By Jean Guerrero / Wall Street Journal
An influx of mining investments throughout Latin America is bringing badly needed investment, but is also causing tensions in some communities, pitting those who see mines as job creators against those who view them as predatory, in some cases threatening scarce resources like water.
In the Ocotlán valley in the southern Mexican state of Oaxaca, two outspoken opponents of a subterranean mine run by a small Canadian firm, Fortuna Silver Mines Inc., were killed in separate incidents in the past year. Dozens were beaten or threatened. Two local government officials who approved the mine, including the then-mayor, were killed by an anti-mining mob.
From 2006 to 2011, mining exploration investment in the region jumped 150 percent to $4.55 billion, top in the world and equal to one in every four dollars, according to the mining industry information company Metals Economics Group.
The investments are creating jobs, roads and other benefits in some of the most neglected corners of the developing world. But it is also creating tensions in a region with a long and complicated history with mining.
Investors who were starry eyed about Mexico’s economic potential at the start of the year are now having misgivings.
From a record high then, the stockmarket fell to an eight-month low on May 21st. Just to rub it in, stocks in Brazil, which Mexico views as its main regional rival, have recently been performing much better.
The immediate catalyst for the change of mood is the economy. In December, just as President Enrique Peña Nieto came to power promising to increase Mexico’s growth potential, the country’s strong recovery from the 2008-09 global financial crisis hit the skids.
In the first quarter of 2013 sluggish sales to the United States, by far Mexico’s largest export market, helped reduce growth to a modest 0.8 percent compared with the same period in 2012. A fall in public spending as a new party took power contributed to the dip.
The government blamed part of the weakness on the early Easter holiday (it had previously blamed poor December numbers on the fact that Christmas fell at mid-week). Nevertheless, on May 17th it lowered its growth forecast for the year to 3.1 percent from 3.5 percent.
Other economic data in recent days have added to the worries. Foreign direct investment last year plunged to $12.7 billion, from an average of around $23 billion during the past decade. Some economists pointed to concerns that high levels of drug-related crime might also be taking a toll on investment, notably in tourism. Last year Mexico slipped out of the top ten of global tourist destinations.
Reading too much into a few months’ numbers would be risky, though. The optimism about Mexico was never based on this year’s economic growth.
By Mark Stevenson / Associated Press
The farm state of Michoacan is burning. A drug cartel that takes its name from an ancient monastic order has set fire to lumber yards, packing plants and passenger buses in a medieval-like reign of terror.
The Knights Templar cartel is extorting protection payments from cattlemen, lime growers and businesses such as butchers, prompting some communities to fight back, taking up arms in vigilante patrols.
Help finally arrived Sunday when thousands of soldiers rolled in to restore order. The government of President Enrique Pena Nieto says troops will stay in Michoacan until every citizen lives in peace. But the offensive looks a lot like failed operations launched previously by former President Felipe Calderon, who was trying to stop drug cartels from morphing into mafias controlling all segments of society.
But that's exactly what has happened, as they maintain country roads, control the local economy and mete out justice for common crimes.
Agence France Presse
Farmers wearing bulletproof vests and toting assault rifles ride in pick-up trucks emblazoned with the word "self-defense" to protect the rural Mexican town of Coalcoman from a drug cartel.
The government deployed thousands of troops to the western state of Michoacan this week, but in some towns like Coalcoman, population 10,000, vigilantes are wary of putting down their weapons until they feel safe again.
"We won't drop our guard until we see results," Antonio Rodriguez, a 37-year-old avocado grower and member of the community force, told AFP.
Authorities detained four members of a self-defense group in another town called Buenavista on Wednesday, angering about 200 residents, some wielding sticks, who surrounded some 20 soldiers to demand their release. The situation was defused about five hours later.
Interior Minister Miguel Angelo Osorio Chong said earlier that the soldiers were merely having a "dialogue" with the residents to resolve the dispute, but he insisted that the authorities would disarm and detain anyone with a weapon.
"The army is there. They asked for security and protection, and they have it. There is no justification to walk around armed," he told Radio Formula.
AFP journalists saw civilians Wednesday carrying handguns, hunting rifles and even AR-15 semi-automatic rifles in the town, which lies in Tierra Caliente, a region known as a hotbed of cartel activity.
"We got tired of paying the quota," said Adriana, a 32-year-old woman working in a pharmacy.
The "cuota" is extortion money the Knights Templar cartel charges business owners, farmers, taxi drivers and even mayors.
"Anyone who didn't pay would be kidnapped and 'bang, bang,' they'd kill him," said Adriana, squeezing her finger as if pulling a trigger.
By Nick Miroff
Villagers in Mexico’s troubled western state of Michoacan lined the highways this week to cheer the arrival of soldiers sent by President Enrique Peña Nieto to reoccupy their towns. But the scenes have underscored the seeming intractability of the country’s security problems.
Peña Nieto’s predecessor, Felipe Calderón, launched an offensive against Mexico’s drug cartels in 2006, at the outset of his term, by ordering thousands of troops into the same state, at the time in the grips of a vicious trafficking syndicate known as La Familia.
Six years later, the Mexican government and its U.S. advisers have all but wiped out La Familia. But as federal forces receded, an equally powerful cartel, the Knights Templar, took its place, squeezing extortion payments from entire towns, torching businesses and killing anyone who challenged its rule.
