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New President in the Dominican Republic: Change or More of the Same?
Danilo Medina of the incumbent Dominican Liberation Party (PLD) beat former president Hipólito Mejía yesterday to become the new president of the Dominican Republic.
The vote was marred by some irregularities such as the use of state resources in favor of Medina, which have been confirmed by the electoral observers of the Organization of American States (OAS). However, former Uruguayan president Tabaré Vázquez, head of the OAS delegation, said that the number of irregularities didn’t affect the outcome of the vote. And Medina’s margin of victory (51.2% versus Mejía’s 46.9%) was well within what the polls predicted in the weeks ahead of the election.
However, the vote irregularities are a painful reminder of the biggest problems that beset the Dominican Republic: corruption and political patronage. The DR ranks 129 out of 182 in the Transparency International index on corruption. According to the World Economic Forum, corruption is the most problematic factor for doing business in the country. The Dominican government is a machine of dispensing favors and political patronage to supporters. For example, the departing administration of president Leonel Fernández has 334 vice ministers distributed among 20 cabinet ministries. The Ministry of Agriculture has 37 vice ministers, Public Health has 34. Each vice minister enjoys a nice salary plus benefits such as a discretionary credit card, travel expenses, car with a chauffeur, staff, etc. The Dominican Foreign Service boasts 113 ambassadors and 1,163 diplomats despite having representation in only 54 countries and 6 international organisms.
The big question then is whether president-elect Medina will break with the past or be more of the same. He comes under the shadow of president Leonel Fernández, who has been in power for 12 of the last 16 years. Medina was twice Fernández’s Secretary of State (equivalent to Chief of Staff), however, he challenged the president in the PLD primaries of 2007 (and eventually was defeated), establishing a reputation of independence from the current president. On the other hand, his vice-presidential candidate is Margarita Cedeño, Leonel Fernández’s wife and current first lady. Medina’s campaign slogan was: “Continue what’s good, change what’s wrong, do what’s never been tried before.”
I spent a week in the Dominican Republic last March on the invitation of the local free market think tank CREES and I could perceive the dissatisfaction that most Dominicans feel towards their political class. An exiled Venezuelan friend even drew parallels between the DR today and his country back in the late 1990’s, when a disaffected Venezuelan population, sick of their corrupted politicians, chose an outsider as president. No strongman appears in the Dominican horizon, though. But there’s an increased feeling that the country needs a dramatic cut from its present.
Perhaps the sentiment is best expressed in the song “Apaga y Vamonos” (meaning something like, “the last one to leave turn off the light”) by renowned Dominican singer Juan Luis Guerra that says:
The same promise, the same CD
The same lie and the same coffee
The same speech and the same cliché
History recycled, all we have is faith
The last one to leave turn off the light
The good men, where are they?
All Europe Needs Is a Massive Earthquake and Tsunami
Paul Krugman looks at the first-quarter growth results from some developed economies and notes Japan’s strong performance due to the post earthquake and tsunami reconstruction. He then compares it to Italy’s dismal results due to austerity measures (which, as I’ve pointed out here, consists almost exclusively of tax increases, not cuts in spending).
Krugman then says that “there seems to be some kind of lesson here about macroeconomics, but I can’t quite put my finger on it…” Is he really saying that what Europe needs to grow again is a massive earthquake and tsunami? Or maybe a nuclear accident? After all, Krugman once wrote that Fukushima’s “nuclear catastrophe could end up being expansionary” for the economy.
Speaking of economic lessons, has the good professor never heard of “the broken window fallacy”?
Looking at Austerity in Italy
The Italian economy contracted for a third quarter in a row, deepening the country’s recession and adding to the fire of the euro crisis. Italy is the third largest economy in the Eurozone, and many view it as the endgame of an eventual collapse of the common currency because it is too big to fail. Neither the EU nor the IMF have enough cash to rescue it. If the country defaults, that would probably spell the end of the euro.
Austerity is being blamed for Italy’s economic troubles. Chiara Corsa, an economist at UniCredit, wrote that “The key factor is austerity, which is weighing heavily on consumption and investment.” Recent local elections saw the rise of anti-austerity parties. Paul Krugman warned about this back in December when he described the austerity push of Prime Minister Mario Monti as “self-defeating” and “delusional.”
However, as is the case for Britain, France and Greece, commentators are unclear about what austerity means for Italy, although many seem to imply spending cuts. For example, if Krugman’s criticism about Italian austerity is consistent with his critiques about austerity elsewhere in Europe, we know he means spending cuts. So let’s take a look and see if there has been any:
* Using GDP deflator.
