[Good Laughs] — Moses finds a GPS

* Warning, Moses uses one naughty swear word, if little children are present or you find swear words offensive, please cover your ears!

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Current Situation in Honduras

Today, I present to all readers, Pamela Fernandez, a university colleague of mine from Honduras who was nice enough to email me a incredibly well articulated analysis of the situation going on down in Honduras. The original message arrived in my mail box last night at 1:18 am, June 29, 2009 – Eastern Standard Time.

Pamela writes:

I feel the media has done a terrible job in reporting the events that took place yesterday in Honduras. A friend of a friend mainly wrote the following 8 points. I have edited them out a bit and added the translation of the constitution article. Below you’ll find my views.

1. The event this morning should be taken as an arrest against a Honduran citizen, Manuel Zelaya, who broke the constitutional Honduran law in multiple occasions over the last few days. This SHOULD NOT be taken as a Coup d’état.
TRANSLATION – Article 239.- The citizen that has been the head of the Executive Branch cannot be President or Vice-President again.

Whoever violates this law or proposes its reform, as well as those that support such violation directly or indirectly, will immediately cease in their functions and will be unable to hold any public office for a period of 10 years.

2. The vast majority of Hondurans firmly oppose Manuel Zelaya and are in favor of his arrest.

3. The current news being portrayed in international networks appear to be heavily tilted toward a contrarian view of most Hondurans.

4. The majority of Hondurans are not in favor of Manuel Zelaya and are extremely proud of our congress and military for their stance in favor of democracy and peace.

5. The events happening today were caused by an attempt by Manuel Zelaya to manipulate our country and its constitution to fulfill his ultimate goal of remaining in power indefinitely.

6. The world should be proud of Honduras as we are the first Latin-American country to stand against a tyrannical leader who has tried to topple democracy and peace in our country.

7. Declarations made by Hugo Chavez should be discredited immediately. He should, as President Obama said, allow Hondurans to solve this issue through open communication following LEGAL processes.

8. It is ONLY in the interest of Honduras and its citizens that democracy prevails.

Now mine:

Facts:
• The economic growth the country experienced in 2006 was a result of the previous government not of Mel’s. The country is now in as much debt as it was before. After a GDP growth of 6% in the 2005, according to the World Bank it is expected to fall to about 2% in 2009.

• In December 2008, Mel decided to raise the minimum wage by 60% against the economists and private sector advice. The government itself will not be able to pay the public employees including teachers and doctors next year. It has resulted in a higher than unemployment rate and it is expected to rise even more in 2010.

• The public higher education system cannot afford to pay the university professors under the new minimum. The professors went on strike for two months and the issue still undresolved.

• After the recent earthquake Mel denied the severity of the damages in port city of Puerto Cortes and never declared a state of emergency in the country. In previous years, he had also undermined the impact of floods and hunger stricken south.

• There were no reported cases of swine flu in Honduras before the OAS summit in San Pedro Sula. Once the summit was over the cases jumped from 0 to 118 as confirmed by the BBC. But the Health Ministry says there are 1,000 cases.

• According to the Observatorio Centro Americano de la Violencia, the there are 42 homicides per 1,000 inhabitants; the international rate is 8.8. In average, there are at least 12 violent deaths per day, the highest in Central America.

• According to the 2004 World Bank report, 50% of the population lived under the poverty line and 36.2% below the extreme poverty line 36.2%. The World Food Program estimated it at 73% in 2008; currently the BBC reports a 70% in the country profile.

• The country’s budget for the 2009 fiscal year was never made, some argue there’s no money and that’s why Mel would not make it.

• No body really knows how many millions of Lempiras and possibly dollars were spent on publicity for the referendum.

• Mel was paying people to vote “Yes” in the referendum.

• Hugo Chaves, Correa, Elbo and Ortega are currently in Nicaragua holding an emergency meeting of the ALBA and Central American nations. Chavez said that he would respect Honduras’ sovereignty and would not make a military intervention.

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Rumors:

• The referendum materials were sent from Venezuela.

• Mel would have done an “auto” Coup against the congress and the military today if the Public Ministry (not the military) had tried to stop the voting.

