Honduras-Restoring Democracy

I spent some time in Honduras in 1990, mainly in San Pedro Sula, Tegucigalpa and a little town on the Gulf of Fonseca called Cedeno (pictured). On the beach at Cedeno there was a constant passing above of UN helicopters flying between listening posts in Nicaragua on one side and El Salvador on the other. But Honduras was stable.

Last week there was a coup after their right of centre president decided to go loopy and declare himself socialist. He then allied himself with Chavez in Venezuela and Morales in Bolivia. Just like these anti-democratic socialists Zelaya then started to dismantle Honduras's democratic constitution. Last week he was overthrown, an interim government is in place and democracy will imminently be restored.

It is always sad when the military intervene but in Latin America they are essential. The Honduran military were left with no option. There is a history in Latin America of leftist despots blighting and impoverishing the country with the military eventually intervening to restore democracy. Alvaro Vargas Losa, of the Independent Institute takes a slightly less positive view in this article, which is well worth a read. He believes upcoming constitutional votes would have rejected Zelaya's march to dictatorship. I disagree, I believe Zelaya would have made sure he won, one way or the other. Or, like the EU he would have just come back from a slightly different angle, with the result he wanted.

When faced with socialism I'm all for military intervention, with a swift return to democracy.

Venezula's Chavez Dictatorship

Latin America has a special interest for me, so the following article particularly drew my attention. Alvaro Vargas Llosa is always worth a read and the Independent Institute always worth a visit:

Showdown In Caracas
June 3, 2009
Alvaro Vargas Llosa



CARACAS, Venezuela—A group of foreign writers, academics and politicians was invited here to celebrate the 25th anniversary of Cedice, a Venezuelan think tank that promotes liberal democracy and the market economy, both of which President Hugo Chavez wants to destroy. The government’s thuggish reaction turned the visit into a public showdown that helped expose what Venezuelans are going through these days.

Although there were visitors from three continents, the authorities took aim particularly at those from Latin America. Four of us were detained at the airport, in my case for three hours, and told to refrain from making political comments. We were followed by the secret police—known as DISIP—in cars with no license plates, and a hostile mob was sent to the main venue. Agents masquerading as journalists were instructed to provoke us. The president and his ministers took turns insulting us on TV from dawn to dusk.

Once the official welcoming became an international media embarrassment, Chavez changed tactics and invited us to debate him and a group of “revolutionary intellectuals” none of us had ever heard of. The president did not really intend to debate, but we decided to put the ball back in his court. I suggested that novelist Mario Vargas Llosa, my father and the senior figure in our group, debate Chavez one on one. A few of us would accompany him to witness that basic conditions be met: no government mobs in the room, and live coverage on the government-controlled networks. Former Mexican Foreign Minister Jorge Castaneda, Mexican historian Enrique Krauze, Colombian writer Plinio Apuleyo Mendoza, our hosts Rocio Guijarro and Rafael Alfonzo, and others backed the suggestion. We put it to Chavez; as expected, he backed down.

The Cedice event and the government’s response helped to convey a simple truth about Chavez—that the emperor has no clothes. Venezuelans had been told that we were imperialists bent on destroying the revolution. But Chavez needs no such help; he is doing a fine job of it himself.

Two years after blocking the ability of Radio Caracas Television, the oldest network in the country, to broadcast over open airwaves, the government is going after Globovision, an independent network. Chavez has levelled trumped-up charges against the owner, Guillermo Zuloaga, who also has several Toyota dealerships and has been indicted for “hoarding” vehicles in order to resell them through “usury.” Globovision itself is officially accused of spreading fear for criticizing the authorities’ slow response to an earthquake and disrespecting the president. Chavez has promised to close down the network.

Opposition mayors and governors have been stripped of their powers and are being viciously persecuted. Manuel Rosales, mayor of Maracaibo and a former presidential candidate, has received political asylum in Peru. The mayor of Caracas, Antonio Ledezma, who gave our group a welcoming speech, dramatically told us that his country is now “a dictatorship.” Retired Gen. Raul Baduel, a former Chavez loyalist who broke with the president during his first attempt to change the constitution in pursuit of “indefinite re-election,” is now in prison.

The Official Gazette, where government decrees are published, has become an ode to theft. On a daily basis, it announces the takeover of local and foreign businesses—rarely with compensation. The nationalizations, often executed through violence, affect all areas of the economy: telecommunications, electricity, oil fields in the Orinoco Basin and oil field services, steel and cement production, banks, metallurgical firms, the food industry and agricultural land. The victims include Venezuelan, American, Mexican, French, Spanish, Swiss, Japanese and Australian investors.