Source: European Commission, Economic and Financial Affairs.
Spending in nominal terms increased by a yearly average of 4.1% between 2000 and 2009, and then fell slightly the following year. In 2011 government spending was just 0.14% below its 2009 level. As for spending in real terms, there’s no cut whatsoever. And as a share of the economy, total spending reached a peak in 2009 at 51.6% of GDP, and it fell to 49.6% last year, a decline far from significant.
So what’s austerity all about in Italy so far? According to The Financial Times, the “government’s €30 billion austerity package, passed in December, was heavily oriented towards tax increases rather than spending cuts, an emphasis that is now widely recognized by ministers as having driven Italy deeper into recession.” The FT adds that the Monti administration is facing “intense pressure from business, politicians and the public to shift the burden of austerity away from heavy taxation towards cuts in public spending.” As a result, the Italian Prime Minister announced €4.2 billion in spending cuts starting in June, still less than 1% of total public spending. That doesn’t sound savage to me.
But it’s quite fascinating to see the hysteria surrounding non existent spending cuts and its supposedly negative impact on economic growth. For example, last December The Economist warned:
“But too great an emphasis on austerity in the short run risks sending the continent’s economy into a deep recession; the latest data on Italian industrial production showed an annual fall of 4.1% in October, even before budget cuts were introduced by the new government.”
Interestingly, according to The Economist, spending cuts were somehow responsible for a decline in economic output in Italy even before being implemented!
If austerity is to blame for Italy’s recession, we need to be clear that by austerity we mean mostly tax increases with almost no reduction in government spending.
Looking at Austerity in Greece
Since 2009 Greece has been at the epicenter of the euro crisis, and after last week’s parliamentary election, it looks like its departure from the common currency is a matter of weeks. Everyone agrees that Greece didn’t get into trouble because it spent too little, just the opposite. When George Papandreou became prime minister in October 2009, he found that his conservative predecessor had cooked the books and left him with a staggering fiscal deficit of 12.7% of GDP. The socialist Papandreou was then forced to shelve his promises of more handouts and implement a program of fiscal austerity in exchange for multi-billion bailouts from the European Union.
Two and a half years on, things look as bleak as ever for Greece, with an economy that is still shrinking and unemployment on the rise. Today, many people claim that, even though profligacy was the source of Greece’s problems, austerity is now making things worse by cutting spending too fast too soon. Time magazine’s Fareed Zakaria explained the dynamics yesterday in his CNN show GPS:
“The problem is that as these governments cut spending in very depressed economies, it has caused growth to slow even further – you see government workers who have been fired tend to buy fewer goods and services, for example – and all this means falling tax receipts and thus even bigger deficits.”
Zakaria is not the only one describing austerity as mostly spending cuts, and some pundits even dramatize the term by adding adjectives such as “deep,” “brutal,” “savage,” or “self-defeating.” Let’s look at how brutal these spending cuts have been in Greece:
Source: Source: European Commission, Economic and Financial Affairs.
Spending has declined to approximately its 2007 level in nominal terms, while in real terms it actually continues to go up. (I look at spending in real terms because that’s what Ryan Avent at The Economist said we should look at in a reply to Veronique de Rugy’s initial graph on austerity in Europe. Note that, as in my previous posts on Britain and France, I’m using the GDP deflator to calculate spending in real terms). If we look at spending in real terms, there haven’t been any spending cuts in Greece. On the other hand, Tyler Cowen observes that “in the short run it is supposedly nominal which matters (that said, gdp and population [and inflation] are not skyrocketing in these countries for the most part).” Let’s look at nominal then. Since 2000, public spending rose in Greece at an annual rate of 7.8% until 2009. Then it declined by 8.3% in 2010 and a further 4.1% in 2011. This is certainly a cut in spending, but far from brutal.
Some argue that we shouldn’t look at spending levels when talking about austerity, but rather at spending as a share of the economy. In that sense, government spending in Greece went up from 47.1% of GDP in 2000 to 53.8% in 2009 and it has come down to 50.3% in 2011—approximately its 2008 level. However, I don’t buy the argument. Does it mean that the government has to spend an ever increasing share of the GDP in order to keep the economy afloat? Is half of the economy not enough when it comes to government spending?
