2007 Wrap Up and a peek at 2008

As this will be our last newsletter of 2007, we wanted to review briefly some of the year’s highlights and then take a peek into 2008.

Highlighted themes in 2007 include Chavez’s reach for more power and the resulting international friction between himself and Lula in Brazil. Bolivia has struggled with a Constituent Assembly. Truth telling in Colombia has unveiled a host of close ties between politicians and paramilitaries, but nothing yet has touched President Uribe.

Ecuador is flirting with China and the idea of a new port in Manta, where the US currently operates a military Forward Operating Location. And Kirchner succeeded in placing his wife in the president’s seat in Argentina.

Political violence in Guatemala underlines the strengthening grip of organized crime on that country’s political class. And ongoing violence in Mexico, as well as violence across the border into the United States, has prompted the discussion and now debate over the Merida Initiative.

In 2008, many of these ongoing themes will evolve and likely come to a head. We’re most interested in observing how the Merida Initiative is actually implemented. Will private contractors such as Blackwater USA or Dyncorp actually be used? Could increased pressure on drug trafficking organizations in Mexico lead to a spill over effect into Central America?

The last thing Guatemala needs is more Mexican criminals. Already, President-elect Colom has his hands full. His first 100 days will undoubtedly be marked by attempts from Guatemalan organized crime to show him – overtly or covertly – just how much they control wide swaths of his country.

We’re also interested to see how the humanitarian exchange process plays out in Colombia. Might Betancourt see freedom? We hear that Uribe invited Lula to mediate a humanitarian exchange process during President Cristina Fernández de Kirchner’s inauguration. For Lula it would be an opportunity to show the region and the world that he can succeed where Chavez has failed – a perfect maneuver for what appears to be an indirect approach to usurp Chavez from his regional leadership role.It is one he has purchased, not earned.

What will happen when the Venezuelan Bolivar drops two zeros (or three for that matter) in January? This slight change in the Venezuelan currency is certainly more cosmetic than economically sensible, as is the recently adjusted Venezuelan hour. It doesn’t make much sense to move the clock by half an hour, does it? Inside Venezuela a galvanized opposition has some momentum. In 2008, we will see how and where this momentum is used. May we see Chavez’s political core crumble? Not likely, but it will be interesting to see if the military takes a more active role in checking the president.

Can Morales hold his country together? The recent declaration of autonomy from the low-lands provinces seems serious enough, but Morales has – as of this printing – not sent in any troops to force order or obedience. He took the time to travel to the MercoSur meeting, so he cannot be too worried about the apparent mess at home.

Lula recently visited with promise of more Petrobras investment. He also told Morales to have “patience, patience, and more patience” with the opposition. Sometimes all it takes are a few words. Lula will likely work to bring Bolivia back into the Brazilian sphere of influence, further asserting his regional leadership role over Chavez.

Meanwhile, inside Brazil, we will be watching two important issues. First, the aviation crisis is still not resolved. How will Lula manage to keep Brazil’s skies safe? Might there be another accident? We’ve seen on many occasions reports of near misses in Brazilian media that some how doesn’t make it to the international scene. Just as important is Lula’s recent loss in the Brazilian Congress over the CPMF tax – one that taxes the movement of money through Brazilian banks. The bottom line is Lula’s administration will have roughly US$ 20 billion less to spend on social programs to pass along to state and municipal budgets in 2008.

Internationally this loss could hurt Brazil’s investment grade, we’re told by the Financial Times and sources in Brasilia, but what does it mean for the Brazilian economy in the long run?

Overall, 2008 promises to be another interesting year in Latin America. For now, and through the end of 2007, we will simply observe...

Crime, politics, and three bullets in the head

Salvatore Mancuso, a paramilitary chief in Colombia, famously claimed control over a third of the Colombian Congress after the 2002 legislative elections. The truth behind this statement continues to unfold even today as more and more Colombian politicians on the national level fall to the so-called para-politico scandal. Colombian paramilitaries across the country were able to extended their reach to national politicians because prior to 2002 they completely controlled politics on a state and municipal level in many of Colombia’s departments.

Violence leading up to elections is the best evidence of the fact that organized crime has a hand in political matters, and while the recent municipal elections in Colombia were not as violent as those of the past, it remains a fact that former paramilitary leaders still control some municipalities in Colombia.

Observing this pattern across the region, there is a striking similarity between Colombia and Mexico.

Mexico is ruled by three political parties. The PAN, represented by the president, Felipe Calderón, has a strong presence in the Congress. The PRD occupies the second-most seats on the national level and sits as the main opposition party. And then there’s the PRI – a political party that holds relatively little sway on the national level but controls nearly all of the Mexican states from the governor down to literally hundreds of municipalities.

These states include: Sonora, Chihuahua, Coahuila, Nayarit, Nuevo Leon, Tamaulipas, Sinaloa, Durango, Veracruz, , Quintana Roo, and Yucatan among others. The states listed here, however, are arguably those most afflicted by Mexican organized crime.

Focusing on Tamaulipas, considered the head quarters of the Mexican drug trafficking organization known as the Gulf Cartel, we see that violence surrounding elections denotes a heavy presence of organized crime in local and state-level politics.

