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Thursday, October 25, 2012

Peru in Brief: Political and Economic Conditions and Relations with the United States



Maureen Taft-Morales
Specialist in Latin American Affairs

This report provides an overview of Peru’s government and economy and a discussion of issues in relations between the United States and Peru.

Peru and the United States have a strong and cooperative relationship. Several issues in U.S.-Peru relations are likely to be considered in decisions by Congress and the Administration on future aid to and cooperation with Peru. The United States supports the strengthening of Peru’s democratic institutions, its respect for human rights, environmental protection, and counternarcotics efforts. A dominant theme in bilateral relations is the effort to stem the flow of illegal drugs, mostly cocaine, between the two countries. In the economic realm, the United States supports bilateral trade relations and Peru’s further integration into the world economy. The United States is Peru’s top trading partner. The U.S.-Peru Trade Promotion Agreement (PTPA) went into effect February 1, 2009. The Obama Administration requested $74 million in foreign assistance for Peru for FY2013 to advance these objectives.

Ollanta Humala, of the left-wing Gana Peru, was sworn in as Peru’s president in July 2011 for a five-year term. Gana Peru won 47 seats out of the 130 seats in the unicameral Congress, requiring Humala to rely on political alliances with lesser parties in order to pass legislation. Deep social divides over how to pursue development continue to undercut political stability. The more radical elements of Humala’s original support base and his party urge the pursuit of more leftist policies, such as nationalization of strategic industries, which Humala called for during the election campaign. Forces that resist more radical policies include a strong business sector; a conservative, wealthy elite; a centrist middle class; and a divided Congress. Social unrest, especially over exploitation of natural resources, is likely to remain a challenge for the Humala government.

Since 2001 Peru’s economy has been stronger than all others in the region, with its growth due mostly to the export of natural resources. High economic growth, along with social programs, has helped to lower Peru’s overall poverty rates. Nonetheless, in some jungle, mountain, and rural areas of the country, over 60% of the population continue to live in poverty. The income distribution gap remains quite large as well. This economic disparity has contributed to rising social unrest. President Humala submitted, and the legislature approved, a bill increasing royalties mining companies must pay. The government estimates the royalties will generate about US$1 billion a year, which it will use to finance social development programs intended to narrow both the social divide and the economic distribution gap.



Date of Report: October 18, 2012
Number of Pages: 16
Order Number: R42523
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Tuesday, October 23, 2012

Venezuela: Issues for Congress



Mark P. Sullivan
Specialist in Latin American Affairs

Under the rule of populist President Hugo Chávez, first elected in 1998, Venezuela has undergone enormous political changes, with a new constitution and unicameral legislature, and even a new name for the country, the Bolivarian Republic of Venezuela. Human rights organizations have expressed concerns about the deterioration of democratic institutions and threats to freedom of expression under the Chávez government. President Chávez won reelection to another six-year term on October 7, 2012, by a margin of 11%, capturing about 55% of the vote compared to 44% for opposition candidate Henrique Capriles. While Chávez’s continued popularity and use of state resources helped his reelection, high rates of crime, inflation, and other economic problems eroded his support somewhat as did an energetic campaign run by Capriles. Looking ahead, Venezuela is scheduled to hold state elections on December 16, 2012. Henrique Capriles will run for reelection as governor of the state of Miranda against former Vice President Elías Jaua. At this juncture, Chávez appears to have bounced back from two bouts of an undisclosed form of cancer, although his health status raises questions about Venezuela’s political future. 

U.S. Policy 


The United States traditionally has had close relations with Venezuela, a major supplier of foreign oil, but there have been friction and tensions in relations under the Chávez government. Over the years, U.S. officials have expressed concerns about human rights, Venezuela’s military arms purchases, its relations with Cuba and Iran, and its efforts to export its brand of populism to other Latin American countries. Declining cooperation on anti-drug and anti-terrorism efforts has been a major concern. The United States has imposed sanctions: on several Venezuelan government and military officials for allegedly helping the Revolutionary Armed Forces of Colombia (FARC) with drug and weapons trafficking; on three Venezuelan companies for providing support to Iran; and on several Venezuelan individuals for providing support to Hezbollah. Despite tensions in relations, the Obama Administration remains committed to seeking constructive engagement with Venezuela, focusing on such areas as anti-drug and counter-terrorism efforts. In the aftermath of President Chávez’s reelection, the White House, while acknowledging differences with President Chávez, congratulated the Venezuelan people on the high level of participation and the relatively peaceful election process. 

