A cure for Latin America violence

There’s a cure for Latin America’s murder epidemic – and it doesn’t involve more police or prisons

this article is part of the World Economic Forum on Latin America 2017

by Ilona Szabó de Carvalho, Executive-director

     Robert Muggah, Research Director  

     Igarapé Institute

San Salvador is confronting a murder epidemic. The city is the world’s murder capital for the second year in a row. The homicide rate reached 136.7 per 100,000 residents in 2016 – at least 17 times the global average. Although registering a decline in murder compared to the previous year, El Salvador’s capital still beat out Venezuela’s capital, Caracas, and San Pedro Sula in Honduras for the world’s top spot.

Salvadorans, Venezuelans and Hondurans are not the only Latin Americans preoccupied by runaway murder rates. Notwithstanding recent improvements in public safety, Colombians still suffer from some of the highest absolute numbers of murder on the planet. Brazil features the planet’s highest homicide toll – almost 60,000 assassinations a year. And at least a third of Central and South Americans know someone who’s been shot dead in the past 12 months.

Across Latin America, death stalks the young. Every 15 minutes a young Latin American – usually a poor young man – is murdered. Latin America has long been the world’s most murderous part of the world, experiencing some 2.5 million homicides since 2000. At least 75% of these were committed with firearms, far above the global average. 

Paradoxically, violence has worsened despite far-reaching gains in poverty reduction, education, health and overall living standards.

As global murder rates fall, Latin America’s rise

Latin America’s homicides are rising at a time when murder is declining virtually everywhere else. Today, the regional murder rate stands at roughly 22 per 100,000 people: it will increase to 35 per 100,000 by 2030 if trends continue uninterrupted. There is no other region that comes even close to matching these rates.

While most Latin Americans are concerned about rising crime, seven countries stand out: Brazil, Colombia, El Salvador, Guatemala, Honduras, Mexico and Venezuela. Together, they generate one-quarter of all intentional murders around the world each year. An astonishing 44 of the 50 most homicidal countries and 23 of the 25 most murderous cities in the world are currently located in Latin America.

Life is cheap

Part of the reason for the persistently high rates of crime in Latin America is that homicides are seldom solved or result in a conviction. In North America and Europe, roughly 80% of all homicides are resolved. Yet in many Latin American countries, the percentage falls to roughly 20%. In Brazil, Colombia, Honduras and Venezuela, less than 10% of murders result in a murder.

As a result, people’s faith in the policing and criminal justice system has plummeted. In Latin America, life is cheap because the cost of murder is so incredibly low. As people lose faith in law enforcement and the courts, they are more inclined to take justice into their own hands.

If there’s any good news it is that homicidal violence is not inevitable. There are examples across the region of countries and cities turning things around. Big cities like Bogota, São Paulo and Rio de Janeiro saw homicide rates decrease by 70% or more over the past decade.

Civic leaders – especially enlightened mayors – were at the forefront of this 

revolution. Mayors in Bogota, Cali, and Medellin combined visionary planning

and clear targets with hot spot policing and welfare programmes focused on neighbourhoods with high levels of social disorganization and at-risk young people.

The high cost of violence

Steady declines in murder are not only feasible, they are fundamental. The cost of criminal violence to Latin American economies is far-reaching, amounting to 3.5% of the region’s GDP, or up to $261 billion a year. This translates into roughly $300 per person.

The consequences of unproductive spending on public security and lost productivity associated with premature deaths are dragging back economies that have made real gains since the dark autocratic years of the 1960-80s. High rates of murder are also undermining social capital and social cohesion: there is an unacceptable tolerance for homicide among large swathes of the population.

Put simply, investments in public security across Latin America are inefficient and often focused on all the wrong areas.

Where to invest to make a difference

How have Latin American governments attempted to deal with this problem so far? Most of them have ploughed more and more money into police forces, the judiciary and prisons. According to a recent study, Latin American governments spent between $55 and $70 billion on public security. That’s on average a third of the amount spent on health and education across the region.

This approach is extremely expensive. Take the example of prisons. Prisons costs are rising because of the expansion of mass incarceration across the region. The prison population rose from 101.2 inmates per 100,000 in 1995 to 218.5 per 100,000 by 2012 – an increase of 116%.

