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Why Is Caracas Latin America's Most Expensive City?
By Simon Romero AND Gregory Kristof / The New York Times
A new report by the consulting firm Mercer has confirmed what Venezuelans long suspected: Caracas, pricier than London, Dubai or Lagos, is also by far the costliest city in Latin America, beating out notoriously expensive São Paulo in this year's ranking.
Political partisans began ascribing blame for this notoriety almost immediately since even a seemingly innocent statistic is cause for argument in one of the region's most polarized nations. "Long live socialism," was how one commentator critical of President Hugo Chávez introduced the news. Others pointed out that Caracas incomes lag far behind those in cheaper cities like Amsterdam, Helsinki or White Plains, N.Y.
The government's Bolivarian News Agency took a different position. "Suppliers are taking advantage of certain aspects of the city's reality to apply measures characteristic of capitalist culture," the agency said, attributing the high cost of living in Caracas to businesses engaging in speculation producing "market distortions."
Few visitors to Caracas are surprised to learn that capitalism is alive and well in this anarchic city. Despite the vigilant use of price controls for a range of basic products and a wave of nationalizations and expropriations by Mr. Chávez, life in Caracas, perhaps more than any other Latin American capital, is still defined by its reliance on one volatile commodity: oil.
Even when oil prices are relatively low, oil-export proceeds slosh through the economy, creating arbitrage opportunities for everyone ranging from bankers (yes, there are many of them left in Caracas) to the many thousands of street vendors known as buhoneros who sell their wares outside the tightly regulated formal economy.
What is more, oil attracts companies that want to extract it regardless of the politics on the ground. The recent influx of oilmen from as far afield as China and Russia, as well as representatives from other multinationals selling products in Venezuela, explains in part why an unexceptional apartment in Caracas rents easily for $4,000 a month.
Combine that robust demand with a shortage of available properties, partly due to rent-control laws that make it extremely difficult to expel tenants and a dearth of construction because builders are afraid their projects will be seized by the squatters or the government (or both), and rents in some districts can run double or triple that amount. >>> Go to Full Story >>>
Peru Struggles to Balance Rights of Native Population and Developers
By Universia-Knowledge@Wharton
The crisis that broke out recently in Peru involved the rejection by the native population of the Amazon region of several government decrees, backed by president Alan Garcia, making it easier for companies to log, farm, explore for oil and natural gas, and develop other natural resources.
The most recent round of conflicts began in April, when the Indian population of Peru’s Amazon region rejected a series of decrees promoted by president Alan García. The decrees were drafted in 2008 within the framework of the U.S.-Peru Free Trade Agreement. They make it easier to privatize natural resources in the Amazon region, which is rich in many commodities.
The native population demanded that authorities revoke the decrees, claiming they threatened their ancestral, communal rights in the region. But the government disagreed and so the 12 largest tribes organized a series of protest demonstrations, which included shutting down roads, closing gas pipeline valves and pumping stations, and blocking river navigation. The government reacted strongly to the demonstrations, arguing that the decrees “regulated” more effectively the management of natural resources and the areas preserved exclusively for the native population. García also emphasized that Peru needs foreign capital to develop its economic potential.
The decisive moment in the conflict took place early in June, when 40 natives and 20 policemen died in an armed confrontation. More than 100 people were wounded. Ultimately, the Peruvian parliament voted to revoke two of the nine decrees handed down by the authorities [in the executive branch]. That may have quieted down the indigenous movement, but the native population is still waiting for revocation of the other statutes. >>> Go to Full Story >>>