What about Zakaria’s argument of the crippling effect of firing government workers on growth? Last January, The Economist looked at the situation in Greece and noted that “Of the 470,000 who have lost their jobs since 2008, not one came from the public sector. The civil service has had a 13.5% pay cut and some reductions in benefits, but no net job losses.” As for what “austerity” means for most Greeks, the magazine added, “Since Greece’s first bail-out in May 2010, the government has imposed austerity, increasing taxes so much that people can barely manage.”
The Economist is not alone in pointing out the extent to which taxes have gone up. Even the IMF has done so. Back in November, Poul Thomsen, the IMF mission chief in Greece, said that the country “has relied too much on taxes and I think one of the things we have seen in 2011 is that we have reached the limit of what can be achieved through increasing taxes.” Since then Greece agreed to eliminate 15,000 government jobs (2% of its public sector workforce) in exchange for a second bailout. Once again, that figure pales when compared to the number of people who have lost their jobs in the private sector.
The evidence shows that in Greece austerity has meant significant tax increases and timid spending cuts.
Looking at Austerity in France
Let’s continue with a look at austerity policies in Europe. Yesterday I wrote that in Britain, austerity so far has meant only tax hikes, since government spending, both in nominal and real terms, continues to grow despite the announcement of deep cuts from 10 Downing Sreet. What about France? The country chose a socialist president on Sunday who, according to Paul Krugman and some media outlets, was elected precisely to fight against austerity.
My colleague Dan Mitchell already showed how there haven’t been any spending cuts in France in the last decade. I’d like to dwell on this issue with another graph:
Source: Source: European Commission, Economic and Financial Affairs.
Once again, it’s pretty evident that there hasn’t been any cut in spending in recent years, neither in nominal or real terms. If we look at total government spending as a share of the economy, it went up from 51.6% in 2000 to 56.8% in 2009, and then it came down a bit to 55.9% in 2011—still the highest in the European Union. I doubt that anyone, other than perhaps Paul Krugman, can seriously claim that a decline of 0.9 percentage points in government spending as a share of GDP represents savage austerity.
However, taxes have indeed gone up, and all the presidential candidates, from the far left to the far right, promised to increase them even further. That’s why The Economist reported that, regardless of who won the election, “big companies and rich families are looking at ways to leave France.”
There is more: France hasn’t had a balanced budget since 1973. Its public debt went up from 20.7% of GDP in 1980 to an expected 87% this year. Its budget deficit in 2011, at 5.8%, stands much closer to that of Spain (6.5%) than that of Germany (1%).
So, what austerity is François Hollande pledging to fight?
Looking at ‘Austerity’ in Britain
I’m going to jump into the debate about austerity in Europe because it is being closely followed in Latin America, and many people are drawing the wrong conclusions about how austerity is strangling the European economies. But first, we have to be clear about what we mean by “austerity.”
As the debate between Veronique de Rugy of the Mercatus Center and Ryan Avent at The Economist shows, there are different definitions of austerity. The term could mean fiscal consolidation only by spending cuts. It could mean a mixture of spending cuts and tax increases (the so called “balanced approach”), and it could even be just tax increases. So when people blame “austerity” for Europe’s economic malaise, we could be talking about a very different set of policies in each country.
Let’s look at Britain, which just entered into a double dip recession because of, according to Paul Krugman, “the evident failure” of austerity policies. If we look at spending levels in the UK both in nominal and real terms, we can clearly see that despite the announcement of deep cuts, government spending continues to rise:
Source: European Commission, Economic and Financial Affairs.
It’s clear that, at least in nominal terms, the rate of growth of spending has declined, but that hardly constitutes brutal cuts as Krugman and others want us to believe. If we look at total government spending as a percentage of the economy, Britain reached a peak in 2009 at 51.5%, and that came down to 49.9% in 2011. Can anyone seriously argue that Britain is in a recession because of that tiny drop in spending as a share of the economy?
Now, let’s remember that the Conservative-Liberal Democrat coalition government that came to power in May 2010 adopted what The Economist hailed as a balanced approach of fiscal consolidation based on £1 of tax increases for £3 of spending cuts. To be fair, the British magazine also said that if economic recovery proved hard to achieve, the government should consider a reprieve in tax increases, but not on spending cuts. We all know that the tax increases already took place (the VAT rate went up from 17.5% to 20%, for example). But as we can see, spending cuts haven’t taken place at all. Thus, austerity in Britain consists only of tax increases.