Legislative Initiatives 


As in past years, there have been concerns in the 112th Congress regarding the state of Venezuela’s democracy and human rights situation and its deepening relations with Iran. H.R. 3783, approved by the House on September 19, 2012, would require the Administration to conduct an assessment and present “a strategy to address Iran’s growing hostile presence and activity in the Western Hemisphere.” H.R. 2542, approved by the House Subcommittee on the Western Hemisphere December 15, 2011, would withhold some assistance to the Organization of American States unless that body took action to invoke the Inter-American Democratic Charter regarding the status of democracy in Venezuela. H.R. 2583, approved by the House Committee on Foreign Affairs July 19, 2011, includes a provision that would prohibit aid to the government of Venezuela. Other legislative initiatives include H.Res. 247, which would call on the Secretary of State to designate Venezuela as a state sponsor of terrorism; and H.R. 6067, which includes a section imposing restrictions on U.S. nuclear cooperation with any country assisting the nuclear program of Venezuela or Cuba or transferring advanced conventional weapons or missiles to Venezuela or Cuba.

In action on FY2013 foreign aid appropriations, the report to the House Appropriations Committee bill, H.R. 5857 (H.Rept. 112-494, reported May 25, 2012), directs that $5 million in Economic Support Funds be provided for democracy programs in Venezuela, the same amount appropriated in FY2012, and $2 million more than requested by the Administration. In contrast, the report to the Senate Appropriations Committee bill, S. 3241 (S.Rept. 112-172, reported May 24, 2012), recommends $3 million for democracy programs in Venezuela to be administered by the National Endowment for Democracy.



Date of Report: October 16, 2012
Number of Pages: 63
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Friday, October 19, 2012

Brazil-U.S. Relations



Peter J. Meyer
Analyst in Latin American Affairs

As its economy has grown to be the sixth largest in the world, Brazil has consolidated its power in South America and become increasingly prominent on the world stage. The Obama Administration regards Brazil as an emerging center of influence, whose leadership it welcomes “to pursue progress on bilateral, hemispheric, and global issues.” In recent years, U.S.-Brazil relations have generally been positive despite Brazil’s prioritization of strengthening relations with neighboring countries and expanding ties with nontraditional partners in the “developing South.” Although some disagreements have emerged, Brazil and the United States continue to engage on issues such as security, energy, trade, human rights, and the environment. 

Political Situation 


Dilma Rousseff of the ruling center-left Workers’ Party was inaugurated to a four-year presidential term on January 1, 2011. She inherited a country that had benefited from 16 years of stable and capable governance under Presidents Fernando Henrique Cardoso (1995-2002) and Luis Inácio Lula da Silva (2003-2010). Rousseff’s multiparty coalition holds significant majorities in both houses of Brazil’s legislature; however, keeping the unwieldy coalition together to advance her policy agenda has proven challenging. Although she has won approval for a federal worker pension reform, regulations for the 2014 World Cup, and a truth commission to investigate abuses during the military regime (1964-1985), other important initiatives have yet to advance. Rousseff has also lost several administration officials to corruption scandals but her efforts to clean up her cabinet have won popular support. In September 2012, 62% of Brazilians evaluated her administration as “good” or “very good.” 

Economic Conditions 


With a gross national income of $2.1 trillion, Brazil is the largest economy in Latin America. Over the past five years, the country has enjoyed average annual growth of over 4%. This growth has been driven by a boom in international demand for its commodity exports and the increased purchasing power of Brazil’s fast-growing middle class. The country has also benefitted from a series of policy reforms implemented over the course of two decades that have reduced inflation, fostered growth, and enabled Brazil to better absorb international shocks like the recent global financial crisis. After contracting by 0.3% in 2009, the Brazilian economy quickly bounced back with 7.6% growth in 2010. The economy has since slowed; it grew by 2.7% in 2011 and is expected to grow by just 1.5% in 2012. Unemployment remains near a record low, however, and the Rousseff Administration is implementing several policies designed to stimulate the economy. 