Over the same period expenditures on prisons increased from $4.3 billion in 2010 to $7.8 billion in 2014. Meanwhile the costs of incarceration also increased from roughly $5.8 billion in 2010 to more than $8.4 billion in 2014 – a 45% increase. Taken together, the overall losses are on average $13.8 billion a year to the region, or 0.39% of GDP.

Not only is this approach costly, there´s painfully little evidence that it works. While spending on health and education is positively correlated with improved wellbeing and literacy outcomes in most Latin American countries, we have yet to see similar gains in public security and safety.

What does all this mean? For one, it means that throwing more police and prisons at the problem isn’t working. The status quo is unacceptable and bold solutions are urgently required.

Smarter solutions for a safer region

So what if Latin American governments and societies committed to a 50% reduction in homicide over the next decade? This amounts to year-on-year declines of just 7.5%, well within the realm of possibility. The savings would be considerable, starting with roughly 365,000 lives that would otherwise be lost. The material dividends would also be substantial.

Halving homicide is precisely the goal of a new campaign being launched by more than 20 organizations across Latin America. Achieving this goal will require that Latin American governments invest in a few commonsense strategies.

At a minimum, governments, business and civil society groups need to adopt evidence-based strategies and data-driven interventions, focusing on hot spots and hot people. 

After all, violent crime is often “sticky” and tends to concentrate quite reliably in very specific neighbourhoods, among poorer, less educated and younger people, and at certain times of the day.

Prevention and reduction efforts must also be guided by hard targets that set murder reduction as an explicit goal, not a hopeful by-product. While requiring political courage, the rewards are considerable.

If reductions in murder are to be sustained, a concerted effort is needed to repair tattered police-community relations in the most violence-affected settings. Neighbourhoods exhibiting the highest homicide rates are also typically those registering the lowest trust in the police.

Problem-oriented policing has an especially positive track-record, especially when it comes to tackling gang-related murder and intentional homicide. Improvements in investigation and prosecution of homicides are also central to restoring law and order.

Finally, Latin American governments need to double down on prevention. Age and educational attainment are key factors shaping vulnerability to both perpetrating and being a victim of homicide. Access to – and retention of – sustained income is also an important deterrent to criminal involvement.

In Medellín, a 1% increase in permanent income generates a 0.4% reduction in homicide. Investment in positive early childhood development, parenting skills, youth employment (especially for young offenders), mentorship and life-skills training are cost-effective and have multiple positive impacts.

We know the cure – it’s time for Latin Americans to take the medicine.

fonte: World Economic Forum

Brazil Looks to Negotiate Agreement with the British After Brexit

Folha International
26 jun 2016

The United Kingdom's exit from the European Union (EU) is not a good sign and may delay the free trade negotiations Mercosul has been negotiating with the European bloc. The Brazilian government was hoping to speed up the talks over the coming months.

The United Kingdom was the biggest heavyweight in support of the agreement, applying pressure to speed up negotiations during all of the decisive moments.

The UK's position is considered to be more in favor of free trade in comparison to the Europeans, such as Ireland and France, who fear the arrival of South American agricultural products. As such, without the British, negotiations could be difficult.

According to a source from the Brazilian government interviewed by Folha, next steps have yet to be defined because no one expected the split, and it left negotiators in shock. One of the fears is the domino effect that Brexit may cause, such as Scotland's exit and the exit of additional countries from the EU.

On Friday (24), Minister José Serra (Foreign Relations) said he intends to initiate a parallel agreement between Brazil and the United Kingdom. According to him, this could help Mercosul's negotiations with the EU.

"I would have preferred no split, but since it happened, we have to have strategies in place for foreign trade policy; the picture has changed and we need to revise our strategy", Serra said.

"Pursuing negotiations with England separately as we will do, will, in some way, motivate the EU to negotiate with us. Therefore, it has effects in both directions, which are very diverse".

When asked if the EU could become more resistant, Serra said: "On the contrary, it provides an incentive for negotiation; if you are negotiating with a partner who has several options, you automatically become more invested".

Brazilian negotiators, however, fear that the strategy could hit the EU like a bucket of cold water. Analysts believe that Mercosul should negotiate with the Europeans or the British but not both at this time.

For José Augusto de Castro, AEB (Brazilian Foreign Trade Association) president, the United Kingdom's exit "will surely play negotiations". The European Union's attention, previously focused on Mercosul and the Atlantic Trade Agreement, will now focus on rebuilding with the United Kingdom.