It’s hard to estimate the impact of tax increases on the British economy. Certainly the economic turmoil in Continental Europe has played a role in taking the U.K. into a second recession. But those who claim that “austerity” is responsible for Britain’s economic malaise should be honest and acknowledge that by austerity they mean only tax increases, not spending cuts.
Krugman’s Love Affair with the Kirchner Model in Argentina
Paul Krugman once again praises Argentina as a “remarkable success story” in a recent blog post. He blames biased economics reporting for the bad news recently associated with the country (though he is careful not to mention nationalizations, massive capital flight, cooking of official statistics, bans on the importation of books, attacks on freedom of the press, etc.). He points to this graph to prove the “basic fact” that Argentina’s growth outperforms that of neighboring Brazil, and thus it should be taken more seriously:
Krugman’s dismissal of economics reporting about Argentina may explain why he doesn’t mention the fact that the administration of Cristina Fernández de Kirchner cooks the inflation numbers. The story was recently highlighted in The Economist, which even removed the official inflation figure from its indicators page. As the magazine put it, “Since 2007 Argentina’s government has published inflation figures that almost nobody believes.” Apparently, nobody but Paul Krugman.
Since Argentina’s Consumer Price Index significantly understates true inflation (the official figure for 2011 was 9.7% whereas private estimates put the figure at 24.4%), the country’s real GDP is overestimated. By how much is difficult to asses. However, in a report [requires free subscription] for the Argentine consultancy firm Elypsis, economists Eduardo Yeyati and Luciano Cohan, constructed an “Elypsis Coincident Activity Index” (ECAI) using 9 series of economic data from the Monthly Index of Economic Activity (MIEA)—a proxy for the GDP. As expected, they found a high correlation between the ECAI and the MIEA until 2007, when the government fired the head of the statistics office and politicized it. After that year, both indicators increasingly deviate.
Based on Elypsis’ index, I’ve recalculated the GDP performance of Argentina and compared it to Brazil’s:
* GDP performance since 2007 estimated on the ECAI.
As we can see, Argentina’s GDP doesn’t outperform Brazil’s in the last decade. Moreover, I should note three things: First, by using 2000 as the year base, Krugman neglects to show that Argentina was already 2 years into a recession, thus giving an impression of a especially strong performance in the last decade. Second, nobody denies that even when corrected, Argentina has experienced strong growth in the last 7-8 years. However, that has to do with high commodity prices, especially of soybeans, and an expansive fiscal policy that can’t be sustained for much longer (thus the high inflation). Third, by comparing it to Brazil, Krugman picked a low standard of economic performance in Latin America. As I pointed out in an op-ed a year and a half ago, Brazil’s economic growth is far from stellar: “In the last decade, 10 Latin American countries enjoyed higher growth rates than Brazil.”
Paul Krugman’s love affair with the Kirchner economic model in Argentina should be taken for what it is and certainly not as a guide for economic recovery in the U.S. and Europe.
Argentina’s Point of No Return
The most important development this week in Latin America is the decision of the Argentine government to seize control of Yacimientos Petrolíferos Fiscales (YPF), the country’s largest oil company. On Monday, President Cristina Fernández de Kirchner announced the expropriation of the controlling stake of YPF that is owned by the Spanish company Repsol. The Spanish government, backed by the European Union, has announced that it will take retaliatory measures against Argentina, noting that “all options are on the table.” The Economist Intelligence Unit has a very good analysis on the case and the implications for Argentina.
The big question after Fernandez’s overwhelming reelection last fall was whether she would deepen the economic model she and her late husband (and predecessor) implemented since arriving to power in 2003—marked by high government spending, tight economic controls on industries, and selective nationalizations of businesses—or instead change course given the growing signs of exhaustion: high inflation, growing fiscal deficit, increasing capital flight, fall in foreign direct investment, the weakening peso, etc.
Any doubt is now gone. With the nationalization of YPF, Argentina firmly joins Venezuela, Ecuador, and Bolivia in the club of Latin American nations that espouse high-octane economic populism. In the upcoming months, we can expect more protectionist measures, further controls on the economy and, once the government runs out of the money that it seized in the past three years from the private pension funds and the Central Bank’s reserves, we should not be surprised if it moves to take control of the banks.
Things will only get worse for Argentina.
