment Repsol has indicated plans to boost its investments in Bolivia.

Also last month, both Moody’s and Fitch Ratings announced that Bolivia’s bond rating was being raised as debt levels remain low and political tension within the country has eased.

On Monday, Jindal Steel and Power began mining iron ore in Bolivia’s El Mutun mine, after initially securing rights in 2006. With reserves of 40 billion tons, El Mutun is one of the world’s biggest iron ore mines. Although small quantities will be exported for the next 4-5 years to neighboring countries such as Paraguay and Argentina, Jindal has committed $2.1 billion investment over the next 8 years to mine up to 20 billion tons and build a steel making facility.

With some of the greatest reserves of natural gas, iron ore and lithium in the world, Bolivians are well aware of the vast natural resources that fall within their national borders.

Over the weekend, President Morales pledged his resolve to continue the process of change taking place in Bolivia – driven largely by the country’s reclamation of its resources and a redistribution of national wealth into social programs.