Only a few foreigners have been spared—notably Brazilian companies, because Chavez is begging Brazil’s government for money. The corrupt mismanagement of the state-owned oil company PDVSA has seen production drop by one-third. Given the commitments made by Chavez on behalf of the Bolivarian revolution when the price of oil was much higher, the government is seriously short of cash. Chavez knows that his political machinery, based on expensive patronage and intimidation, is in jeopardy.

Thanks to Chavez’s overreaction, which gave the Cedice event a wider audience than expected, millions of Venezuelans were able to hear about our different experiences with authoritarian populism. They should take heart in the message that it can be reversed and that they are not alone in trying to prevent a second Cuba in the Western Hemisphere.

Drug Legalisation?

The article below is another interesting look at the drug problem .There is an undoubted problem but is prohibition exacerbating it, especially in relation to the associated crimewave, much as prohibition of alcohol did in the USA between 1919 and 1933? Remember, the Mafia and other organised gangs of criminals, boomed during prohibiton and crime associated with the prohibition of drugs is also booming. Perhaps we need a more imaginative approach. The article is from the Independent Institute.

How to Combat Mexican Drug Cartels
Legalize Their Activities
April 6, 2009
Ivan Eland



While the U.S. superpower has meddled in many far-flung nations around the globe in the name of enhancing its security, as prior to 9/11, it has ignored a threat much closer to home. In recent years, the Bush administration blithely blamed Mexico for the flow of illegal drugs into the United States and virtually ignored the raging mayhem involving Mexican drug cartels south of the border. That rampant violence is now spilling into the United States as crime. Yet again, the Bush administration has handed off a tar baby to the Obama administration. And yet again in the security area, the Obama administration has improved on the Bush policy (it’s not hard to do) but needs to go farther.

Instead of merely blaming Mexico for the problem, the Obama administration has acknowledged that the $65 billion annual demand for illegal drugs in the United States is part of the problem. In fact, it is the driver of the problem.

Unfortunately, although admitting that the United States shares blame for the problem because of its burgeoning demand is a start, the Obama administration is still focused on the long failed U.S. government policy of interdicting the supply of drugs. The administration will send almost 500 federal agents south to the border, accompanied by more electronic surveillance and x-ray machines, and will also focus on stopping the flow of guns and tens of billions of dollars in payments going south to the suppliers. Last year, U.S. officials were able to seize less than $1 billion in illicit drug proceeds of the estimated $18 to $39 billion routed back to Mexico. Even more snooping into the bank accounts of Americans will likely occur in what will probably be a futile effort to appreciably increase the percentage snared.

The new Obama policy is analogous to an alcoholic admitting to a drinking problem, but then blaming beer distributors and trying to have them arrested. The analogy to alcohol can be taken a step further. According to the Justice Department, the biggest organized crime threat in the U.S. today is the presence of the Mexican drug cartels in 230 U.S. cities. Similarly, in the United States, organized crime got a huge boost by the prohibition of alcohol in the 1920s and 1930s.

So if there has been a failure working on both the supply side (even having a fortified border still results in tens of billion of dollars in annual drug imports) and demand side (drugs are illegal, yet many people still do them), then why not try a fresh, if counterintuitive, approach that many economists favor? Why not legalize drugs for adults 21 and over?

Sound radical? Even crazy? Here’s the logic. Such drugs are cheap to make. The reason they are so expensive is because producing, transporting, and selling the drugs risks arrest, jail time, and even injury or death. Crime results because the substances are illicit, people buy guns to protect themselves, and then use them to shoot at other drug cartels competing for the huge profits or to commit crimes to pay the steep prices because drugs are illegal.

Legalizing drugs for adults would turn it into a mainstream business and prices and profits would dramatically drop, thus resulting in far less crime among producers, traffickers, and users. If the price dropped, more people might try drugs, but money can better be spent on education campaigns and treatment than on stricter drug laws and penalties and government agents, gizmos, and improved border fences in what has been a multi-decade futile effort to stanch the flow of drugs into the United States. After all, since drugs are cheap to make, the drug producers simply estimate that 10 to 15 percent will be interdicted by law enforcement and simply produce that much more.

In addition, the United States has the largest prison population in the world, but many of those people—convicted on most drug crimes—should not be there in the first place. Shouldn’t any adult be able to make their own decisions about what substances to put in their bodies? Taking most illegal drugs is unhealthy, but why should the government get involved in regulating personal behavior for adults? Lets reserve the jail cells for true criminals: murderers, rapists, robbers, child molesters, and those who sell illegal drugs to minors. Putting routine drug sellers and users in prison just causes taxpayers to spend a lot of hard earned money creating hardened criminals.

