Ecuador's government, the most fragile of South America

Authors:
José Alberto López Rafaschieri and Luis Alberto López Rafaschieri
www.morochos.net

The closing of radio Arutam and Teleamazonas by Rafael Correa's administration are not chance events, behind this onslaught against the media is the face of a weakened government.

Although Correa has not done so badly in the economic sphere, his lack of social outcomes, his authoritarian style, his ties to Colombian guerrillas and his alliance with Hugo Chavez, have been the variables that have weighed in on the deterioration of his image before the people of Ecuador. So that, only from September to November 2009, Correa's popularity has fallen from 49% to 42%.

That is why Correa attacks the media, he is blaming this sector for his loss of legitimacy. Similarly, there is the reason of the donation of Mirage fighter jets from Venezuela to Ecuador, it seems an attempt to appease the Ecuadorian military class and to prevent a situation like the coup against Zelaya in Honduras. The ALBA leaders know that the country's military can react against Correa if he continues to fall in popularity and copying Chavez's policies.

Based on the above -plus the tensions with Colombia and the growing conflict with the indigenous sector- of all South American governments, Ecuador has the biggest political risk.

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Chile invited to join OECD earlier than Venezuela

Authors:
Luis Alberto López Rafaschieri and José Alberto López Rafaschieri
www.morochos.net

While some governments in Latin America are threatening to abandon the OAS, the UN and any multilateral organization not willing to support the anti-democratic ideas of the radical left in the region, Chile has just recently joined the OECD -the Organization for Economic Cooperation and Development- which is integrated by a group of countries considered the world's most developed.

It is interesting that Chile has done this earlier than Venezuela, considering that Chavez's country has a much larger GDP -The Venezuelan economy doubles in size to that of Chile-. But for the OECD it's not only important to have a big economy, it's also essential to have strong democratic institutions, independent central banks, a robust private sector, an advanced legal system, a stable economy and the willingness to implement joint policies; variables that Venezuela has deteriorated over the past ten years with the government of President Chavez.

The two political models being debated now in Latin America: Chavez's extremist style, or the moderate way, like Chile. This last is doing better, say the world's most developed countries.

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On the Mexican strategy of hedging oil prices

Authors:
José Alberto López Rafaschieri and Luis Alberto López Rafaschieri
www.morochos.net

It is a fact that the budgets of oil-exporting countries are subject to the vagaries of international prices of this product; however, nations like Mexico are betting on a new way to protect them against sudden drops in the price of crude oil: Financial hedging instruments.

Because 40% of the Mexican government's revenue depends on oil exports, President Calderon's administration took a short position in the financial markets equal to a number of oil barrels which amounts to 20-30% of exports. So if oil prices fall, the profits of this operation will go up. And if the price rises, the amount of money coming into Mexico for traditional exports of crude will be still greater, although the losses from the short position in the oil derivatives markets.

But our argument against using such strategies is that the government always have to keep large amounts of money trading against the export product, funds that could well be used for other productive sectors in order to diversify the nation's dependence on the oil industry. For example, instead of resorting to the above described strategy, the Mexican government could put these millions of dollars in programs that support domestic industry, thereby promoting a more developed and less dependent country.

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Criticism of Chavez's military strategy: Destruction of the national productive sector

Authors:
Luis Alberto López Rafaschieri and José Alberto López Rafaschieri
www.morochos.net

According to figures from CONINDUSTRIA, when Chavez became president in 1999, there were over 12 thousand factories operating in Venezuela. However, due to the Chavez's anti-private sector policies, Venezuela has today less than 2 thousand operating factories. Not to mention that many manufacturing plants that were nationalized by Chavez are abandoned, or work with great inefficiency.

This weakened national production means that Venezuela is actually a country more dependent on imports -80% of products consumed in Chavez's Venezuela are imported-. A reality that raises the vulnerability of Venezuela in war situations, because in such scenarios the import-related infrastructure -roads, customs, ports, airports and warehouses- tends to operate with great difficulty, be blocked or destroyed.

Moreover, although from an economic perspective imported products could be less costly; from a logistical standpoint, mobilizing domestic goods is an easier task, and their repositioning time is usually less. Furthermore, no one knows what posture will adopt the usual suppliers of Venezuela if a military confrontation erupts.

This is why, in war, the foe's industrial systems are often selected as strategic targets to be disabled. But in the case of Venezuela, thanks to Chavez, the hypothetical enemies of this country have much of the work done.

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Polls for Chile's presidential election

Authors:
José Alberto López Rafaschieri and Luis Alberto López Rafaschieri
www.morochos.net

On December 13, there will be held the first round of elections to choose who will become the next president of Chile. An election where Sebastian Piñera apparently has a comfortable lead.

This is reflected in the latest survey, conducted by Universidad del Desarrollo, in which appears Sebastián Piñera with 38% of Chileans' voting intention. He is followed by Eduardo Frei with 23% and Marco Enriquez-Ominami with 20%. This study was made on November 18 and has a margin of error of 3.2%.

Assuming these results, it would mean that Chile will be another place lost by the leftist movement in Latin America -independently of how radical or moderate they are-. Something that would be very positive for democracy in the region because, lamentably, many centrist leftist leaders have served to support the extremist project that promote Hugo Chávez and his allies in the area. For an example, we can consider how the presidency of Lula in Brazil, or the Insulza's role in the OAS, have always been backing the abuses of Chavez against Venezuela's democracy.

Update -december, 16- Polls for the second round election: Piñera 49%, Frei 32%. Margin of error 3%. Source: CERC.

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