The protests against Amazon development turned violent earlier this month when demonstrators clashed with police, leaving 50 dead, including 23 police officers. Peruvian President Alan Garcia has come under fire for his handling of the violence, and his approval rating has plummeted.

Reuters reporter Terry Wade joined Worldfocus from Lima to discuss the social unrest in Peru and its lasting implications for the country’s economy and political landscape.

Worldfocus: Can you describe how the protests originated?

Protests in Peru.

Terry Wade: Protests organized by a number of different indigenous groups started in Peru’s Amazon basin in April, and they were held to try to persuade the government to strike down a series of laws that President Alan García passed last year to help attract foreign investment in the mining, agricultural and petroleum industries.

Basically, the tribes feel that these laws will end up turning their ancestral lands over to foreign companies. For a long time, the tribes were telling the government they didn’t like the laws, and then the government didn’t do anything, so they started to protest. And the protests dragged on for weeks. The government didn’t pay a whole lot of attention to them. The government tried to set up a series of meetings where they could negotiate a solution or settlement; those failed. The government grew increasingly frustrated because roadblocks in the Amazon were preventing basic supplies from moving between cities in the jungle to cities on the coast. So they sent in the police, and that provoked a whole bunch of violence and bloodshed.

At least 34 people died — about 24 are police, according to the government, and 10 were protesters. Tribal groups say that many more protesters died, anywhere from 30 to 40, or even higher. So far, the bodies of people who are presumed missing or people who are allegedly killed — those bodies haven’t been located. So it’s very hard for anyone to know with absolute certainty how many people actually died.

A series of investigations are being conducted by human rights groups and also by the government to find out definitively how many people died in the clashes. Part of the problem is that some of the claims that people make about the disappeared bodies — there’s no way to verify it. I mean, even my colleague, who was in the jungle, you know, they called people to some supposed execution ground or mass grave, and then they went there and there were no signs of any kind of death or conflict. So it’s very difficult to know, or to verify, that missing people actually ended up dying. That kind of thing may take several more weeks to find out for sure, because a lot of these people live in places where there’s not much in the way of telecommunications or infrastructure. Some people may not have basic documents saying who they are, or where they live, and so on and so forth. It’s very rural, and the presence of the state is almost nil.

Worldfocus: Why did the government decide to rescind some of the more controversial laws, and how will this impact foreign investment in Peru?

Peruvian police observe protests.

Terry Wade: The government, for months, had said that these laws couldn’t be rescinded; there were about nine of them that were passed last year. The Congress originally had given President Alan García special powers to sign, essentially, decrees to put these laws into effect. He was given those special powers to help bring Peru’s regulatory framework into compliance with the free trade deal that Peru was signing with the United States at the time. And the government’s position was that these laws could not be rescinded, and they said that doing so could hurt the trade agreement with the U.S., or would cause an increase in illegal logging in the Amazon, and so forth.

But at the end of the day, the government backtracked and struck down two of the laws, two of the most controversial ones. So far, the government has said that it might need to review certain clauses in the trade agreement with the United States, but that it wouldn’t necessarily put it in jeopardy. So, the government ended up backtracking, and essentially doing something that it initially said was impossible.

Peru has been able to successfully attract a lot of foreign investment, for the past decade and certainly over the past five years. The last five years, that was related to a rise in commodities prices. That investment was coming into Peru before these laws were passed, and a lot of investment will probably still continue to come into Peru. A whole other series of laws on the books make it quite attractive for foreign companies to invest here. Depending on where foreign companies are operating in Peru, there’s always kind of a risk, just below the surface, that people in local towns or in small towns up in the Andes, where there’s a lot of poverty, will start demanding more and more things of foreign companies — in terms of building schools or hospitals or creating jobs.

Worldfocus: How does the Peruvian public as a whole feel about the protests and will there be any political fallout?

A protest in Cusco, Peru.

Terry Wade: This case is quite interesting. Historically, there’s been a big divide between voters in Lima and voters in the countryside, but an opinion poll done after the bloodshed by the leading survey firm here said that more than 90 percent of voters nationwide thought that President García committed a series of errors, and that he should have consulted with the tribes before signing them into law. I think something like 80 percent of voters think the government may be understating the number of people who died in the conflict. So, public opinion is overwhelmingly on the side of the indigenous groups.

A lot of people, especially people outside of Lima, or people who don’t necessarily work in the mining industry, are very frustrated that they didn’t see their salaries increase or that their income didn’t increase during the boom years. Periodically, over the last couple of years, there have been protests demanding that President García do more to spread the wealth. Now that the economy is slowing, those protests might be picking up steam.