• Based on a reported increase flow of Nicaraguans into Honduras: hundreds of Nicaraguan soldiers crossed the border on Friday and Saturday disguised as civilians.

• Chavez is planning to do a military intervention in Honduras. Still, his discourse last night was borderline offensive.

All that said, the president of congress Roberto Micheletti was sworn as interim president promising and making it a decree to hold the general elections on November 29th as scheduled and give the power to the elected president on January 27th. The military is not in power, they just did their job and defended the constitution.

Of course, there are plenty of sketchy things in the whole process. For example, Mel’s resignation letter, which he denies writing, the fact that Micheletti was running for president but lost the primaries are just a few; and the fact that TV, radio, and internet were cut in the main cities for couple of hours during the coup. Also a fact, not every Honduran likes Micheletti but not every Honduran likes Mel. We are trying to pick the lesser of 2 evils.

I’m not against the citizens’ right to give their opinion in the referendum but the Electoral Institute was not supervising it. I, as are many Hondurans, am aware of the social injustice and the extreme poverty in my country. We feared and questioned the transparency of the process. We also believe, and know, that Mel was acting on his interest and not that of the country.

I’m not happy that we have come to this but now we can only wonder what would have happened if Mel had gone ahead with the referendum. From my point of view, the assurance of elections in November makes this a move in favor of democracy and not one against it. Sadly, the international community does not see it this way. The UN, OAS, EU and US want Mel back because he was democratically elected, Honduras doesn’t want him back because he was trying to interrupt the democratic process by staying longer as a president.

Honduras is in peace right now, nobody died, very few were hurt, after some riots by Mel’s supporters yesterday there’s no civil unrest. The curfew is not against civil liberties it is meant to prevent riots and such from happening. In case that rumors are true and Hugo Chavez tries to use military force in Honduras, we hope and pray… I hope he doesn’t and hope we can get back solving the real problems of the country.

The good thing in all of this? I want to believe that Hondurans will wake up and take a more active role in politics. That hopefully the corrupt politicians will take a hint and realize that the “people” as Mel said can stand up against them when need it.

If you read this much, THANK YOU very much,

Pamela Fernandez is graduate of American University who specializes in visual media and film studies. You can learn more about Pamela and see some of her work at her personal site — http://www.pamelafer.com/

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[Commodities] — Is the rally over?

Commodity Rally May Falter on Supply, Speculators

June 29 (Bloomberg) — Commodities, heading for the first quarterly advance in a year, may struggle to repeat their gains in the next three months as supply expands and speculators sell.

Nickel may average 29 percent less in the third quarter than now, crude oil 16 percent, copper 14 percent and gasoline 10 percent, analyst estimates compiled by Bloomberg show. Hedge funds and speculators cut their bets on higher prices by 23 percent in the two weeks ended June 23, the first back-to-back drop since March, based on an index using U.S. Commodity Futures Trading Commission data. The World Bank said June 22 the global recession will be deeper than it expected three months ago.

“Commodities have gotten a little ahead of themselves,” said Walter “Bucky” Hellwig, who helps oversee $30 billion at Morgan Asset Management in Birmingham, Alabama. “As long as there’s uncertainty about growth, that’s going to be headwind commodities won’t be able to overcome.”

Commodities rose 14 percent this quarter, led by nickel, oil and sugar, after three consecutive declines, according to the Reuters/Jefferies CRB Index of 19 raw materials. This year’s 57 percent advance in oil costs, combined with widening budget deficits, may cause another global slump, said Nouriel Roubini, the New York University economics professor who predicted the financial crisis.

Click here to access the full article from Bloomberg

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Microfinance needs active clients and skilled, efficient workforce

Livemint.com, a news organization partnered with the WSJ from India, ran a interesting piece today about the Microfinance industry. Good reading for readers looking for a nice synopsis of what exactly is Microfinance.

I have a included a excerpt of the article I feel is especially relavant and worthy of your attention. If you would like, you can click here to access the greater article from Livemint.com.

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Microfinance calls for active, participating clients as well as skilled and efficient work force. Its main challenge remains recovering timely repayments, considering the unstable nature of the clients’ cash flows, making efficient risk management critical to the success of an MFI.