Researcher Lia Valls Pereira, from the FGV (Getulio Vargas Foundation), says the European Union must first let Mercosul know if it plans to stand by its position, even without the United Kingdom.

"No delays [in the schedule with Mercosul] would mean that the European Union will continue negotiations without the United Kingdom. That is still unknown", she said.

The United Kingdom does not represent a significant market for Brazilian exports, representing 1.5% of Brazilian sales abroad and focusing on primary products: gold, coffee and soy.

Brexit will have indirect effects on Brazil. The split increases uncertainty over the recovery of the European economy and affects the price of Brazilian commodities sold overseas.

fonte: Folha International

BRexit: como saída do Reino Unido mudaria relações com UE

Deustsche Welle
16 jun 2016

Não faltam pesquisas sobre as repercussões para a economia se o Reino Unido sair da União Europeia. Apoiadores e opositores do assim chamado "Brexit" já produziram toneladas de artigos e relatórios fundamentando suas respectivas posições.

A maioria dos estudos conclui que a saída da UE traria custos substanciais, principalmente para o Reino Unido. Quase a metade das exportações do país é direcionada aos Estados-membros do bloco, enquanto mais da metade das importações britânicas vem dos europeus.

Segundo um estudo publicado pela Fundação Bertelsmann, um think tank alemão próximo aos setores econômico e empresarial, se o país se decidir pela saída, sua economia poderá encolher até 14%, o equivalente a 300 bilhões de euros. "Um Brexit deveria ser evitado", concluem os autores.

Muitas pontas soltas

Por mais que se esforcem, porém, os economistas dão tiros no escuro ao tentar apresentar dados confiáveis. Não há dúvida que a saída do Reino Unido da UE mudaria a relação britânica com os países da UE, mas ainda não está claro como. Certo é que resultará em custos e incerteza.

"É por isso que se fez uma certa pressão sobre os britânicos para não votarem pela saída nestes tempos difíceis ", explica Rolf Weder, professor de economia e integração europeia na Universidade de Basel, na Suíça. "Se você focar no curto prazo, é óbvio: nunca se deve colocar em questão relações estabelecidas, pois isso sempre acarreta custos."

Uma ideia clara de como as relações comerciais entre o Reino Unido e a UE se alterariam só emergirá após o eventual Brexit, e de forma muito lenta. O Artigo 50 do Tratado da UE estipula prevê dois anos para ambos os lados negociarem os detalhes, prazo que poderiam ser prorrogado pelo Conselho Europeu. No entanto a empresa britânica de consultoria Global Counsel estima um período de incerteza de "dez anos ou mais".

Uma vez que tudo depende do resultado dessas negociações, não há limites para a imaginação. No pior dos cenários, pesquisadores da Fundação Bertelsmann preveem que o Reino Unido ficaria totalmente "isolado", privado de todos os seus privilégios comerciais com os países da UE e com os terceiros que têm acordos com o bloco. Hipóteses menos hostis cortam consideravelmente os custos do Brexit, de acordo com o estudo: apenas 14 bilhões de euros em vez de 300 bilhões de euros.

"O Reino Unido, claro, vai negociar com o objetivo de não perder completamente o acesso ao mercado comum europeu. Ao mesmo tempo, a UE vai querer garantir o acesso ininterrupto ao mercado britânico para as empresas europeias", estima Rolf Weder, acrescentando: "Espero que ambos os lados busquem algum tipo de acordo de livre-comércio."

Parceiros comerciais mais importantes do Reino Unido

O exemplo suíço

No comércio de mercadorias, há décadas o Reino Unido tem registrado um grande déficit, importando mais do que exporta, apesar de Londres ser um dos principais centros financeiros do mundo. Entretanto o superávit em serviços não basta para compensar a fraqueza em termos de mercadorias, tendo deixado o Reino Unido com um saldo negativo total de mais de 77 bilhões de euros no comércio com a União Europeia, em 2014.

Graças à adesão do país à UE, bancos, companhias de seguros e escritórios de advocacia britânicos podem oferecer seus serviços em qualquer parte do mercado único. Caso saia, será crucial negociar condições favoráveis para o setor financeiro do país.