The indigenous groups in the Amazon don’t have their own political party. Some of the members of the indigenous groups are aligned with the Nationalist party, which is left-of-center. Other protesters in other regions of the country could belong to smaller parties. But in general, Peru’s opposition, at least in terms of left-wing parties, is fairly fractured. I think what’s most interesting to me is that, politically, the indigenous leaders are very well organized and very savvy, and have fairly clear demands about what they want. So far, they have been able to generate a lot of public support. I spoke with an indigenous leader — there’s a bunch of different indigenous leaders, but I spoke with one last week who said that they’re currently debating whether they should form their own political party or ally themselves with an existing political party.

Photo courtesy of Flickr users Winklitz, wanderinghome and illuminaut under a Creative Commons license.

Iraq’s massive oil reserves, the third largest in the world, are well-known. But small businesses represent about 90 percent of the country’s businesses.

More than a quarter of young men in Iraq are jobless, according to the United Nations, and this high rate of unemployment and lack of prospects can often contribute to instability. Some 450,000 people will enter the workforce in Iraq this year — but only a fraction of them will find jobs.

The country is also not immune from the global financial crisis, and dropping oil prices represent a threat in a country where oil accounts for about 95 percent of the government’s revenue.

As the new administration in Washington prepares to scale down the U.S. presence in Iraq and the world’s focus shifts to Afghanistan, Worldfocus.org’s weekly radio show explored the state of the Iraqi economy, from small shoe shops to large oil corporations.

Worldfocus anchor Martin Savidge hosted a panel of guests:

Ali Alnaemi was born in Baghdad, Iraq. He worked as a freelance reporter for the BBC and Voices of America in Iraq, and from 2004-2007 worked as the newsroom manager for The New York Times’ bureau in Baghdad. Ali’s main interests include politics and issues that affect minorities in the U.S.

Eric Davis is a professor of political science at Rutgers University and past director of the University’s Center for Middle Eastern Studies. His research has included the study of the relationship between state power and historical memory in modern Iraq and the impact of oil wealth on the state and culture in Arab oil-producing countries. His publications include “Memories of State: Politics, History and Collective Identity in Modern Iraq,” among others.

Robert Looney is a professor of national security affairs at the Naval Postgraduate School. He has been an adviser to the governments of Iran, Saudi Arabia, Panama, Jamaica and Mexico. Robert’s regional interests are government budgets, defense expenditures and economic planning in the Middle East/South Asian region. He has written twenty books on various aspects of economic development, including “Economic Development in Saudi Arabia: Consequences of the Oil Price Decline.”

Credits:
Host: Martin Savidge
Producers: Lisa Biagiotti, Katie Combs, Nicole E. Foster and Bijan Rezvani

Financier Bernard Madoff’s alleged $50 billion fraud case has made headlines worldwide.

News of what may be the largest Ponzi scheme in history – a $50 billion fraud case alleging wrongdoing by former NASDAQ chairman Bernard Madoff — rocked U.S. and foreign investors.

Similar fraud cases recently emerged in other world markets as well. In Canada, for example, many farmers lost thousands of dollars to fradulent pigeon-meat businessman Arlan Galbraith. In Colombia, up to 500,000 investors face losses thanks to Ponzi schemes.

Daniel Kaufmann is the director of the World Bank’s Global Programs and Governance and writes at the “Global Governance” blog about worldwide Ponzi schemes and their relationship to the global financial crisis.

Ponzi Schemes in Russia, Colombia and the US: from Mavrodi to Murcia to Madoff

Very recently we witnessed political and social unrest in Colombia due to the implosion of the DMG pyramid scheme (named after the scammer, David Murcia Guzman).  And now we got Madoff in Wall Street.  These cases today show how difficult it is sometimes to learn from the past.  Especially when past events are far way in space and time…

I have received articles from experts in Colombia who found parallels with the analysis I made long time ago on the Mavrodi’s MMM pyramid scheme collapse that inflicted major pain on so many Russian citizens in 1994.  The focus of my old article was particularly on the MMM Russian case.  But there were other such financial collapses caused by pyramid schemes at that time–including in Romania, and of course the tragic case of Albania, in which 2,000 citizens died during the civil war that ensued.