That is why Mexico is so important. About 90 percent of U.S. drug traffic flows through there because Mexico neighbors the United States, one of the biggest markets for illegal drugs in the world. Mexico is being destabilized by a draconian U.S. drug policy, and that instability is flowing back into the United States and causing a threat to national security in the form of imported crime. This is one area in which U.S. domestic policy is hurting its foreign and security policies. Legalizing drugs for adults at home would make Mexico, an important neighbor, more stable and the United States more secure.

Time To Legalise?

From the Independent Institute:

Officials in the international war on drugs had their work cut out for them last week as they convened in Vienna to collaborate on strategies for victory--or whatever outcome that could reasonably be called successful. Over the past decade, according to a recent study by the United Nations Office on Drugs and Crime, opium and cannabis production have doubled while cocaine production has increased slightly. In addition, the former presidents of Brazil, Mexico, and Colombia recently issued a report condemning the drug war as a counterproductive failure. In Mexico alone, the drug war has resulted in the killing of ten thousand people on either side--and often on the sidelines--of the battle between the state and the drug cartels; it has also brought corruption to the office of attorney general.

These and related persistent problems should prompt policymakers to consider the merits of drug decriminalization, according to Independent Institute Research Fellow Alvaro Vargas Llosa.

"Today we regard the Opium Wars of the 19th century--by which the British retaliated against China for clamping down on opium imports--as crazy," Vargas Llosa writes in his latest column. "One and a half centuries from now, people will read in total amazement that so much blood and treasure was wasted in the failed pursuit of a private vice that a relatively small percentage of the world population was not ready to give up."

Full Article.

Another interesting article from 2002.

Financial Mess

I've just received my latest bulletin from the Independent Institute, well worth a read it is too. This warning particularly struck me as it seems like commonsense, aimed at the USA but equally relevant here:

U.S. Policymakers Should Avoid Japan's Mistakes, Not Repeat Them

In the 1990s, Japan tried to revive its moribund economy with deep cuts in interest rates, bank bailouts and nationalizations, and multiple fiscal stimulus packages--including a 1998 spending program that amounted to a whopping 8.5 percent of gross domestic product. Despite those drastic measures, however, the economy languished: the 1990s were Japan's "lost decade."

Economic policymakers in the United States have taken a cue from their Japanese counterparts, enacting similar policies but doing so more quickly. Unfortunately, it is the basic similarity of their approach that is cause for alarm, according to Benjamin Powell, a research fellow at the Independent Institute.

"Bank bailouts and fiscal stimulus bills don't work because they strive to maintain the status quo," writes Powell. "But the status quo is the problem and exactly what needs to be corrected.... To achieve long-term economic recovery, market forces, not political forces, need to direct capital and labor to their most productive uses."

"Avoid Japan's Mistakes," by Benjamin Powell (Washington Times, 3/8/09)

Paraguay at the Crossroads

This was one of my earliest posts.

Having spent some time in Latin America, and particularly Paraguay, I am sad to see the problems that lie ahead there due to a 'turbulent priest'. The piece below is taken from The Lighthouse.

President-elect Fernando Lugo will face huge obstacles to fostering a prosperous democracy when he takes power in Paraguay in August. As Carlos Alberto Montaner, advisor to the Independent Institute's Center on Global Prosperity notes, the former Catholic bishop can hardly look to positive role models among his immediate neighbors. Argentina under the Kirchners is experiencing a new form of Peronism. Brazil? Lugo will likely be butting heads with it. Bolivia? Morales is Chavez "light."

An alternative way to frame the choice for Lugo is to consider not Paraguay's geographically closest neighbors, but rather two countries that exemplify widely divergent visions of economic development: Venezuela and Ireland. Which of the two approaches is he more likely to emulate?

"If he is guided by the rancorous nonsense of Liberation Theology, his country will undoubtedly follow the Venezuelan road and plunge into a deep political and economic crisis," writes Montaner. "If he chooses to look to Ireland (or Chile, close to home), he'll be able to serve his neediest compatriots, which is what he apparently desires. I haven't the slightest notion of what he'll do, but, with the passing of years, I've learned that optimism is usually followed by frustration. Lamentably."

"Paraguay: Ireland or Venezuela?" by Carlos Alberto Montaner (7/16/08)

Center on Global Prosperity (Alvaro Vargas Llosa, Director)

Purchase Lessons from the Poor: The Triumph of the Entrepreneurial Spirit, edited by Alvaro Vargas Llosa.

Purchase Liberty for Latin America: How to Undo Five Hundred Years of State Oppression, by Alvaro Vargas Llosa.