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Inicio arrow Análisis arrow Latinoamérica arrow Political Situation in Latin America: January 2015

Political Situation in Latin America: January 2015 PDF Imprimir E-Mail
Jan-30-16 - by Rosendo Fraga

1. After a year of stagnation, Latin America begins another year with low growth. Until a few months ago the regional growth prospects according to the IMF were 2.3% by 2015; it has now been reduced to 1.3%. The main reason has been the decline in the price of raw materials, starting with oil. Coinciding with these prospects, the Davos Forum - which as every year gets together in Switzerland in the second half of January - has confirmed the region's halt for the same cause, and the decline in China's growth. Venezuela, Argentina and Brazil have been determining countries in the regional brake in 2014 for having negative growths -the first two- and almost 0% -the latter. This will remain in 2015 and makes the Mercosur -these countries combined account for more than 90% of the regional group- be the subregion of Latin America with the lowest growth rate. ECLAC recorded the social impact of economic stagnation in 2014. It reported that last year poverty stopped declining in Latin America: it remained at 28%, that is, 167 million people. Of these, 71 million have poor nutrition and are in poverty or extreme poverty. The brake on the economy of the region has disrupted the positive evolution of its social indicators, which is set to continue this year.

2. The prospect of a difficult economic year is seen in the countries of the region. The situation in Venezuela is increasingly difficult. The IMF forecasts that GDP in 2015 will fall 7% and inflation could reach 100%. The Government emphasizes and extends controls and denounces an "economic coup". The basic basket increased 93 per cent in 2014 - 30 points more than inflation - and shortages grow. In Bolivia Evo Morales has just started his third consecutive term and held two ceremonies: one dressed with the suit of Inca Emperor according to the indigenous rite and the other making it in a traditional way since independence. But Bolivia's thriving economy today is threatened by the decline in the price of gas, the country's leading export item. In Brazil, a blackout in ten states precipitated by drought left Sao Paulo without water and electricity as new protests have stormed in. In 2014 the country registered the largest current account deficit since 2001. The rise in interest rates to lower inflation and the public spending tightening can reignite the recession the country suffered in the first half of last year. In Mexico, although the industry is favored by the American revival, the decline in the price of oil decreases the growth rate - although less than in other countries- when four months after the disappearance of 43 students new marches and protests calling for their appearance are carried out.

3. The fledging talks to normalize relations between the United States and Cuba have shown that it will be a long and complex process, although probably irreversible. The meeting in Havana of the officials of both countries, although a symbolic event in itself, failed to generate the reopening of embassies. Migration has been eased up but less than expected. The repression of dissent remains a central point of disagreement, even if the Castro regime has released fifty dissidents within the framework of the agreement with the United States. Both dissents and exiles are divided in view of the negotiations underway. Having a freer Internet has been another unmet goal of the U.S. officials. In this context the normalization of the relations between the Cuban regime and the Catholic Church is also moving forward, initiated during the papacy of John Paul II and now strengthened by the role of Pope Francis in the talks to resume relations between the US and Cuba, which will advance in dealing with matters such as the return of the assets that were expropriated from the Church when the Communist regime was established. But the public reappearance of Fidel Castro has shown the political limits of the agreement. He did so after months of absence and rumors about his health. He criticized both Obama and his country but did not rule out the possibility of reaching agreements as per that stipulated in the 'international standards'.

4. Between late January and early February several significant events will take place in the region. On Jan 28 and 29 the Presidents from 34 countries of the Summit of Latin American and Caribbean States (CELAC) gather in Costa Rica. The resumption of US-Cuba political relations and the effects of the decrease in the price of raw materials will be dominant issues, beyond the formal agenda of the meeting. The peace talks between Colombia and the FARC will be resumed in Feb 2 in Havana, anticipating further gradual progress. On Feb 3 and 4 the President of Argentina visits China. She does at times of a severe political and institutional crisis following the death of Prosecutor Nisman, who had accused her of covering up Iran in the investigation of the bombing by Islamic terrorism that hit the country in 1994, when the Jewish mutual association was blown up, claiming 85 lives. China's financial support is vital to avoid a currency crisis in the last year in office, when recession is expected to continue and inflation will remain high. As for the Pope, he has announced he will visit Paraguay, Bolivia and Ecuador in the region and in 2016 he will be in Uruguay, Chile and Argentina.

5. To conclude:

1) Poverty stopped declining in the region in 2014 due to economic stagnation, which is slated to continue this year as well.

2) The prospects for a financially more difficult year have already been expressed, considering the worsening of the Venezuelan crisis, the risk that recession returns in Brazil and the decline of gas in Bolivia.

3) The fledging talks between Cuba and the US show a slow process has started, combining political rifts as evidenced by Fidel Castro's expressions.

4) The ECLAC Summit in Costa Rica, the resumed talks between Colombia and FARC and the visit of the Argentine President to China will be relevant events in the coming days.

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