Pyramid schemes in the financial sector are known as ‘Ponzi schemes’ – after Charles Ponzi who scammed many Bostonians almost a century ago.  A Ponzi scheme fraud occurs when the money of fresh investors, attracted by the promise of ‘fantastic’ dividends, is used to pay the previous investors.  The first group of investors to enter the scheme gets high dividends, the word spreads about the high payoff to those early investors, fresh investors are attracted, until everything falls apart because the much broader group of latecomers cannot be compensated by the eventual cap in the number of new investors attracted into the scheme.  It is literally a house of cards, with no actual investments, but based instead, on an unrealistic expectation of ever growing cadres of new ‘investor’ cohorts to pay the previous cohort.  When such perennial growth fails to materialize, it becomes impossible to pay returns to the previous investors that had already joined relatively late in the game.

So the DMG debacle in Colombia is nothing new.  The similarities with past events are obvious.  Even in the present, Colombia does not stand alone, as we now face in the US what is arguable: the largest ‘pure’ Ponzi scheme caused by an individual.  This is the case of Bernard Madoff, former chairman of Nasdaq stock market.  Madoff himself seemed to have acknowledged (even bragged?) that his fraud was a Ponzi scheme (a big lie…), estimated at about US $50 billion!

That is the blatantly obvious part.

But at the same time, and much less obvious, and with little media coverage, is the issue of the link between the financial and mortgage markets disaster (that started months ago in the US), on the one side, and pyramid schemes, on the other.

Even if less obvious, some of the characteristics of the actions and schemes promoted by some of the main actors in the real estate, mortgage and financial markets contain some Ponzi scheme elements.

To read more, see the original post.

The views expressed by contributing bloggers do not reflect the views of Worldfocus or its partners.

Photo courtesy of Flickr user jenn_jenn under a Creative Commons license.

Even as stock markets around the world shot up today, economic projections pointed downward in many countries, sparking skepticism about how long the Citigroup bounce might last.

Citigroup also has a huge international presence, with more than 200 million customer accounts in 106 countries.

Robert Lenzner, national editor of Forbes magazine, speaks with Martin Savidge about the repercussions of Citigroup’s fall, overseas faith in U.S. financial institutions and foreign banks that are also threatened.

Paul Blustein, a journalist at the Brookings Institution, joins Martin Savidge to discuss U.S. dependence on foreign investment and the future of these investments given huge losses. They also discuss other American companies that are courting foreign investors, such as General Electric.

Erika de la Garza, the program director for the Latin American Initiative at Rice University, speaks with Martin Savidge about the effect of drug violence on foreign investment in Mexico, government stability and U.S. support of Mexican law enforcement.

For more on drug violence in Mexico, see our previous report: Mexican drug violence connected to U.S.

China invested $4.5 billion in infrastructure projects last year in Africa.

Though the world financial crisis will impact trade between China and Africa, the crisis may also allow China to increase its influence in the country at a time when Western investment in Africa is declining.

Today, a South African navy ship is scheduled to make its first official visit to China, as part of a year-long celebration honoring 10 years of China-South African diplomacy.

China’s investment in Africa has grown exponentially in recent years, with the total value of trade between China and Africa increasing nearly 40 percent every year.

Despite Chinese officials characterizing the relationship as “win-win” proposition, there are questions about the effects of cheap Chinese goods on the African job market.

Recently, British conservative author Peter Hitchens penned a scathing article about China’s exploitation of Africans. He calls the relationship a “slave empire,” saying that Africans fear speaking ill of Chinese businessmen despite producing their raw materials in poor living conditions.

The “Tibet Rights” blog posts a response to Hitchens’ article, calling it hypocritical and reminding readers of the impact of Western intervention in Africa.

Grace Augustine argues on Stanford’s “Social Innovation Blog” that despite China’s claim of reducing poverty in Africa, poverty and inequality are not the same and Africa should be wary of China’s human rights record.

The blog “I have no tribe, I’m Sudanese” writes that China has helped Africa. The blogger defends China against colonization claims and says the relationship is mutually beneficial.

Blogger “Keeplefty” writes that while most reactions to China’s presence in Africa fall under categories of paranoia or praise, their real relationship falls somewhere in between.

American blogger David Mixner urges increased involvement in Africa to compete with China.

The “Windy Harbor” blog writes that the financial crisis may be an opportunity for Africa to more fully engage in the global economy.

As the debate continues, interest in Africa is on the rise elsewhere. The “China Comment” blog predicts that China will face competition from the U.S. and EU in South Africa, where it has deep economic and diplomatic ties. Alex Belida of “Regrets Only” discusses Iran’s interests in Africa, while Pambazuka News examines India’s role in the region.

Following a recent World Bank report [PDF] on China’s essential financing of sub-Saharan African infrastructure, the “African Politics Portal” blog assesses the thoroughness of the study and outlines the benefits and pitfalls of these Chinese investments.

Photo courtesy of Flickr user cogdogblog under a Creative Commons license.