“New Chapter” for two countries

Book your flights to Cuba, because barriers and travel warnings are now down. For the first time in half a century tensions between the United States and the island off the coast of Florida, which stood as a dark power during the Cold War times on the side of Russia, have been eased.

U.S. President Barack Obama has called for a move to reestablish diplomatic ties with Cuba (Politico). The move and efforts have suddenly been made known to the public as Cuba released a long time U.S. hostage who had been held captive since 2009. Of course U.S. citizen’s lives are important, but what pushed such a big move for friendship after the release of one hostage?

“[Alan] Gross was convicted of espionage by a Cuban court in 2011 and sentenced to 15 years for bringing telecommunication devices into Cuba” (WREG Memphis).

In addition, the United States has released 3 Cuban spies.

President Barack Obama (left) greets Cuban President Raul Castro during the memorial service for Nelson Mandela on Dec. 10, 2013, in Johannesburg, South Africa. | Getty

Although seemingly sudden, the deals between U.S. and Cuban officials has been culminating over the past year. Obama calls the embargoes on Cuba to be a failure.

What this means:

    • Travel restrictions eased
    • Increased exports of U.S. goods to Cuba
    • U.S. travelers to bring in some items
    • Embassies will be opened in both countries

While only Congress can formally overturn the five decades-long embargo, the White House has some authorities to liberalize trade and travel to the island,” WREG Memphis.

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Analysis

With the petro dollar value falling, Russia loosing influence and Venezuela’s economy faltering in the midst of falling prices; some of Cuba’s main financial and export partners are withering at the core. It’s no wonder, if Cuba along with other countries is turning its eye to new partners. It’s not about the prices of oil, but petro politics and who’s producing it. The reality is the U.S. and Canada fracking and shale revolutions are changing dynamics. The global economy and relations are switching as can already be seen as almost a 50-year silence is being broken between two former rival countries.

 

 

Endless Plummet? Gas Prices Continue to Drop

Oil prices have hit a record low falling below $60 per barrel. Although for gasoline consumers the drop in prices are accompanied with happy bank accounts, other production sectors and countries are starting to feel the effects.

From oil fields in places like Texas to those in Saudi Arabia and Russia, along with extraction plants and businesses, are being affected by the fall in prices. Countries like Venezuela and Russia, whose economies greatly depend on oil extraction and exportation are some of the hardest hit as they try to maintain production quotas in the face of a saturated market.

“Russia’s rouble went into free-fall in Tuesday trading, falling repeatedly to hit record lows, despite the central bank’s dramatic decision to raise interest rates from 10.5% to 17%,” according to BBC.

Why are oil prices down?

The simple answer is that there is a surplus in the supply of oil, but a decreased demand for oil in the global market. This problem has been perpetuated by the exploration and the energy independence revolution in the United States and Canada. The extraction of shale oil in the United States has boomed and created alternative energy sources that are messing with the natural flow of oil trade (Boston Globe).

 

Haiti calls on Putin for help

A wave of marches and protests continue in Latin America. Haiti faces protests from unsatisfied citizens, marching against corrupt and useless governmental system.

Thousands gathered in Haiti this past week, clashing with police. The protesters that remained were met with tear gas, in an effort to subdue the masses.

The march began peacefully but some protesters later threw rocks and set tyres ablaze [Reuters]
Originally the protests arose in a plea to hold long overdue elections. Dissatisfied sentiments have led citizens to march to the National Palace, a place that has been restricted for years, according to BBC. Regardless of police force, citizens made it to the National Palace in Port-au-Prince protesting against incumbent President Michel Martelly.

Martelly was supposed to hold elections in 2011, but because of a disagreement between the executive and other legislative branches, elections have yet to take place…three years later.

Many Haitians accused the United States of supporting the country’s incumbent president. Due to this they have turned to Russian President Vladimir Putin for support in initiating actions and governmental transition. Protesters gathered in streets holding up poster with Putin’s face, asking for his aid.

Obama has a new friend

The populist movement in Latin America among countries such as Cuba, Nicaragua, Venezuela, Brazil and Argentina (as some examples) has greatly increased along with ill sentiment towards the United States. From this, new strategic relations with Russia’s Putin and business promoted by China have been formed.

However, despite the movement away from U.S. influence in the region, there is surprising openness and acceptance from an unexpected place: Uruguay. Uruguayan President Jose Mujica will be accepting U.S. detainees from Guantanamo. The detainees were arrested for alleged links to insurgent groups, although they were never charged. The detainees that are to be sent to Uruguay are four Syrians, one Tunisian and one Palestinian, according to El Comercio.

With Uruguay being the first nation to legalize the trade and selling of marijuana, is something clouding Mujica’s judgement? What irked him to make such an offer?

¿Por qué aceptó José Mujica recibir presos de Guantánamo?
Uruguayan President Mujica. Photo: Reuters

This year Mujica volunteered to give shelter to six prisoners from Guantanamo. The announcement was not only surprising to the citizens of Uruguay, but to the United States as well, since the only countries really making offers were those close to Washington.

In a radio broadcast last March, Mujica stated that the U.S. government reached out to the nation of Uruguay and asked if they would be willing to take in some of the refugees. Negotiations with the United States over the issue are “far from being closed,” Mujica commented.

“Mucho, mucho hemos criticado y seguiremos criticando al imperialismo yanqui, a sus abusos de poder, por acá y por allá”, acotó Mujica.

