Here comes the sun

While Rio de Janeiro's carnival, described as the greatest show on Earth, reached its climax this month, Comet Holmes, fleetingly the largest comet in the solar system in October 2007, reached the point in its orbit at which it is closest to the sun. 

As I write this, the government in Venezuela is experiencing the sound of fireworks in the street thrown by protestors rather than carnival revellers, some of them claiming parallels with Ukraine. As for feeling the heat, the government could be reaching its closest point before political conflagration. 

Venezuela is an embarrassment for all those moderate regional governments who eschew the radical politics of past times and which are practised by only a handful of countries now. 

Just as carnival in Brazil ended, Venezuela severed diplomatic and trade relations with Panama, claiming that the tiny republic on the isthmus was nothing more than a 'lackey' of the US and a willing participant in a conspiracy plot against it. 

Panama’s sin has been to try to encourage action by the Organisation of American States (OAS) in an effort to help promote dialogue and human rights in Venezuela. It seems, though, that David’s stone missed Goliath this time and much of Latin America has been reticent in its criticism of Venezuela where tempers are rising and the tempo of hostilities is increasing midst violent anti-government riots. 

Panama had hoped to bring all the region’s foreign ministers together at the beginning of the month to seek a solution to the impasse following public discontent that first spilled on to the streets on 12 February.

Unfortunately, because of pressure from what I euphemistically describe as the awkward squad (including Bolivia, Cuba, Nicaragua and Argentina), the OAS was unable to justify a meaningful meeting of foreign ministers. And although Chile and Colombia did issue statements condemning the political violence, Brazil (South America’s leading, and in many respects most weighty, power) has, to date, not been very vocal. This is surprising because less than 30 years ago, it had an authoritarian military government so the dangers confronting Venezuela should still be fresh in the minds of today’s politicians.

Bolivar’s question

It is somewhat of an irony that Simón Bolivar’s influence is so great in the country – after all we are referring to the Bolivarian Republic of Venezuela. His life suggests nothing that would fix him firmly as a supporter of Hugo Chávez’s creed, when Bolivar posed the question: “How can the representatives of the people think they are authorised constantly to change the social organisation? What then will become the basis of rights, properties, honour and the life of citizens?”

Chaos in Caracas does nothing to advance regional democracy, which is gaining traction, while elsewhere – a turn up for the books – there are doubts about it, with trust in the west’s governments and institutions having suffered blows in the last couple of years following this century’s Great Recession.

Meanwhile, if Brazil wishes to see itself as the leading light in South America, it must be more forthright in its criticism of situations that only give Latin America a black eye. Admittedly, with presidential elections in just over six months, Brazilian minds have been focused on domestic affairs – not to mention hosting the FIFA World Cup, which has filled them with joy. 

FATCA (Foreign Account Tax Compliance Act) and not FIFA, however, has had the opposite effect as Brazil and other regional countries are asked to play ball with the US to ensure that its tax payers meet their obligations.

Antonio Carlos Jobim (who composed Girl from Ipanema) once said that Rio de Janeiro is great but a mess, just like his country’s tax system. And what Brazil doesn’t need is the headache that FATCA could bring. 

So far, Mexico and Costa Rica have signed intergovernmental agreements with the US, and Panama is likely to follow suit in the next couple of months. Unless FATCA is derailed unexpectedly, it is on track to travel all the way south to Tierra del Fuego in Chile, which, in English, translates to Land of Fire. 

Venezuela and the province have much in common at the moment.

Derek R Sambrook is managing director of Trust Services, SA and has served as both treasurer and chairman of the British Chamber of Commerce in Panama

He writes a regular blog about Latin America for Private Client Adviser

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