Alex Leff's Notebook:

How much will US unemployment hurt in Central America?

Around the world, the early bells of a so-called end of the recession have been intoxicating. Mexico and Brazil are among the recent nations to proclaim themselves to have emerged from the depths of crisis.

But the United Nations served a sobering chill to this region Thursday, when its Economic Commission for Latin America and the Caribbean (ECLAC) reported that it projects 9 million people will fall into poverty by the end of this year, bumping the number of the region's poor up to 189 million.

Sound like a lot of folks?

Of course it does. It's about 34 percent of the population. And that's only a 1.1 percent increase over 2008's total of poor people. The population living in extreme poverty is expected to grow to a total 76 million (13.7 percent of the population), up from last year's 71 million — a 0.8 percent increase.

This is a blow to the region's efforts to revive economies, which for the past six years drove the number down from even more frighteningly high levels.

And as far as Central America's concerned, an ominous question mark looms, a U.N. Latin America expert recently told me. With the U.S. unemployment rate hitting 10.2 percent in October, over a 25-year record, "the first thing that comes to mind is what will happen to remittances?" said Martin Hopenhayn, head of ECLAC's social development division.

During a conversation at a social innovation event earlier this month in Guatemala City, Hopenhayn said families in countries like El Salvador, Nicaragua and Honduras depend enormously on money coming in from emigrant workers, primarily in the U.S. This cash makes up as much as 18 percent of the gross domestic product of some Central American economies, he said.

One of the projects awarded at the event in Guatemala has grown in part thanks to migrants' remittances. Women in Oaxaca, Mexico, reinvest the money into a business making "comfort food" out of nopal cactus and have revitalized their community.

It's hard to think what scarcer cash inflows could do to such initiatives.

I'm looking at the World Bank's Web site for more insight on remittances and I find this: A November projection for remittances in 2009.

Overall, the World Bank says the indicators are better than expected. But wait. Looking more closely, inflows particularly to Latin America and the Caribbean will have a larger-than-expected decline this year, the report says.

Opening up a long Excel spreadsheet, my eye goes straight to El Salvador, probably because of recent tragedy that struck that poor Central American nation: flooding and landslides caused by rains from Hurricane Ida killed as many as 200 people and displaced 15,000, devastation comparable to 1998's Hurricane Mitch.

Salvadoran migrant remittances could fall nearly 10 percent to $3.46 billion in 2009 compared with last year's total. If the World Bank's projections are right, that percentage drop will be the average decline in money inflows across Latin America and the Caribbean. Analysts expect the global average to decline by 6.1 percent.

For many of the families in this region just barely eking out a living, a cutoff from expected funds could spell out disaster, and full fledged poverty.

As some governments and corporate leaders are preparing to pop their champagne corks, somewhere in the shadows of this alleged recovery, the world's poor are at risk of getting lost between the green shoots.

Honduran accord falls apart

After speaking too soon, perhaps, the U.S. State Department appeared at a loss for words today as the much touted Honduran accord — which high ranking U.S. officials helped broker — broke apart once again.

After a team of senior State Department and White House officials dived into the fray last week in Tegucigalpa, a truce was signed by both leaders who until then had been intransigent about their claim to the presidency of Honduras. This came four months after the ouster of Manuel Zelaya, who after sneaking back from exile remains holed up in the Brazilian Embassy in Tegucigalpa.

After the signing of the pact — now being called the Tegucigalpa-San Jose Accord — it's implementation was hanging in limbo pending approval from the Honduran Congress, which itself awaited a thumbs up from the Supreme Court before it would proceed.

But it all seemed to be going so well.

One of the first points of the pact, to create a Verification Commission, already bore fruit. The commission comprises esteemed leadership under former Chilean President Ricardo Lagos and U.S. Secretary of Labor Hilda Solis. Optimism that seemed impossible not long ago began to fill the air. So what happened?

Zelaya accused interim President Roberto Micheletti, essentially, of moving to form a unity government without unifying with Zelaya or including members from the ousted leader's camp. Zelaya called off the accord. "The negotiations have come to an end," Zelaya said told The Associated Press. "We have declared that there is no possibility of recognizing that accord."

However, the Micheletti administration has just issued a statement refuting that claim. It reads: "Mr. Manuel Zelaya refused to provide the list of candidates who could form part of the unity government. Surprisingly, today, Mr. Zelaya attributes this lack of participation in the Government of Unity and Reconciliation as an excuse to declare the failure of the accord and abandon his commitment when it was he who refused to cooperate with creating this new government."

Ho-hum, tit-for-tat...

