May 1, 2009        www.LatinEPR.com 

To add your e-mail to our distribution list, or to be removed from it, please contact Ellie Perla at: ellieperla@aol.com, or call 305-535-0951

Carola Perla, Editor

Missed last months' LatinEPR Newsletter?  Click here to see past issues

LATIN AMERICA - NEWS BRIEFS

Tourism:

H1N1 Virus Outbreak Impacts Mexican Tourism Industry

Mexican business associations estimate that the country has lost more than $1 billion in tourism revenue since the recent outbreak of the H1N1 virus, and continues to lose some $57 million due to closed businesses daily, the Washington Post reported this past week.  The fast-spreading and, in some cases, fatal disease has dealt a serious economic blow to Mexico’s third largest industry, with hotel occupancies running at 20%, flight and cruise ship cancellations, and a new government directive that all non-essential businesses close May 1-5, a customarily peak festival period.

Several countries, including the US, Canada, France, Britain, and Germany, have now issued some form of travel advisory, a move the World Health Organization is criticizing.  The WHO insists that such restrictions have little effect on halting the spread of such viruses and can socially do more harm than good (CTV).  WHO Director-General Margaret Chan explained further that “pandemics by definition will move around the world and cannot be stopped by restricting movement or closing borders”.  Not surprisingly, this position is being rejected by cautious travelers, who are understandably more concerned for their health and that of their family’s than the economic welfare of a neighboring country.  And as the vast reach of the H1N1 virus continues to expand around the globe, sympathy for Mexico’s ailing work force could sadly be in short supply.  However, despite its own travel advisory, the US government has made it clear that in light of already existing domestic cases, the US-Mexico  border would remain open. 

Rated a phase-5 pandemic by the WHO, the H1N1 virus comes at a time when the Mexican tourism industry was just beginning to show signs of recovery from the negative effects of border violence.  Only this past month, RE/MAX investment properties had published an encouraging study that showed tourist zones like Baja California Sur and Quintana Roo were up to 26 times safer than comparable tourist zones in the US.

LAN Chile Branches out into New Markets

LAN airlines have started domestic flights in Ecuador and Brazilian cargo operations as tactics to combat the global lull in passenger and cargo traffic, Reuters recently reported.  The Chilean airline is also initiating cargo operations in Colombia after a 24.2% fall in cargo traffic in March year-on-year.  Passenger traffic is faring better, with a 7.6% rise in March 2009 from the same month last year, owing to its performance in Chile, Argentina, and Brazil.  Although these numbers are not likely any time soon to match the double-digit increases the airline saw all through last year, Credit Suisse raised its recommendation for LAN shares to outperform from neutral.   

Brazil Lifts Airfare Price Minimums

The Brazilian Civil Aeronautics Agency released a statement this past month that starting May 2009, airlines would be allowed to offer discounts of up to 20% on all domestic and international flights originating in Brazil in a move to gradually eliminate government-enforced price limits, according to the Associated Press.  The arrangement, which plans to increase the discount amount by increments throughout this year, should see minimum airfare prices in Brazil phased out within 12 months.  The lifting of price limits on airfares are intended to help consumer spending, particularly in low season, as it would give airlines the freedom to make their prices more competitive. 

Media:

Terra Invests Millions to Tap Internet Advertisers

Major Internet provider Terra Networks is investing millions to raise its profile in what it sees as a rapidly growing Internet advertising market in Latin American, reported the Miami Herald this past month.   The company recently invested $10 million in upgrades to its 18 Internet portals in Latin America and the US, with plans to continue adding features this year.  Features include high-quality video content and expanding capabilities in music, news, sports, and social networking.  One feature growing in popularity is Terra TV, which offers television content on the web and has doubled in viewers since its introduction in early 2008, from 5 to 10 million.  These numbers are sure to increase as Terra recently secured Planet Disney Films as well as the 2010 Winter Olympics and the 2012 Summer Games in London. 

Projections for future Internet usage in the region is also encouraging.  According to a survey by eMarketer, Latin American Internet users are expected to increase from the current 111.2 million to 125.6 million by the end of this year and reach close to 180 million by 2013.  Users also spend an average of 29 hours on the web  a month,  more than users in other parts of the world.  All this is leading companies such as Price Waterhouse Coopers to project, despite the economic downturn, that Internet advertising could grow by double digits through 2011 in the five major Latin American markets: Argentina, Brazil, Chile, Mexico, and Venezuela.  In Terra’s case, touting advantages of Internet ads (relative low cost and tracking capabilities) and investing in features have the company on track to take advantage of these projections.  Terra has already experienced a 12% rise in net revenue from the $500 million in 2007, including a 26% increase in online advertising. And numbers of unique visitors are climbing, up to 29.5 million in February 2009 from 29.2 in December of this past year.