"A UE estará determinada a não tratar o Reino Unido bem demais", prevê o professor Weder. Afinal de contas, ela perde um contribuinte para seu orçamento, sendo improvável que vá recompensá-lo com concessões generosas.

A Suíça é frequentemente citada como modelo potencial para as futuras relações entre o Reino Unido e o bloco. Acordos comerciais permitem que o país alpino, que não é membro da UE, troque mercadorias livremente.

Mas mesmo os suíços não conseguiram alcançar um acordo semelhante para sua enorme indústria de serviços financeiros. Se o Reino Unido também fracassar, seu setor financeiro "enfrentaria os mesmos custos com que as companhias suíças têm que arcar atualmente, já que a Suíça não é tão bem integrada assim", aponta Weder.

No entanto, "há poucas perspectivas de que Londres deixe de ser o principal centro financeiro internacional", conclui a consultoria Global Counsel. As regulamentações da UE poderão tornar mais difícil as transações no mercado europeu, mas "é difícil imitar as vantagens que Londres oferece e sua ampla rede de serviços financeiros e profissionais".

comércio de bens serviços britânico em 2014

Mais alternativas

Depois de um Brexit, o Reino Unido não só teria que negociar com a UE: seria também necessário substituir os acordos comerciais existentes entre o bloco e terceiros – para enorme alegria das firmas de advocacia. Batalhando sozinho e não sendo mais parte da UE, a posição do país nas negociações seria consideravelmente fraca.

Então por que todo esse trabalho, por que correr o risco de custos elevados e anos de incerteza? Na essência, o referendo britânico não é sobre economia, mas sobre a ideia de uma Europa diferente. "Eu acredito que menos Europa poderia, no fim das contas, resultar em mais Europa", especula Weder. "Se houver menos harmonização e menos integração, a diversidade na Europa lucrará."

Durante as crises financeiras recentes – do setor bancário, da dívida soberana e da Grécia –, os cidadãos europeus repetiram muitas vezes não havia alternativa às injeções de capital, pacotes de resgate e austeridade fiscal. Weder acredita que poderão surgir novas alternativas, caso os britânicos saiam da UE.

Por exemplo, o Reino Unido poderia se juntar com a Suíça e outros países na Associação Europeia de Livre-Comércio (AELC), e tentar um modelo diferente de Europa: livre-comércio sim, mas com soberania nacional quanto à imigração, mercado de trabalho e outras questões.

Até os defensores de uma maior integração na Europa ficariam em melhor situação. "Se o Reino Unido sair, e talvez outros dois ou três países também, a União Europeia se tornaria mais homogênea. Assim, os membros remanescentes poderiam ir em frente e criar um Estado federal europeu", propõe Rolf Weder. "Mas aí essa não seria a única opção na Europa, e as pessoas poderiam escolher entre essas alternativas."

fonte: Deutsche Welle Brasil

Brazil´s Economy: Nowhere to go but up ...

The Economist
june 4th, 2016

WITH bearded baristas and furniture cobbled together from wooden crates, Curto Café in Rio de Janeiro is a typical outpost of Brazil’s nascent hipster scene. Aficionados of its organic coffee do not pay set prices; instead they pay what they think reasonable—or what they can afford. This, says Gabriel Magalhães, one of Curto’s founders, is less and less. Like other Brazilians, cariocas (as Rio residents are known) are pinching their pennies.

Brazil is suffering its worst recession since the 1930s, perhaps of all time. On June 1st the government reported that GDP contracted by 0.3% in real terms in the first quarter of this year; it is 5.4% smaller than it was a year earlier (see chart). 

Over that period GDP per person dropped by more than it did during the hyperinflationary “lost decade” from 1981 to 1992, notes Alberto Ramos of Goldman Sachs, an investment bank. Over two years the number of jobless Brazilians rose from 7m to 11m. It is a “downright depression”, says Mr Ramos. 

The task of pulling Brazil out of this morass falls to Michel Temer, who took over as interim president after the Senate voted in May to try President Dilma Rousseff on impeachment charges. Politically, his government has had a rough start. 

Two of the ministers in his all-white, all-male cabinet, including the one in charge of fighting corruption, had to step aside after recordings were leaked in which they appeared to criticise prosecutors’ investigation of the massive corruption scandal surrounding Petrobras, the state-controlled oil company. They say they were misinterpreted.