After its short-lived diplomatic victory, there was only one thing the U.S. could express: disappointment.

During Friday's briefing, U.S. State Department Spokesman Ian Kelly said, "I think we’re disappointed with both sides. I think we’re disappointed that both sides are not following this very clear path which has been laid out in this accord."

But reporters pushed Kelly further on a related point. Yesterday U.S. Sen. Jim DeMint (R-South Carolina) released a statement announcing the Obama administration has assured him it will recognize Honduras' Nov. 29 elections, eschewing an earlier condition that an agreement involving Zelaya's reinstatement was crucial first before the vote could be fair and ultimately legitimate.

“I am happy to report the Obama Administration has finally reversed its misguided Honduran policy and will fully recognize the November 29th elections,” said DeMint. “Secretary Clinton and Assistant Secretary Shannon have assured me that the U.S. will recognize the outcome of the Honduran elections regardless of whether Manuel Zelaya is reinstated.”

Kelly refused to confirm this during today's briefing, in spite of prodding by journalists. Instead he stuck to the line that the U.S. believes the accord is the way forward and, when its goals are met, Washington will recognize the newly elected president.

What now? The U.S. Ambassador to Honduras Hugo Llorens is urging the rival leaders to return to the negotiating table. But after talking that began here in Costa Rica in the weeks following the June 28 coup, and more talking that resumed after Zelaya popped up in Tegucigalpa, what's really left to negotiate? Hopefully Micheletti and Zelaya will find something, and follow through with it, realizing that their nation's future — more important than their own — still hangs in the balance.

The countdown to Nov. 29 continues.

Excerpts from the evening Honduras finally put an end to political stalemate

Honduras' interim President Roberto Micheletti announced Thursday night that negotiators finally reached an agreement that could allow ousted President Manuel Zelaya to return to the presidency, ending the political stalemate that this week marked four months since the Honduran military toppled their chief-in-command.

The accord (whose points are listed below) seems like an ironed-out version of Costa Rican President Oscar Arias' proposal, which he pitched after talks in his San Jose home faltered. It remains to be seen whether the outgoing leader will parlay this new accord, as well as the many thanks from negotiators involved, into a last great masterpiece of diplomacy of his presidency.

Washington could not have hoped for a better finale to this week's visit to Honduras by senior State Department and White House staff, which seems to have catapulted the accord to form a power-sharing government.

The visit was a slight departure from the Obama administration's position to leave the talks in the hands of the Hondurans and the Organization of American States (and previously President Arias). It seemed like a decisive, send-in-the-wolf moment, when Secretary of State Hillary Clinton dispatched a team, led by a high official in Western Hemisphere affairs, Thomas Shannon, to turn up the heat.

The clincher was that the U.S. and other major world players claimed they would not recognize a president elected in Honduras' Nov. 29 vote if the rival leaders didn't first sign a reconciliation deal. The financial pressure from frozen aid to one of the hemisphere's poorest countries might have helped, too.

Clinton, speaking from Islamabad, Pakistan, said that under this new accord Washington is "looking forward to the elections ... and working with the people and government of Honduras to realize the full return of democracy and a better future for the Honduran people."

The agreement is pending approval from Honduras' Congress in order to go into effect.

Here are some excerpts from what Micheletti had to say Thursday evening:

"Tonight I am pleased to announce that minutes ago I authorized my negotiating team to sign a final agreement that marks the beginning of the end for the country's political situation."

(And he proceeded to read off the following points from the accord.)

1. The creation of a government of reconciliation.
2. Rejection of political amnesty despite the fact that our team was willing to grant it.
3. Recognition of the Nov. 29 presidential elections.
4. The transfer of authority from the Armed Forces to the Supreme Electoral Tribunal.
5. The creation of a Verification Commission to ensure the points of the agreement are met.
6. The formation of a Truth Commission to investigate the incidents before, during and after June 28 when Mr. Zelaya was divested of his powers as president
7. Asking the international community to repeal all sanctions against Honduras and send observers to the presidential elections.

"And lastly, regarding the most contentious issue of the agreement, the possible restitution of Mr. Zelaya to the presidency, my government has decided to support a proposal to allow a vote in the National Congress, with a previous opinion from the Supreme Court, to return all the executive power of our nation to June 28 of 2009. ... Finally, I'd like to deeply thank the delegation from the United States of America and the Organization of American States for their important mediating support in recent days to reach this end point."

Hillary Clinton's remarks from Islamabad, Pakistan:

"... I want to congratulate the people of Honduras as well as President Zelaya and Mr. Micheletti for reaching an historic agreement. ... As you know, I sent Assistant Secretary Tom Shannon and his deputy Craig Kelly and the White House NSC representative for the Western Hemisphere Dan Restrepo to Honduras yesterday after speaking with both President Zelaya and Mr. Micheletti last Friday to urge them finally, once and for all to reach an agreement."