Paul Krugman’s Distorted Views on Inequality in Latin America
When it comes to discussing Latin America, Paul Krugman has a tortuous relationship with facts. Let’s take a look at a post he wrote last week on inequality in the region. Krugman claims that Latin America’s decline in inequality in the last decade is due to the region “partially turning its back on the Washington Consensus” (a term that has misleadingly become short hand for free market policies). Is that the case?
First, note how the graph in Krugman’s post actually shows inequality going up in Latin America during the 1980s, before the implementation of policies related to the Washington Consensus (which for most countries begins in the early 1990s), and then sharply declining before the arrival of what he calls the “new policy approach” of left-of-center governments. The rise of inequality in Latin America in the 1980s coincides with the periods of hyperinflation that crippled the economies of Argentina, Brazil, Nicaragua, Peru, and Bolivia. Central banks in Latin America were all too busy in those years financing the acute fiscal imbalances of their central governments through the emission of money. And Latin American countries were deep in the red precisely because their bloated public sectors became unsustainable, leading to the serious debt crisis of 1982. Thus, it was an inflationary spree, caused by the crisis of big government, that exacerbated inequality in the region. Of course, Krugman fails to mention this.
Can we assign the recent decline in inequality in Latin America to any specific ideology? A recent study by Kenneth Roberts of Cornell University on the politics of inequality in Latin America looked at inequality trends from 2000 to 2010 and found that “countries that experienced net declines in inequality were governed by diverse administrations of the left, centre, and right, including non-leftist governments in Colombia, Mexico, Peru, Paraguay, El Salvador, Guatemala, and Panama.” According to Roberts, “there was no strict correspondence between declining inequality and either the ideological profile of national governments or any specific set of redistributive initiatives.”
Second, it’s quite a stretch to state that Latin America as a region moved away from the Washington Consensus. I’m not going to dwell here on the virtues of all the policy recommendations identified by John Williamson back in 1989 or discuss the extent to which they were actually implemented by the various Latin American governments. However, even though some countries such as Venezuela, Ecuador, Bolivia, and Argentina have turned their backs on responsible macroeconomic policies in the last few years, most governments in the region, including those called “left of center,” still implement macroeconomic policies related to the Washington Consensus such as freer trade, fiscal and monetary discipline, and attraction of foreign direct investment.
It is telling that despite the serious deterioration in economic freedom in countries such as Venezuela, Ecuador, and Argentina economic liberty has actually increased—slightly—in Latin America as a region in the last decade. According to the Economic Freedom of the World , Latin America went from a regional average grade of 6.56 (out of 10) in 2000 to 6.62 in 2009. Implying that Latin America has somehow turned its back on market-friendly policies is misleading.
Third, Krugman looks at the economic performance of Latin American governments based on their ideological affiliation, suggesting that social democratic regimes have a better record than non-left-of-center governments. However, the study on which he bases his post relies too heavily on analyzing governments by their ideological labels, rather than looking at their actual economic policies. This can be very misleading. For example, during the period covered by the study (2000s), Chile is ranked as left of center, even though during that decade the country increased its level of economic freedom, moving up in the ranking of the Economic Freedom of the World index from 28th place in 2000 to 5th in 2009.
Finally, Krugman finished his post questioning Chile’s free market model and private pension system (even though the study he was referencing categorizes Chile as “left of center” and thus credited that ideological camp for Chile’s healthy economic indicators). Krugman doesn’t provide evidence to substantiate his criticism other than making a presumable reference to the recent student protests in Chile. If he looked at the facts, he would see a different picture. He would find that Chile is the country with the most impressive record in poverty reduction in Latin America (the poverty rate fell from 45 percent in the mid-1980s to just 15 percent in 2011), that it has tripled its income per capita since 1990 to $16,000 (the highest in Latin America), and that it is set to become the first developed nation in Latin America within a decade. What is it about this record that Krugman finds so annoying?
The Drug Debate at the Summit of the Americas
John Stuart Mill once said, “Every great movement must experience three stages: ridicule, discussion, and adoption.” It looks like the movement to end the failed war on drugs is about to enter the second stage, at least on a political level.
For the first time since Richard Nixon launched the international war on drugs more than 40 years ago, a U.S. president will face sharp criticism of this policy from his Latin American counterparts at a regional gathering this weekend. The setting is the Summit of the Americas, which will take in Cartagena, Colombia, on April 14-15.
As the Washington Post reported this week, some Latin American presidents, led by Guatemala’s Otto Pérez Molina, will bring to the table a discussion on alternatives to drug prohibition, including legalization. To be sure, there is no consensus among Latin American leaders on this issue. However, it will be the first time such a discussion will take place at this level.