There is also a need for constructive collaboration between the formal sector finance institutions and MFIs, in which the former provides funds and the latter extends savings and loan facilities to the urban poor. On the demand side, focus must be to organize and make clients more participative. They must be made accountable to the use of the credit given. Savings must be encouraged. On the supply side, the concentration must be to transform MFIs into professionally managed, externally regulated entities. There must be uninterrupted supply of services to clients. The profitability and viability of the service must be given importance. All MFI credit models lack an appropriate legal and financial structure and so there must be a more formal environment to regulate and coordinate the activities of MFIs. Government should provide an enabling legal and regulatory framework which encourages the development of a range of institutions and allow them to operate as recognized financial intermediaries subject to simple supervisory and reporting requirements.

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Newswire: China South America

[Peru – China] — Peru, China relations “at best moment”

Chinese ambassador to Peru, Gao Zhengyue, said that relations between his country and Peru “are at their best moment” in history.

According to him, both countries have deepened the confidence in the political, economic, technological educational, cultural, tourism and justice areas, among others.

The Chinese diplomat noted the increase of the economic, trade flow and bilateral investments, and highlighted the increase of the Chinese investments in Peru, with over seven billion dollars.

“I am convinced that with joint efforts the relations between our two brotherly countries will enter a new stage of development and reach a higher level in the two peoples’ benefit,” said Zhengyue.

[Latin America – China – Africa] — China’s new frontier

Chinese telecom-gear makers Huawei and ZTE have already conquered Africa and Asia. Next stop: Latin America.

(Fortune Magazine) — At phone operator Movistar’s sales offices in Buenos Aires, customers line up to buy high-speed wireless services to access the web on their mobile phones. Most Argentines don’t realize, though, that the company providing the gear for their broadband connections isn’t a longtime supplier to Latin America like Alcatel-Lucent, Ericsson, or Motorola, but a relative newcomer called Huawei.

China’s telecom suppliers are coming to the Americas. Pursuing the same formula they’ve used to win business throughout Asia and parts of Africa (selling cheap gear in low-income countries), equipment makers Zhong Xing Telecommunication Equipment (also known as ZTE) and Huawei are now getting a foothold in countries such as Argentina, Chile, and Colombia. Says Leandro Musciano, project director at Movistar Argentina, a unit of Spain’s Telefónica: “Price is important.”

[Caribbean – China] — China’s expanding relations with Latin America and the Caribbean

Commentary
By Odeen Ishmael

The recent visit of Brazil’s President Luiz Inacio “Lula” da Silva to China in May 2009 reflected the Asian nation’s expanding economic and political influence in Latin America and the Caribbean (LAC). One year ago, the Brazilian government had announced that China would surpass the United States as its major business partner. The results of da Silva’s visit verified this after the two nations signed 13 agreements, including a $10 billion loan from the China Development Bank to Brazil’s state oil company Petrobras. Petrobras also concluded a deal with a subsidiary of China’s oil refiner Sinopec for the export of crude oil. A major commercial agreement will also see the beginning of huge poultry exports to China.

Brazil’s two-way trade with China, one of the few economies still growing despite the global crisis, reached US$3.2 billion in April, surpassing the $2.8 billion trade total with the US. So far this year, Brazilian exports to China grew 65 percent over the same period in 2008, rising from $3.4 billion to $5.6 billion.

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Peru ETF (EPU) launched Monday, June 22

Peru’s first exchange traded fund, MSCI All Peru Capped Index Fund (EPU), started trading yesterday, Monday June 22, 2009.

Seeking Alpha Reports:

The iShares MSCI All Peru Capped Index Fund (EPU) will allow US investors to easily access one of Latin America’s hottest markets by tracking a pure free float market cap weighted index. Its 25 names are heavily concentrated in the materials sector (65%), with a particular focus on gold, silver, and copper. Its largest holding at 19% Cia De Minas Buenaventur (BVN) who produced nearly half a million ounces of gold last year (compared to Goldcorp’s 2.4), and its second largest at 15% is Southern Copper (PCU), the biggest player in the world’s fourth largest copper producing nation.