On 29 November, men in a Suburban, a Jeep Cherokee, and a pickup opened fire on the recently elected president of the border-town municipality of Rio Bravo, Antonio Guajardo Anzaldúa, who was exiting his offices with a federal police escort. After the rain of bullets, one of the attackers calmly opened the door of his pickup, walked over to Guajardo, and shot him three times in the head.

Later that day, a main Tamaulipas-state newspaper received a call from the Gulf Cartel, warning that when reporting the news of Guajardo’s death the reporters should be careful with that they print, according to Mexico’s El Proceso magazine.

Guajardo was a member of the Workers’ Party, part of the coalition formed by the PRD. He was a relatively unimportant politician in the grand scheme of Mexican politics, but he had information on PRI politicians in Tamaulipas that he insisted on using to denounce the presence of organized crime in state and municipal politics.

During his campaign, Guajardo focused on blowing the whistle on any and all PRI politicians or political appointees who had connections to the Gulf Cartel in Tamaulipas. He denounced the state’s governor, Eugenio Hernández Flores, as an accomplice of the Gulf Cartel. He denounced Servando López Moreno, who won the elections in the border municipality of Miguel Alemán. López, according to Guajardo, had already appointed Juan Felipe Hinojosa, father of a well known crime boss Carlos Hinjosa, as the municipality’s treasurer. And the list goes on, too long to share with you here.

Guajardo’s death and the following cover up underline the close relationship between organized crime and PRI politicians in Tamaulipas. But what about other states and other municipalities where organized crime likely controls politics as much as it does in Tamaulipas?

Consider that the PRI controls governorships and municipalities in just about every state where organized crime is a principle problem and you’ll get a sense of the possible depths of corruption Calderón must tackle as he fights to remove organized crime from his country.

Eventually we may see the day when an organized criminal boss declares that he controls a third of the Mexican Congress. It would be a stretch to make such assumptions now, but if that day comes, many will remember when Salvatore Mancuso said the same thing in Colombia in 2002 and then proved it by telling the truth and crushing the careers of various politicians in 2007.

Digging into Blackwater USA

Hugo Chavez has lost the referendum to vote his reform package into law. And some news has surfaced that a group out of Serbia might have had something to do with the “no” vote, but more on that next week. We’re also looking in why the RC-26B aircraft is not part of the Merida Initiative package and why it should play a central role.

But for now, we're digging into Blackwater USA...

When two US government inspectors were asked by a US Border Patrol Agent if they were US citizens, they replied, “yes.” It was all they needed to enter the country at a land crossing between US and Mexico. No government issued form of identification was requested. The Border Patrol Agent never even got up from his seat, located some 10 feet away.

The agent obviously didn’t know that the two investigators were working for the Government Accountability Office on a report requested by the House of Representatives Committee on Homeland Security. The report, entitled, “Despite Progress, Weaknesses in Traveler Inspections Exist at Our Nation’s Ports of Entry,” found that both the Department of Homeland Security and the Border Patrol had some serious issues to overcome, including communication between field offices and headquarters, and training.

Training is an expensive process the US government would rather outsource. It has been well documented that contracts awarded by the Department of Defense (DOD) have focused on training Iraqi policemen and others in the Middle East, but what about training US agents inside the United States?

Such considerations have been on the books for Blackwater USA since at least 2005, when the company’s president at the time, Gary Jackson, testified before the House of Representatives Committee on Homeland Security in May of that year. “Just as the private sector has responded in moving mail and packages around the world more efficiently, so too can Blackwater respond to the customs’ and Border Patrol’s emerging and compelling training needs,” Jackson told Committee members.

Since early 2007, Blackwater has worked hard to lobby the right politicians in San Diego County for a license to operate a new training facility located in Potrero, California. A number of news stories have outlined the battle between Blackwater and local residents, numbering around 850 in the rural border town community, who don’t want the so-called “mercenary training camp” installed in their backyard.

What’s more, the training camp would be located less than ten miles from the US-Mexico border. The selection of the site, according to Blackwater, has nothing to do with the company’s interest in increased involvement in border patrol and the United States’ efforts to combat narco-trafficking on the US-Mexico border.

But this base’s location become more interesting given the results of a recent DOD bidding process for a US$15 billion dollar contract to combat narcoterrorism.

On 14 September, Blackwater USA, along with four other government contractors received slices of a multi-billion dollar contract awarded by the Pentagons’ Counter-Narcoterrorism Technology Program Office. Presumably, Blackwater will help with the development of surveillance technology used to stop “narcoterrorists” crossing into the United States from Mexico.

These facts, when considered together with the news that military contractors will be used to train Mexican law enforcement officials as part of the Merida Initiative, or Plan Mexico, draws a narrow bead on Blackwater as a likely candidate for a bidding process that will award the contract to train Mexicans how to fly the surveillance helicopters used to patrol the Mexican side of the border.

If this is the case, we should consider two more questions. First, how will the Mexican government react to Blackwater's presence so close to their border and on Mexican soil to train Mexican law enforcement officials. Second, in the long run, how involved will companies such as Blackwater become in protecting the US-Mexico border? As we've seen in Iraq, mission creep is tough to avoid.