The Obama administration has said that a regional debate on drug legalization is “legitimate,” but that U.S. support for prohibition won’t budge. However, there’s some evidence that Washington is pressuring some Central American countries to boycott the efforts of Guatemala to discuss this issue. At least that’s what Pérez Molina said after the presidents of El Salvador, Honduras, and Nicaragua skipped a Central American summit a couple of weeks ago where the Guatemalan leader expected to rally the region behind his proposal.
Colombia’s Juan Manuel Santos, the host of the upcoming summit, is a critical figure in this debate. He was the first president to come out in favor of a debate on legalization, a policy he says he would support as long as everyone else agrees to it. That, of course, is a big caveat. Santos, while remaining critical of the war on drugs, has been more cautious than Pérez Molina in proposing and advocating legalization. However, as Santos himself has stated, Colombia has lots of moral authority to bring up this discussion.
The other important person to watch is Brazil’s Dilma Rousseff. High-ranking officials have said in the past that her government would explore alternatives such as decriminalization, but only after “deep” analysis. However, Rousseff hasn’t commented yet on Guatemala’s proposal. Because Brazil is the second-largest consumer of cocaine in the world, and is a diplomatic heavyweight in the region, its stand on this debate matters significantly.
Both the Rousseff and Santos administrations have pointed to the importance of having a “deep” and “objective” discussion about the merits of alternative drug policies. This means that the United States will no longer be able to dismiss the debate first-hand.
For decades the Cato Institute has been a leading voice for drug legalization. Our studies and conferences have provided facts and arguments on the futility of prohibition and the merits of alternatives such as decriminalization and legalization. We are gratified that the debate on ending the war on drugs is now reaching the highest levels of government, and plan to continue providing analysis for policymakers to make informed decisions.
Argentina Bans Book Imports due to ‘Human Health Concerns’
The Argentine government has severely restricted the importation of books due to “human health concerns” [in Spanish]. That’s right. According to the government, it can be dangerous to “page through” a book that has high lead quantities in its ink. “If you put you finger in your mouth after paging through a book, that can be dangerous,” said Juan Carlos Sacco, the vice-president of an industrialist organization that supports the measure.
The government claims that this is not a ban. However, since each buyer has to demonstrate at the airport’s customs office that the ink in the purchased book has lead quantities no higher than 0.006% in its chemical composition, the result is that all book imports into the country are stalled.
The measure has a lot to do with the increasing efforts of the Argentine government to stop the flight of dollars out of the country. Capital flight in 2011 reached $21.5 billion, and it accelerated after the reelection of Cristina Fernandez de Kirchner in October. Facing increasing fiscal pressures, and after seizing private pension funds and raiding the Central Bank’s reserves, many people expect the government to go after their bank savings.
The government has reacted with increasingly ridiculous measures. Sniffing dogs are being deployed at airports and border check points to detect the ink used to print U.S. bills, so Argentines cannot take out of the country more than $10,000 without declaring it to the government. The Fernandez administration is also requiring major importers such as automakers to match the price of their imports with that of goods they must now export. As a result, Porsche is exporting Malbec wine and Mitsubishi is now selling peanuts.
This is the economy that Paul Krugman defended as a “serious country.”
The government’s proliferation of capital and import controls is now clearly threatening freedom of speech. The restriction on foreign books is a measure consistent with the Fernandez administration recent push against independent newspapers and its growing authoritarian tendencies. As an Argentine friend told me last night, “I’m pretty confident that they’ll come after the Internet any time soon.”
Is Washington Pressuring Central American Presidents to Boycott Debate on Drug Legalization?
A couple of weeks ago, I wrote about the U-turn performed by Mauricio Funes, president of El Salvador, who initially supported the proposal of Guatemala’s President Otto Pérez Molina to discuss drug legalization in Central America and then came out against it. I wondered if Funes’ change of mind had anything to do with pressure from Washington regarding the renewal of the Temporary Protected Status program (TPS) that grants migratory benefits to Salvadoran citizens in the United States. I also noticed that the TPS benefits nationals from Honduras and Nicaragua too.
This past weekend, president Pérez Molina hosted a Central American summit to discuss his proposal of drug legalization. Even though the presidents of all Central American countries had confirmed their attendance, three of them called off in the last moment. Want to guess which ones? Yes, the presidents of El Salvador, Honduras and Nicaragua.
Just a coincidence?
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