Mr Temer’s economic programme is faring better. His heavyweight team, led by Henrique Meirelles, a former governor of the Central Bank, has proposed the most ambitious overhaul of Brazil’s economic governance in decades. Public spending, including on the unaffordable pension system, is to be slashed, though the government has yet to say just how. 

Enterprise-crushing regulations are to be lifted, starting in the oil and gas sector. Mr Meirelles says the government will consider reforming Mussolini-era labour laws and the Byzantine tax code. Privatisation, long a taboo, is a possibility for the first time since the 1990s. Such ideas are a radical break from the left-wing interventionism practised by Ms Rousseff’s government, which is largely responsible for the economic mess. They offer hope of a way out of it.

The centrepiece of Mr Temer’s plan is a constitutional amendment to freeze public spending in real terms. Even health and education—which consume more than a quarter of government revenue without providing commensurate benefits—may not be spared. The government is expected to present a draft to Congress within the next two weeks.

The idea is to cure the government of one of its principal vices. Public spending has grown by an annual average of 6% for the past 20 years, much faster than GDP. The central government’s primary fiscal balance (before interest payments) went from a surplus of 2.2% of GDP in 2010 to a deficit of 2.3% in the year to April 2016, the highest level yet. 

This, and the prospect of deficits stretching far into the future, keeps interest rates high, which further worsens the deficit. The government’s interest bill is a massive 7% of GDP. Brazil’s high taxes thus pay for past profligacy rather than effective government.

The spending cap, if approved by majorities of three-fifths in both houses of Congress, will lead to lower deficits as soon as growth and tax revenues revive. It could help even sooner, says Arthur Carvalho of Morgan Stanley, an investment bank. That is because confidence that Brazil will reduce its debt could lower long-term interest rates, cutting the government’s interest bill. 

As important, the spending cap will force the government to undertake other reforms, though in the long run it may prove impossible to maintain as the population grows. Currently, the constitution and other legislation protect 90% of spending from cuts, no matter how unproductive it is. If the government is not to breach its self-imposed ceiling, those laws will have to change.

Such prospects are already stirring hopes among unhappy entrepreneurs and investors. Bond yields have fallen from about 17% in January to 13%; the cost of insuring against default is down by a third since December. With more than a third of industrial capacity idle, production could revive quickly if sentiment improves. “In six months we may look back at today as an inflection point,” says Marcelo Carvalho of BNP Paribas, a bank. But only if Mr Temer delivers what he has promised.

That “will be tough”, admits Mr Meirelles, the finance minister. He hopes to enact some reforms, including the spending cap, before next year’s budget is submitted to Congress, which must happen by August 31st. 

With important local elections looming in October, few politicians will be in the mood to vote for less spending on schools and hospitals.

But members of Mr Temer’s team, several of whom left lucrative private-sector jobs to help rescue the economy, dispute that. They think the political and economic crisis has made both voters and congressmen more receptive to proposals for radical change. A billboard put up by the National Confederation of Industry at the airport in Brasília, the national capital, demands: “Pension reform now!”

In theory, Mr Temer can count on 356 votes in the 513-seat lower house of Congress, and 56 in the 81-seat Senate, more than enough to amend the constitution. Unlike Ms Rousseff, who also enjoyed solid nominal majorities in Congress, Mr Temer knows how to charm and cajole his allies. Unencumbered by past commitments, he has more perks and patronage to offer politicians who formerly supported Ms Rousseff.

Despite watching two ministers sink into the quicksand of the Petrobras scandal, Mr Temer has managed to keep his government functioning. That may be in part because Brazilians have low expectations. 

A handful of other members of his cabinet are under investigation, as is Renan Calheiros, the president of the Senate and a member of Mr Temer’s Party of the Brazilian Democratic Movement, who features in the leaked recordings. But neither Congress nor the voters are demanding the toppling of Mr Temer’s government. The howls of rage from Ms Rousseff and her allies have so far had little effect.

A survey published this week by IMD, a business school, puts Brazil in last place out of 61 countries in the efficiency of its government, behind war-torn Ukraine and, astoundingly, bankrupt and autocratic Venezuela. Brazilians are not expecting moral purity from Mr Temer’s interim government, which will probably continue in office until after elections are held in 2018. 

But they are hoping for relief from their economic pain. The early signs are that Mr Temer knows how to provide it.

fonte: The Economist