Category: Latin America

Ecuador won’t pay foreign debt interest – CNN.com

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As I mentioned earlier, Ecuador has made assertions that much, if not all, of its foreign debt is illegal, claiming that the borrowing was made without proper authorizations and other irregularities.

Well, Ecuadorian President Rafael Correa is now saying that they won’t pay interest on $4 billion in foreign debt, for which they have paid $7 billion in interest since the 1980s with no appreciable paydown in the principal.

Of course, paying $7 billion in interest on $4 billion in debt sounds grim, but it’s only about 6% a year if you assume that the payments were made over 30 years.

By the same token, the infrastructure of international sovereign debt, most notably through the IMF and World Bank, is structured in such a way as to prevent any meaningful payback on those loans.

They require that the economy be restructured to allow extensive foreign ownership and the free flow of capital, and that the internal economy be placed secondary to the export economy.

This means that whenever there is a downturn, and there will always be a downturn, governments are forced to borrow to repay their loans, and the cycle continues.

Brazil to Buy Hind Helos

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This actually makes a lot of sense for them.

They are dealing primarily with things like dope dealers and insurgents, and purchase of 12 Mi-35M attack helicopters gets them an aircraft that is competent in attack, but also has the ability to carry 8 troops or a 4 of litters in a medevac situation, and so are more flexible.

They are also likely a lot cheaper, than the competition, the Eurocopter Tiger, and the Agusta-Westland Mangusta.

Argentina Plans to Renationalize Pensions

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Of course, Moody’s investor’s services hates the idea.

I will make a note on the bigger picture: When Argentina privatized its pension system over a decade ago, it set the stage for its brutal economic implosion in the first place, because it stripped the government of all reserves in the process.

In response to the reports of the plans the Argentina markets dropped like a stone (13%).

I will note Brad Delong’s blog, and this quote:

The private retirement system, set up in 1994 to help bolster capital markets, owns about 5 percent of companies listed on the Buenos Aires stock exchange and 27 percent of shares available for public trading, data compiled by pension funds show.

The market crash was inevitable. It would either happen now, or when the population cohorts start sellling stocks when they retire.

This should have been done sooner.

Bolivian Elections Resolve Nothing

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To no one’s surprise, Evo Morales won the referendum that he called.

It’s not really going to settle anything.

Fundamentally, it the level of venom by entrenched interests in former Spanish possessions is even now a surprise to me a bit, but there are historical reasons for this.

For most of the existence of the Spanish monarchy, the king was the absolute ruler of the nation, and the nobility were absolute rulers of their domains, and it was believed that this was God’s will.

Hence, as any student of English history knows, when the English crown ignored their responsibilities under the Magna Carta, the refrain was always that England, “Wasn’t Spain.”

The belief by the Spanish crown and the nobility that their positions by virtue of God’s will transferred down to the landed gentry in Spain’s former colonies, particularly in Latin America, where there is a real divide between those of Spanish ancestry and those of Amerindian ancestry.

So, even minor efforts toward land reform, which would not be viewed positively by any land holding class, is also literally viewed as an affront to God.

As a result, I would expect to see political instability for some time to come.

Cuba Playing Russian Bomber Rumor Close to the Vest

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Fidel Castro wrote an online column saying that, “Raul did very well keeping a dignified silence.”

Both Russia and Cuba have everything to gain from ambiguity, and so I think that they will continue to be ambiguous.

That’s part of Teddy Roosevelt’s idea behind the hole “talk softly” foreign relations.

I would note that the rumor is not about a permanent base, just a refueling base, but that would still give NORAD fits.

It Appears that Some People Want to Relive the 1960s

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Specifically, the Cuban Missile Crisis.

There are now rumors that Russia may start basing nuclear capable bombers in Cuba in response to the US installing an ABM system in Europe directed at them (let’s be honest, if it were actually aimed at the Iranians, as claimed, it would be further south, to give coverage to Turkey and Italy).

General Norton Schwartz, the nominee for Air Force chief of staff, said, “I think we should stand strong and indicate that that is something that crosses a threshold, crosses a red line, for the United States of America.“

I agree….as does the expansion of NATO eastward, and a the European missile defense system crosses a red line for the Russians.

Russian political culture is not driven by a need to engage in the world. Russian political culture is driven by a paranoia about the world, and we seem to be taking steps guaranteed to stoke their paranoia.

It’s almost as if someone wanted to recreate the Cold War for political gain.

“Free Cuba” Funding Frozen in Orgy of Corruption

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Considering that these programs were all founded by people who prospered under Batista, it’s not surprising that corruption is the rule rather than the exception.

If your goal is to restore corruption and klepto-capitalism to Cuba, it should be no surprise when the organization you found is corrupt and klepto-capitalist.

Our position towards Cuba has been as self-destructive as anything that I’ve seen in US history.

Cuban Oil May Put Kibosh on Embargo

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It looks like Cuban may be pumping over half a million barrels a day in the next few years, and this may change minds about the embargo.

There are a number of reasons, the first being that US oil companies will want to be in the game, the second is that will mean that there will be oil rigs in spill distance of the Florida coast, and the tourist industry there may not be so sanguine about, for example, a Brazilian firm drilling.

South Africa and Brazil Enter Joint Development for A-Darter Missile

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South Africa has been working on this missile for some time, and the jount development agreement should bring some more resources to the project.

It’s clearly been delayed a bit, as the SAAF has purchased German IRIS-T missiles as an interim fit.

The A-Darter is a short range IR guided air to air missile, and appears rather similar to the British ASRAAM, with no forward wings, though it has thrust vector vanes in the exhaust, implying a bit more agility off the rail:

This would also imply a dual thrust motor, with low thrust in the first second or so, so as to allow for optimum operation of the thrust vector paddles.

Sick Old Man Now Pandering to Cuban Wackjob Community

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Ever since the Elian Gonzalez debacle, which revealed the right wing of the Cuban to be something akin to terrorists, US sentiment has increasingly turned against our cuba policy.

John McCain just slammed Obama for “being soft on Cuba”.

The problem is that “being soft on Cuba” this is exactly what most Americans want, it’s what dissident Cubans actually living in Cuba want, and it’s the best policy for both countries.

Our mindless anti-Castro foreign policy has harmed the US, the people of Cuba, and butressed the Castros hold on power in Cuba.

Obama should confront McCain on this. It’s old thinking from an old man.

What’s more, the old anti-Castro whack jobs won’t vote for him anyway. They would never vote for a negro.