Congressional Action 


The 112th Congress has maintained interest in U.S.-Brazil relations, with energy and trade issues receiving particular attention. Congress allowed a duty on imported ethanol to expire at the end of 2011, removing a long-standing barrier to U.S.-Brazil biofuels cooperation. A bill introduced in April 2012, H.R. 4621, would authorize the President to enter into negotiations with Brazil to obtain open and reciprocal market access for trade in ethanol products. H.R. 6539, introduced in September 2012, would create a U.S.-Brazil Joint Commission on Commerce and Trade to address bilateral trade issues and promote commercial opportunities in both countries. Several bills with implications for the long-standing U.S.-Brazil cotton dispute have also been introduced in the second session. H.R. 5143 would prohibit payments to the Brazil Cotton Institute and thereby prevent the United States from complying with the terms of a temporary bilateral agreement. Additionally, both versions of the 2012 farm bill, S. 3240 and H.R. 6083, include potential modifications of the U.S. cotton program.

This report analyzes Brazil’s political, economic, and social conditions, and how those conditions affect its role in the world and its relationship with the United States.



Date of Report: October 11, 2012
Number of Pages: 35
Order Number: RL33456
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Monday, October 15, 2012

Venezuela: Issues for Congress



Mark P. Sullivan
Specialist in Latin American Affairs

Under the rule of populist President Hugo Chávez, first elected in 1998 and reelected to a six-year term in December 2006, Venezuela has undergone enormous political changes, with a new constitution and unicameral legislature, and even a new name for the country, the Bolivarian Republic of Venezuela. Human rights organizations have expressed concerns about the deterioration of democratic institutions and threats to freedom of expression under the Chávez government. Venezuela is scheduled to hold its next presidential election on October 7, 2012, with President Chávez running against Henrique Capriles Radonski, the unified opposition candidate. While Chávez’s continued popularity and use of state resources bode well for his reelection, high rates of crime, inflation, and other economic problems could erode his support. Most opinion polls favor Chávez, but Capriles has been running an energetic campaign that has been gaining momentum and could potentially result in an upset victory. Until recently, a wildcard in the election was the health status of President Chávez. At this juncture, Chávez appears to have bounced back from two bouts of an undisclosed form of cancer, although his health has limited his campaign appearances. Looking ahead, however, Chávez’s health status raises questions about Venezuela’s political future. 

U.S. Policy 


The United States traditionally has had close relations with Venezuela, a major supplier of foreign oil, but there has been friction and tensions in relations under the Chávez government. Over the years, U.S. officials have expressed concerns about human rights, Venezuela’s military arms purchases, its relations with Cuba and Iran, and its efforts to export its brand of populism to other Latin American countries. Declining cooperation on anti-drug and anti-terrorism efforts has been a major concern. The United States has imposed sanctions: on several Venezuelan government and military officials for allegedly helping the Revolutionary Armed Forces of Colombia (FARC) with drug and weapons trafficking; on three Venezuelan companies for providing support to Iran; and on two Venezuelan individuals for providing support to Hezbollah. Despite tensions in relations, the Obama Administration remains committed to seeking constructive engagement with Venezuela, focusing on such areas as anti-drug and counter-terrorism efforts. 

Legislative Initiatives 


As in past years, there have been concerns in the 112th Congress regarding the state of Venezuela’s democracy and human rights situation and its deepening relations with Iran. H.R. 3783, approved by the House on September 19, 2012, would require the Administration to conduct an assessment and present “a strategy to address Iran’s growing hostile presence and activity in the Western Hemisphere.” H.R. 2542, approved by the House Subcommittee on the Western Hemisphere December 15, 2011, would withhold some assistance to the Organization of American States unless that body took action to invoke the Inter-American Democratic Charter regarding the status of democracy in Venezuela. H.R. 2583, approved by the House Committee on Foreign Affairs July 19, 2011, includes a provision that would prohibit aid to the government of Venezuela. Other legislative initiatives include H.Res. 247, which would call on the Secretary of State to designate Venezuela as a state sponsor of terrorism; and H.R. 6067, which includes a section imposing restrictions on U.S. nuclear cooperation with any country assisting the nuclear program of Venezuela or Cuba or transferring advanced conventional weapons or missiles to Venezuela or Cuba.

In action on the FY2013 foreign aid appropriations, the report to the House Appropriations Committee bill, H.R. 5857 (H.Rept. 112-494, reported May 25, 2012), directs that $5 million in Economic Support Funds be provided for democracy programs in Venezuela, the same amount appropriated in FY2012, and $2 million more than requested by the Administration. In contrast, the report to the Senate Appropriations Committee bill, S. 3241 (S.Rept. 112-172, reported May 24, 2012), recommends $3 million for democracy programs in Venezuela to be administered by the National Endowment for Democracy.



