LATIN-AMERICAN AFFAIRS

▪ 1994

Introduction

Developments.

      The year 1993 was a mixed one for Latin America and the Caribbean. On February 24, for the first time since the 1959 revolution, Cubans had the opportunity to vote directly for 589 members of the country's National Assembly as well as for provincial bodies. While those standing were not required to be members, all candidates were supporters of the ruling Communist Party. In Jamaica, Prime Minister Percival J. Patterson of the People's National Party called a general election for March 30, some 11 months before it was due. The timing reflected favourable poll ratings for the PNP over the main opposition Jamaica Labour Party following a period of relative economic stability. As expected, Patterson, who had taken over from Michael Manley in 1992, was reelected in a landslide. A similar snap general election (15 months ahead of time) called in Belize for June 30 did not produce a winning outcome for George Price's People's United Party. The opposition United Democratic Party led by Manuel Esquivel won, benefiting from Price's failure to persuade the British authorities to maintain defense forces in Belize.

      From early in the year, it became clear that the government of Jorge Serrano Elías in Guatemala was unlikely to deliver improvements in human rights. On May 25, Serrano suspended the constitution and closed both Congress and the Supreme Court. Serrano was forced to step down on June 1. Elections were quickly convened by Congress, with members voting to install Ramiro de León Carpio as president on June 6. Within three months, however, there was a further crisis in the wake of de León's calls for members of Congress to resign amid allegations of corruption. There followed a period of legal wrangling over reform, with a referendum called for November 28 although the poll was subsequently suspended. Elections in Honduras on November 28 were won by the Liberal Party's Carlos Roberto Reina. Rifts were reopened over human rights issues in El Salvador, where, in March, Pres. Alfredo Cristiani proposed an amnesty for military personnel named in a UN report as perpetrators of atrocities during the country's civil war. By November, evidence of a resurgence of death squads was being investigated by the UN after an increase in killings of members of the left-wing Farabundo Martí National Liberation Front. Pres. Violeta Chamorro's government in Nicaragua appeared increasingly vulnerable as members of the National Opposition Union, which had backed her, withdrew support, putting the former ruling Sandinistas in a stronger bargaining position.

      The attempt to reinstate the exiled president of Haiti, Jean-Bertrand Aristide, was not successful. In March the administration of U.S. Pres. Bill Clinton made clear that it would not issue a formal ultimatum to the Haitian military regime. Soon after, during April, the UN proposed a formula to resolve the crisis, and there were indications that the military-backed prime minister would resign to allow for democratic government. In late August Aristide's prime minister designate, Robert Malval, was endorsed by the legislature in Haiti, with a view to Aristide's return by October 30. Despite the dispatch of a U.S. troopship in early October, the deadline passed amid increasing signs that support for Aristide's return was waning, and Malval subsequently announced his resignation.

      Allegations of corruption wracked the governments of Venezuela and Brazil. In Venezuela, Pres. Carlos Andrés Pérez was forced to leave office in May following allegations of embezzlement. Octavio Lepage briefly took over, but Ramón José Velásquez was subsequently agreed upon by Congress as interim president. A law approved by Congress in August helped Velásquez push through economic legislation. Repeated speculation that a military coup was in the offing (two failed coups had taken place in February and November 1992) was not borne out, although the political climate was tense. In the presidential and congressional elections on December 5, a veteran politician and former president, Rafael Caldera, standing as an independent but backed by a coalition of minority parties in the National Convergence, defeated the Social Christian (COPEI) candidate, Oswaldo Alvarez Paz. In Brazil a national plebiscite on April 21 retained the presidential system and republican form of government. Having replaced Pres. Fernando Collor de Mello in October 1992 after Congress had voted to impeach him for corruption, the Itamar Franco government suffered a setback in October 1993 when a former treasury official made allegations of widespread corruption. The work of a congressional inquiry contributed to delays in revising the 1988 constitution.

      The ruling Peronist (Justicialist National Movement) party in Argentina did well in the congressional elections on October 3, helping to reinforce Pres. Carlos Menem's bid for constitutional reform that would include a provision to allow him to run for a second consecutive term in 1995. A referendum on the issue was called for November 21, but it was suspended following an accord with the opposition Radical Civic Union, whose leader, Raúl Alfonsín, agreed to cooperate with the National Congress to secure a two-thirds majority for the reform in the Chamber of Deputies.