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“Much, much have we criticized and we will keep on criticizing to the Yankee imperialism, to its abuses of authority, here and over there”,  annotated Mujica.

In this statement, it is almost as if Mujica sees Guantanmo and its prisoners, as casualties of U.S. imperialism.

Mujica recognized that the current U.S. president has made and effort and based his campaign on “getting rid of that shame,” referencing to all the controversy of Guantanamo and to its captives.

The Uruguayan president also sees the acceptance of these prisoners as beneficial. Mujica reflected on the reactions and image of the country based on their acceptance of the prisoners:

Este pequeño Uruguay supo dar refugio (…) a los anarquistas perseguidos y expulsados por otros países, cuando decían que eran terribles terroristas, y acá les daban cobijo y trabajo, y vaya qué fruto le dieron al Uruguay”, recordó Mujica.

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This small Uruguay can be a refuge…to the persecuted anarchists that were driven out of their lands by other countries, when they [countries like the U.S.] said they were terrible terrorists, and here they were given shelter and work, and go giving their fruit [skills] to Uruguay,” recalled Mujica.

Bumpy Road Ahead for Latin America

Pass by a Shell or Chevron gas station and the prices for gasoline…are unbelievably low. There was a time, where paying $20 would almost fill the tank up half way, however now for some cars $20 can get you about 75% of a full tank. In February 2011, prices per barrel of oil rose above $100 USD (Washington Post). It seemed as if prices would remain around the $100 per barrel price; the oil cartels would profit and the petro world would keep turning.

Reality check: prices can only rise so much until they plummet and the market decides to balance itself out. The problem with the oil industry is not just the development of alternate energy sources, but the oil surplus that has been produced in the market has collided with a crippled world economy. Cartels such as OPEC have refused to drop their production quotas despite the oil price crash. Prices per barrel fell below $70, according to The Washington Post.

Most Latin American economies have been switching to oil exploration, extraction and exportation. However, the region, along with the rest of the world, is about to be the titanic hitting its iceberg, with something unseen looming in the water. The dropped oil prices are just one reflection of the weakness of the world economy. Great development within regions such as Latin America has been achieved within the last decades, but the future does not look bright.

“These economies thrived because of their sound, rule-based policy frameworks, rising commodity prices, and favorable global financial conditions,” said IMF director Christine Lagarde at a regional summit in Santiago (ABC News). Lagarde continued, “the road ahead looks increasingly bumpy,” for the region’s economy.

Regional growth is supposed to remain at about 1.3 percent for this year, and raise slightly to 2.2 percent for 2015. Latin America’s economy has generally been heavily dependent on export goods, however demand and commodity value will continue to slow as the market slows.

IMF Chief Legarde speaking in Chile on the outlook for Latin America. Photo: Mercopress

What the region is posed with now, is shifting its focus from being cultivation and export based to developing infrastructure. The region must now (like it should have been doing a long time ago) begin greatly investing in structural reforms, such as education to ‘lift productivity and create economic diversification’ according to IMF director Lagarde.

“Latin America’s middle class had grown by about 50 percent since 2003, partly because of a reduction in labor income inequality, including through rising minimum wages,” according to Lagarde.

Stay as long as you want, no charge applied

Originally implemented in August, the $100 fine which is supposed to be charged to foreigners leaving Costa Rica with an expired ‘term of stay card,’ has been over looked by authorities in airports according to the Nicaraguan newspaper, La Prensa.

Due to the country’s unreliable airport technology, the fine has not been applied. The electronics do not yet ensure trustworthy collection information regarding to the inflow and outflow of people.

The economy of Costa Rica most heavily depends on: tourism, agriculture and electronics exports, according to a Princeton University study. As eco-tourism is key to the Costa Rican economy, the airports have failed to charge people who have stayed past their leave date. Although a minuscule economic loss, about 1.7 million tourists come in and out of Costa Rica per year, amounting to about $1.7 billion U.S. dollars per year (Costa Rican Embassy).

Polling Results and Correct Answers: Random Facts about Latin America

Fortunately, tourism to Latin American countries doesn’t look to be stopping as 100 percent of people who answered the Latin America Survey answered “yes” to traveling there.

Question 2: From which country/countries does Tango originate from?

About 57 percent of survey takers answered that the starting regions of Tango are Argentina and Chile, 29 percent said Argentina and Uruguay, while 14% claimed that the Tango originated in Colombia and Peru. The correct answer however, is that the Tango originated within the region of Argentina and Uruguay. It was heavily European influenced, as Uruguay and Argentina have a heavily European descent population. The dance was started as something scandalous in the streets between men and prostitutes in the 1890’s, but today is a famous intimate dance between partners.

Question 3: Which of the following is the biggest cocaine producer in the world?

Colombia is the Latin American country most associated to drug trade and the production of cocaine. These sentiment was supported as 100 percent of pollers voted Colombia as the biggest cocaine producer in the world. However, the reality is, in the past year Peru has surpassed Colombia in the cultivation of the coca leaf and manufacturing of cocaine.

Question 4: Which country’s president has recently created very warm relations with Russian President Vladimir Putin?

This question got an array of answers, 43 percent voted Chile as the country whom Putin has drawn closer to, 29 percent said Argentina, while the other 29% said Mexico. The truth however, is that Russian President Vladamir Putin and Argentine President Cristina Fernandez de Kirchner have become trade partners, but even stronger ideological partners.

This blog is a platform for the investigation of the economic situations and governmental transitions within Latin America and how these factors have increased activities with unusual trading partners.