Economics and Politics:

Summit of the Americas: Heralding a New Era

The 34-nation Fifth Summit of the Americas, held this past month in Trinidad and Tobago, is being hailed as a diplomatic success by media outlets across the region, following inroads into climate control, easing of the Cuban Embargo, and improved relations between the US and Venezuela.  President Obama maintained his popularity in Latin America with statements that touched on open dialogue, relationships based on goodwill, and in general making the region a priority once again of US foreign policy. 

In regards to Cuba, which did not participate, President Obama took the opportunity to address Raul Castro, who had earlier expressed the possibility of discussing such issues as human rights and political prisoners with the US.  Said the US president in a final press conference, such willingness was “a sign of progress” and the US would “explore and see what further steps could be taken”.  In particular, President Obama spoke positively about Cuba’s international medical presence, and stressed the importance of using these kinds of humanitarian avenues to develop political relationships.

Perhaps the most memorable “thawing” of relations during the Summit, however, took place between President Obama and anti-American Venezuelan leader Hugo Chavez, who grabbed headlines with their genial handshakes.  Although the greeting has encountered criticism in the US, the President has defended his actions, claiming that despite political differences with Chavez, the US needs to improve its global image and can afford diplomatic courtesy in an effort to foster cooperation (LA Times).  The meeting resulted in the two countries discussing readmitting their respective ambassadors. 

On the topic of climate control, President Obama proposed a new Energy-Climate Partnership of the Americas.  The commitment to sustainability helped reinvigorate the spirit of cooperation and solidarity within the region.  However, what regards economic talks, especially free trade agreements with Panama and Colombia, there was little headway made.  Clearly the objective of this summit was some long-overdue smoothing of political friendships.

Peruvian Ex-President Fujimori Sentenced 

This April, former Peruvian president Alberto Fujimori was sentenced to 25 years for being the “indirect perpetrator” of at least 25 murders and two kidnappings in the 1990s at the onset of an eventually successful campaign to stamp out the country’s two main guerilla groups, Tupac Amaru and the Shining Path.  Fujimori served as president from 1990 to 2000, a period of ten years that began with economic reform and ended in authoritarian rule and corruption.  The conviction is a first for a democratically elected leader, and a result being hailed by human rights groups around the world as a milestone for justice.   For his part Fujimori maintains his innocence, and plans to appeal the sentence.  His position and the outrage expressed by his daughter, Congresswoman Keiko Fujimori, is helping to keep loyalties to the ex-statesman strong among the country’s poor, who fondly remember Fujimori as responsible for ending years of domestic terrorism and debilitating hyperinflation.  Their devotion could well see Keiko Fujimori, who has enjoyed popularity in her own right since being elected to public office in 2006, become the chief contender against leftist Ollanta Humala in Peru’s 2011 presidential elections.

Argentina and China Plan Currency Swap

Argentina and China have finalized an unprecedented agreement to swap $10.2 billion worth of their own currencies in bilateral trade, bypassing the US dollar, the Associated Press recently reported.  The agreement, China’s first with Latin America, allows Chinese importers to buy Argentine products in pesos, and perhaps more importantly, Argentine importers to buy in yuans.  This introduces Argentina to hard currency and should, according to the report, strengthen its financial position.  China has made similar agreements with emerging economies like Malaysia, Belarus, and Indonesia, as it aims to depose the US dollar as the world’s supreme currency.

Culture:

Guatemala Fights Crime with Motorcycle Law

This month Guatemala introduced a new law banning more than one person from riding on motorcycles, in order to stem the tide of motorcycle-related crimes, Reuters recently reported.  Guatemala police estimates that some 60 bus drivers have been shot in 2009 for failing to pay extortion fees in exchange for protection to street gangs, who perform many of their attacks from the back of a motorcycle.  In fact, according to the Guatemala Times, 6 out of every ten homicides are carried out by motorcyclists. The new law, in addition to limiting drivers, also requires motorists to wear brightly colored jackets and helmets that display their vehicle registration numbers.  But the ambitious law has its detractors, namely because the motorcycle is a popular family vehicle, on account of its affordability and accessibility.  The ban could place a heavy burden on the daily lives of many Guatemalans who depend on this mode of transportation.  Time will tell if the law will have the intended effect.  For now, say some police officers, residents continue sharing motorcycles, and despite the $3000 fine, many officers opt to simply ask the second person to get off.

Colombia: Jailbirds and Druglords

The term “jailbird” took on a whole new meaning this past month, as a carrier pigeon in Colombia was discovered trying to smuggle cell phone parts into a high-security prison, according to CNN.  The bird, laden with a little suitcase on its back, failed in its delivery due to heavy rains and has since found a new home in a nearby animal shelter, but authorities worry that this new method of smuggling will be virtually impossible to deter.  Not helping their case are the many pigeons in the surrounding area that could already be employed as smugglers.  While Colombian authorities tackle these curious little miscreants, a much larger one is finally in custody: after nine months of planning, Colombian police captured this April the country’s most wanted drug trafficker, Daniel Rendon Herrera.  Among the world’s most dangerous drug lords, Herrera shipped some 100 tons of cocaine to the US, headed a private army responsible for thousands of casualties, and worked closely with Mexican networks.