      General elections in Bolivia were held on June 6, with Gonzalo Sánchez de Lozada of the Nationalist Revolutionary Movement winning some 34% of the vote, compared with 21% for the ruling Patriotic Accord led by a former general, Hugo Banzer Suárez. The new president took office on August 6 following his confirmation by two-thirds of Congress. Juan Carlos Wasmosy (see BIOGRAPHIES (Wasmosy, Juan Carlos )) of the Colorado Party became Paraguay's first democratically elected president on August 15, having been elected on May 9. In elections in Chile on December 11, the Christian Democrat Eduardo Frei, the presidential candidate of the ruling Concertación centre-left coalition, won by a wide margin.

      The administration of Alberto Fujimori in Peru continued to reap dividends from having captured Sendero Luminoso (Shining Path) guerrilla leader Abimael Guzman in 1992. Municipal elections held on January 29 returned a large number of independents and were relatively peaceful. A new constitution was endorsed by a slim majority of 53% to 47% in a referendum held on October 31. In Colombia the year was marked by repeated outbursts of drug-related violence, scandals, and politically motivated killings. In December government forces killed Pablo Escobar, leader of the Medellín drug cartel, who had escaped from prison in July 1992.

Economic Affairs.

      Gross domestic product was expected to grow in 1993 by about 3%, similar to the rate for 1992, partly underpinned by still strong growth rates in Chile (up to 6%) and Argentina (7%) and by more moderate rates in the 3-5% range in other countries, including Brazil (4.5%), which registered a significant recovery in the first half of 1993 after several years of stagnant to negative results. In November the annual growth forecast for Mexico was officially revised down to 1.1% from 2.5-3%, with performance being impaired by uncertainty arising from delays in completing the North American Free Trade Agreement (NAFTA) with the U.S. and Canada. After side accords on labour and the environment were negotiated, NAFTA was ratified by the U.S. Congress in November, paving the way for it to go into operation on Jan. 1, 1994.

      With the exception of Brazil, where monthly inflation was running at over 35% in November, inflation remained largely under control, with the regional average projected at 19% for the year, down from 25% in 1992. Both Mexico and Argentina succeeded in bringing annual inflation rates down to below 10% for the first time in many years, reflecting in large measure the success of efforts to control public-sector accounts, keeping them in balance or surplus, and the stability of exchange rates. Of the major economies, Brazil and Venezuela were expected to run sizable deficits, keeping upward pressure on inflation.

      The regional trade balance appeared likely to register a deficit of at least $14 billion in 1993, after an $11 billion deficit in 1992, partly because of reduced surpluses in Brazil and Colombia and a reversal of Chile's usual surplus (a deficit of some $800 million was predicted). Poor world prices and weak world demand for many export commodities hampered growth in export revenues from their 1992 level of $127 billion, while overvalued exchange rates in some countries, combined with a more liberal trade regime, favoured import growth well above the $137 billion of 1992.

      The aggregate amount of outstanding foreign debt remained high at some $465 billion at the end of 1992, with servicing costs put at some $62 billion during 1993 ($2 billion less than in the previous year). Of the largest debtors, Argentina managed to complete its Brady deal (the reduction of debt through refinancing) with commercial creditors. Brazil, despite having reached a similar Brady deal in July 1992, was unable to complete the agreement by the deadline of Nov. 30, 1993, owing largely to domestic political problems. The deadline was then extended until mid-April 1994.

      On regional trade, the Clinton administration pronounced in favour of encouraging a trading bloc along the lines of former president George Bush's Enterprise for the Americas Initiative. The ratification of NAFTA in late November put in place one of the key pieces in this strategy, with Colombia, Venezuela, and Mexico agreeing in December to sign a free-trade pact in January 1994. Uruguay's Pres. Luis Alberto Lacalle expressed the view, however, that a hemisphere-wide bloc was inappropriate in the short run, with emphasis better placed on subregional groups of the kind already being developed. The Southern Cone Common Market (Mercosur) involving Argentina, Brazil, Paraguay, and Uruguay, which aimed to have arrangements for integration in place by the end of 1994, suffered a number of further setbacks during the course of 1993, in large measure related to the widening differences in economic management between Argentina and Brazil. A decision in July by the Caribbean Community and Common Market (Caricom) to increase trade and technical cooperation with Cuba was not well received by the U.S. (SUSAN M. CUNNINGHAM)

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