The fund also holds an 11% weighting in Credicorp (BAP) – Peru’s largest financial firm with operations in commercial banking, insurance, and investment banking – whose shares have held up well during the crisis, and several smaller miners with operations in lead, zinc, and iron.
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Now then… it is time for a few “million dollar questions.

a) Does this ETF facilitate investment in Peruvian equities for international investors?
Yes, as one of the world’s best performing benchmarks of the year, loaded with companies seeing gains of well over 60-70% from the beginning of 2009, it will indeed offer investors a way to tap into these companies not listed via ADR’s or OTC.

b) Does this ETF accurately track a Peruvian benchmark , like the Lima General Index?
Time will tell. ETF’s always claim that they do, but I won’t fully believe it until I see hard data supporting such. This ETF does not track Peru’s Lima General Index, but rather MSCI All Peru Capped Index. Click here to access a PDF that explains the methodology behind MSCI All Peru Capped Index.

c) Is now the right time to invest?

Here are some factors to consider when doing your own due diligence:

• Markets around the world are down and it seems the downward trends in recent markets might continue throughout the summer months.

• Copper, gold and silver have already had pretty amazing run ups in recent months and are Peru’s crown jewels of commodity exports (yes there are others like zinc, but lets emphasize these major Peruvian money makers for the time being).

• Volatility due to the political risk associated with the upcoming Peruvian elections in 2011 which pit two extreme candidates of the left and right against one another. Ollanta Humala, the left-wing buddy of Chavez and Keiko Fujimori, right wing, daughter of former president & dictator Alberto Fujimori.

• Recent political unrest in the Amazon region which only calmed down after heated disputes between the government and indigenous protesters lead the deaths of many Peruvian police officers and the massacre of protesters, forced to rely on wooden spears to defend themselves against high powered weapons. *** Note, this is the opinion of this sites humble and open minded Peruvian-American blogger, who can trace his ancestry on his maternal grandfathers side back to the amazon provinces of San Martin and Amazonas, Peru.

• Perceived instability (political and financial) as a result of plummiting approval ratings of President Alan Garcia, who was instrumental is creating the climate for the recent protests in the Amazon–contrary to the popular belief of those who believe his propaganda. Garcia’s administration loves to blame Hugo Chavez and Evo Morales for everything wrong with Peru and as crazy as it might be, it is a great deal like Ahmadinejad in Iran who blames the West whenever something goes wrong.

I have used this statement from Iran’s state television station about the protests occurring right now to articulate my point.

“At least 10 people were killed in the latest unrest to shake Tehran (Bagua), state television said on Sunday as Iranian leaders (President Garcia’s administration) took aim at Western “meddling” (Hugo Chavez and Evo Morales “meddling”) in the post-election tumult (Peruvian Amazon Region) that has triggered the worst crisis since the Islamic revolution (the worst political unrest in his Presidential Term).

Invest wisely my friends! More to come on this topic at the end of the week.

Analysis by Benito

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Peruvian Ambassador enlightens the U.S. with his overview on recent conflict in Bagua

Peru’s Ambassador to the United States presented his overview of the recent clashes / massacre / protests (depending on what you call it) in the Peruvian Amazon to The Council of the America’s today in Washington D.C.

The Council of the America’s summarizes this wonderful treat from Peruvian Ambassador, Luis Valdivieso as follows:

Security forces clashed with indigenous groups protesting the development of ancestral lands for oil and natural gas extraction in recent week. The ambassador provided an overview of the current situation, discussed Peru’s legal framework for sustainable development, and highlighted actions taken by the government toward a long-term solution, including the decision to postpone the implementation of land-use laws. He noted that a permanent solution must include dialogue with indigenous groups, the participation of civil society, and respect for democratic principles.

Click here to view/ download a PDF of the PowerPoint show Luis Valdivieso must have used when giving his presentation. I don’t believe you will need his assistance in narrating the slide show.

A interesting download and read for readers not too familiar with the geopolitics of Peru. However, if you are looking for the real deal on the situation down in the Peruvian Amazon, I would not get your hopes up.

The PDF is full of fancy graphics from INEI, the National Institute of Statistics of Peru. The problem is that INEI no longer produces legitimate economic data, as Otto from IncaKolaNews and Farid Matuk explain in their respective web sites.