Date of Report: October 3, 2012
Number of Pages: 63
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Saturday, October 6, 2012

Mexico: Issues for Congress



Clare Ribando Seelke
Specialist in Latin American Affairs

The United States and Mexico have a close and complex bilateral relationship as neighbors and partners under the North American Free Trade Agreement (NAFTA). Although security issues have recently dominated the U.S. relationship with Mexico, analysts predict that bilateral relations may shift toward economic matters once President-elect Enrique Peña Nieto takes office. Peña Nieto of the Institutional Revolutionary Party (PRI) defeated leftist Party of the Democratic Revolution (PRD) candidate Andrés Manuel López Obrador and Josefina Vázquez Mota of the conservative National Action Party (PAN) in Mexico’s July 1, 2012, presidential election. As a result, the PRI, which controlled Mexico from 1929 to 2000, will retake the presidency on December 1, 2012. Some analysts have raised concerns regarding the PRI’s corrupt past and impending return to power, but President-elect Peña Nieto has pledged to govern democratically and to forge cross-party alliances.

The outgoing PAN government of Felipe Calderón has pursued an aggressive anticrime strategy and increased security cooperation with the United States. These efforts have helped Mexico arrest or kill record numbers of drug kingpins, but more than 55,000 people have died as a result of organized crime-related violence since December 2006. Mexico’s ongoing security challenges have overshadowed some of the Calderón government’s achievements, including its successful economic stewardship during the global financial crisis and expansion of healthcare coverage. 

U.S. Policy 


In recent years, U.S. policy toward Mexico has been framed by security cooperation under the Mérida Initiative. Congress has provided more than $1.9 billion in Mérida aid since FY2008 to support Mexico’s efforts against drug trafficking and organized crime. Whereas U.S. assistance initially focused on training and equipping Mexican counterdrug forces, it now prioritizes strengthening the rule of law. Along the border, U.S. policymakers have sought to balance security and commercial concerns. The U.S. and Mexican governments resolved a long-standing trade dispute in 2011 involving NAFTA trucking provisions and have sought to improve competitiveness through regulatory cooperation. Bilateral trade surpassed $460 billion in 2011.The February 2012 signing of a Trans-Boundary Hydrocarbons Agreement for managing oil resources in the Gulf of Mexico could create new opportunities for energy cooperation. 

Legislative Action 


The 112th Congress has maintained an active interest in Mexico. The Obama Administration asked for $269.5 million in assistance for Mexico in its FY2013 budget request. The Senate and House Appropriations Committees’ versions of the FY2013 foreign aid measure, S. 3241 and H.R. 5857, each recommend increases in aid to Mexico, with human rights conditions similar to P.L. 112-74. Congress has held oversight hearings, issued reports, and introduced legislation on how to bolster the Mérida Initiative and on related U.S. domestic efforts to combat gun trafficking, money laundering, and drug demand. A Senate-passed bill, S. 1612, would increase penalties for transnational drug trafficking.

Violence in northern Mexico has kept border security on the agenda, with P.L. 112-93 increasing penalties for aviation smuggling, and P.L. 112-127 tightening sentencing guidelines for building border tunnels. Another bill that recently passed both chambers, H.R. 915, provides statutory authority for the bilateral Border Enforcement Security Task Force (BEST) program. A House- passed measure, H.R. 1299, would require a new border security strategy, while another, H.R. 6368, would require a study on cross-border violence.

Mexico’s recent accession to negotiations for a Trans-Pacific Partnership (TPP) trade agreement is likely to generate congressional interest. Congressional action may be required in order for the Trans-boundary Hydrocarbons Agreement to take effect. And, as Mexico’s political transition approaches, Congress is likely to monitor the policy positions taken by the incoming Peña Nieto administration.

Also see: CRS Report R42548, Mexico’s 2012 Elections, by Clare Ribando Seelke; CRS Report R41349, U.S.-Mexican Security Cooperation: The Mérida Initiative and Beyond, by Clare Ribando Seelke and Kristin M. Finklea; and CRS Report RL32934, U.S.-Mexico Economic Relations: Trends, Issues, and Implications, by M. Angeles Villarreal.



Date of Report: September 24, 2012
Number of Pages: 45
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