"I cannot think of another example of a country in Latin America that having suffered a rupture of its democratic and constitutional order overcame such a crisis through negotiation and dialogue. ... I'm very proud that I was part of the process, that the United States was instrumental in the process. But I'm mostly proud of the people of Honduras who have worked very hard to have this matter resolved peacefully."

Sen. John Kerry, chairman of the U.S. Senate Foreign Relations Committee:

"The accord provides a roadmap for elections on Nov. 29, but success will depend on rigorous international monitoring of the accord's implementation."

The OAS:

“All of the countries of the Americas and in general the international community also have reason to celebrate, because all together they played a key and almost unprecedented role upon maintaining at all times a common position without divisions.

“Specially important was the role played by the governments of the region that sent representatives to Tegucigalpa during the crisis to help along the dialogue. Of particular note is the contribution of the United States and the Assistant Secretary for Western Hemisphere Affairs, Thomas Shannon, who, despite great personal cost, became deeply involved in the search for a solution to the problem. The role of (Costa Rican) President Oscar Arias, on whose proposal the final agreement was based, was also fundamental.

Nicaragua bound for a world of political pain?

Following a surprise ruling Monday by high court magistrates, Nicaragua might have gained license to enter a world of political pain akin to that being experienced in nearby Honduras.

The decision by the Constitutional Chamber of the Supreme Court to strike down a constitutional ban on re-election plays into the hand of President Daniel Ortega, seeking to run for a second term in 2011, but is driving a wedge into an already divided nation.

Carlos Tunnermann, of the Movement for Nicaragua, told the Nicaraguan daily La Prensa that the Constitutional Chamber has done something "not in its power to do, reforming the constitution."

Just as Sandinista supporters took to the streets to cheer on the court's decision, civic organizations began calling on Ortega's detractors to protest against the move that opens the way to Ortega's re-election candidacy.

The ruling enables Ortega to run without having to seek the legislature's support for constitution reform or to hold a national referendum on the issue, Reuters reported.

Similar Central American sagas have ended with presidents rousted from bed and forced into exile, without mentioning any names (Manuel Zelayan of Honduras).

Ortega wouldn't be the first. Other Latin American leaders, from Venezuela's leftist President Hugo Chavez to Colombia's conservative leader Alvaro Uribe, have successfully secured reforms allowing their re-election.

Nicaragua, whose streets filled with violence for weeks after allegations that the Sandinistas rigged last November's municipal elections, will not sit quietly during this controversy over the future of its government's top post.

Court sentences former president to five years in prison over kickbacks

Costa Rica’s right wing is reeling after a San Jose court sentenced the former president, Rafael Angel Calderon, to five years in prison for accepting kickbacks and arranging other unlawful payments from a Finnish medical firm, in the country’s first corruption trial against a previous head of state.

Calderon, who led the country from 1990 to 1994, was found guilty Monday of receiving some $520,000 from a loan intended for medical equipment for the Costa Rica’s public hospitals. Calderon says he’s innocent and that the money was a consulting fee.

Vowing to appeal the ruling, Calderon nevertheless has pulled out of the race to the February 2010 presidential elections, serving a blow to the opposition Social Christian Unity Party (PUSC).

He told reporters the ruling was a “huge surprise.”

In mid-August, following a CID-Gallup poll that put him far behind in the presidential race, Calderon told the daily La Republica, “Internal surveys tell us that the Costa Ricans will give me their support when I’m declared innocent.”

On Tuesday, the same newspaper wrote in its editorial, “We think it would have been best if this trial hadn’t coincided with a political campaign.”

The ex-president’s case has stained the opposition party since Calderon’s arrest in 2004.

Contrary to their clean green image, Costa Ricans are wary of graft in their midst. A State of the Nation study released in August said Ticos were more concerned about corruption than any of their Central American neighbors.

In addition to Calderon's sentence, the court handed a five-year prison term to the former head of the social security system and lesser sentences to other former health officials and executives of a private firm, Fischel, which represents a Finnish medical company in Costa Rica.

And the chief prosecutor may press for a harsher sentence.

Maybe Costa Ricans were expecting it, but PUSC seems like it didn’t see it coming, or else why would it choose a convict to campaign in the 2010 elections?

The party’s president, Luis Fishman, told the daily La Nacion “We have a government program, we’re ready to govern … We’ve been hit very hard, [we’re] very surprised.” 

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