Farid Matuk if you didn’t know was the old head of the office until President Garcia replaced him with some of his loyal chronies. You can read more about how the government replaced him and how he is now accusing the goverment of persecution in this article (in Spanish), from the usually very pro-government Lima newspaper, El Comercio.

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Lack of China South America Updates — Sorry! Lo Siento! 对不去！

I must apologize to all readers and internet surfers who have arrived at China South America in recent days to find that no updates had been made.

This blog was started in response to my personal interests in the following:

1- Sino-Latin American Foreign Policy; Economic and Political
2- Commodity Investment
3- Mining in South America
4- International Investment Opportunities
5- Microfinance in Peru, Bolivia and Colombia

Since graduating from American University in May 2008 with a degree in Economics I have been on a post-collegiate journey to find a greater purpose in life that can one day encompass some these interests.

Opportunity came a’knockin’ and I now find myself a international businessman selling South American wines in China and Singapore.

Recent weeks have been particularly hectic with a few deals looming in the horizon this summer.

I promise to get back to the usual flow this weekend.

Thank You — Gracias — 谢谢

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How much of this map will be red when The Economist does a story on this in 20 years?

Oil and land rights in Peru — Blood in the jungle

FOR seven weeks tens of thousands of Amazonian Indians blocked roads and rivers across eastern Peru. They seized hydroelectric plants and pumping stations on oil and gas pipelines to try to force the repeal of decrees facilitating oil exploration…

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Newswire: South-South Cooperation, China in focus

[China – Africa] — China’s New Silk Road shines in Africa
The word “China” has echoed in the meeting halls of the ongoing three-day World Economic Forum on Africa, reflecting the close attention to the Asian country which is widely regarded as Africa’s crucial partner in the strive against global economic crisis and future development.

The issues related to China have become hot topics in the platform which attracted over 800 participants from 50 countries and five African leaders in a bid to seek practical solutions to foster better business practices and greater investment across the continent, under the theme of “Implications of the Global Economic Crisis for Africa”.

[China – Africa] — ICBC chief says China to increase investment in Africa
Chief of China’s major bank ICBC, Jiang Jianqing, said on Thursday that he believes China will continue increasing investment in Africa which is mutually beneficial.

“With the development of economic globalization, China will have more and closer business links with the rest of the world, which will finally lead to increasing oversea investment from China. Therefore, I believe more investment with mutual benefits will come to Africa,” said Jiang in a joint interview with Jacko Maree, group chief executive of the Standard Bank Group.

[China – Afghanistan] — China, Afghanistan vow to advance bilateral partnership
The foreign ministers of China and Afghanistan met in Beijing Thursday and agreed to boost cooperation.

“China and Afghanistan are traditional friendly neighbors” who share mutual respect and support, said Chinese Foreign Minister Yang Jiechi in a meeting with Afghan Foreign Minister Rangin Dadfar Spanta.

[China – Kazakhstan] — Chinese parliamentary delegation visits Kazakhstan
A Chinese parliamentary delegation visited Kazakhstan from June 9 to June 12 at the invitation of the Kazakh parliament.

[China – North Korea] — Senior CPC leader calls on closer media co-op with ROK
Senior Chinese leader Li Changchun on Friday called on media organizations from China and the Republic of Korea (ROK) to offer more news reports that conducive to cementing bilateral strategic and cooperative partnership.

Hailing fruitful media cooperation between the two countries, Li hopes press organizations take the opportunity of the dialogue to set up a regular exchange mechanism, and provide more news reports and information that help boost Sino-ROK strategic and cooperative partnership.

[China – Pacific Island Countries] — Pacific parliamentary delegations to visit China
The five delegations will be led respectively by Isaac Figir, Speaker of the National Congress of the Federated States of Micronesia; Tu’ilakepa, Speaker of the Parliament of the Kingdom of Tonga; Manu Korovulavula, Chairman of the Public Accounts Committee in Fiji; Billy Talagi, Chairman of the Bills Committee of the Parliament of Niue and Lino Bulekuli Dit Sacsac, Clerk of the Parliament of the Republic of Vanuatu.

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