By Jonathan Levin / Bloomberg
Mexico’s attempt to solve the country’s housing shortage by constructing millions of new homes far from city centers has crippled the nation’s homebuilders and fueled record foreclosures. But for Antonio Diaz, a former investment banker with Banco Santander, it’s an opportunity.
Diaz’s company, backed by a venture-capital firm whose funders include JPMorgan Chase & Co. and the Soros Economic Development Fund, is buying foreclosed homes for as little as 60 percent of face value, refurbishing them and then selling them for up to 90 percent of a new home price.
Abandoned homes are in part a result of a government policy that helped back mortgages and provide subsidies for low-income homes on cheap land sometimes hours outside the nation’s cities. During the last six-year administration ended in 2012, the National Workers’ Housing Fund Institute, or Infonavit, gave out a record 3 million mortgages and housing credits.
For Diaz, 53, it’s not just about making money. It’s an attempt to repopulate towns that face an exodus and plunging property values after the government subsidized developments that sprawled too far from cities and led to unattended buildings that lured criminals and illegal tenants.
By Tracy Wilkinson
Los Angeles Times
A dramatic rupture in Mexico’s main opposition political party has aired the group’s dirty laundry and also could trip up President Enrique Peña Nieto’s ambitious agenda of reform.
The political fireworks riveted Mexicans on Monday, dominating airwaves and social media as leaders of the National Action Party, or PAN, bickered openly.
On one level, citizens were viewing another chapter in the agony of a party that ruled for the last 12 years but has been corroded by infighting and a bitter power struggle. Also at stake, potentially, was the ease with which Peña Nieto has been getting legislation through a fairly compliant Congress.
PAN chair Gustavo Madero over the weekend unceremoniously fired his party’s caucus leader in the Senate, Ernesto Cordero. Cordero will remain in the Senate, even continuing to hold his title of Senate president, but will no longer be the party’s go-to man.
Analysts quickly saw in this a slap at Mexico's former president, Felipe Calderon. Calderon’s conservative PAN held the presidency from 2000 until it lost the election last year, when Calderon’s term ended. He quickly decamped to Harvard University but remains close to Cordero and on the outs with Madero.
Cordero has been critical of Madero’s willingness to cooperate with Peña Nieto. On behalf of the PAN, Madero signed a so-called Pact for Mexico in which he pledged support for numerous initiatives that Peña Nieto and his Institutional Revolutionary Party, or PRI, are pushing.
The Associated Press
Mexicans often feel that billionaire Carlos Slim owns everything in their country, from telephone and Internet companies to banks and chain stores, but his latest acquisitive foray is meeting resistance after touching a national passion: soccer.
Slim recently bought part of two of Mexico’s first division soccer teams, setting up another showdown with television giants Televisa and TV Azteca, major players in the soccer field that are in turn trying to push their way into Slim’s telecommunications and Internet markets.
The owners of the 18 Mexican first division clubs are scheduled to meet today, Monday, to decide whether one person or one company can own more than one first-division soccer team, and many see Slim as the target.
Slim ventured into soccer in September, when he bought 30 per cent of the shares in the Leon and Pachuca teams through his telecommunications company America Movil. In December, he bought all the shares of the second division team Estudiantes Tecos.
Following the acquisitions, team owners in February decided to discuss the issue of multi-ownership.
By MCT Information Services
Barely a quarter-century ago, Mexico’s all-powerful presidents could run any of the nation’s 31 governors out of office at will. Then the pendulum began to swing. In the last decade, the power of governors grew to such levels that they became known by the moniker “little viceroys.”
Now the pendulum is swinging again, with Mexican President Enrique Pena Nieto and his political party, the Institutional Revolutionary Party, or PRI, pressing several initiatives designed to cut the power of governors.
One, adopted in November, forces state and municipal governments to reveal more details of how they spend their money.
A second initiative, under discussion this week, would affect state elections, which historically have been manipulated by governors who control the voting apparatus in each state. Under the proposal, state elections would be run by the federal electoral institute, not the states.
“The president has the governors on the run,” said Joy Langston Hawkes, a political scientist at the Centre for Research and Teaching of Economics, a Mexico City think tank.
Currently, state governors enjoy little oversight and torrents of money from Mexico City. They control state health and educational services, run state elections, operate state police, play a huge role in the federal Congress through their hand-picked candidates, finance state judiciaries and wield power over the state media through the purchase of advertising. Many grow inexplicably rich in office.
Ironically, Pena Nieto is a former governor, who ruled the state of Mexico during the height of the buildup in governors’ power.
Reuters and TNW
Yahoo Inc. said on Thursday that a Mexican appellate court had thrown out a $2.75 billion ruling by a lower court against Yahoo and Yahoo Mexico in a contractual dispute with two Mexican firms.
The Superior Court of Justice for the Federal District in Mexico agreed to overturn all monetary awards against Yahoo and reduced the monetary award against Yahoo Mexico to $172,500.
It was not immediately clear when the court issued its ruling.
The original ruling late last year was equal to an estimated 40 percent of Yahoo's 2012 cash balance, and its scope and size perplexed the tech world.
The non-final judgment was made in favor of Worldwide Directories, a holding company of Ideas Interactivas, against Yahoo in Mexico with regards to yellow pages listings. Ideas Interactivas is the publisher of Yahoo! Páginas Útiles, a printed and online phone book for Mexico with business listings, similar to the yellow pages.
It’s still unclear what went wrong between the two companies, but it’s been over nine years since the original deal was struck.
A Yahoo spokeswoman said in a statement that the company would not be commenting further on the case.
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