Recent comments by Uruguayan vice president Danilo Astori have put the current economic crisis in a disturbing light: “I have no doubts we are before the most significant financial crisis capitalism has faced in contemporary history”, Mr. Astori remarked when asked about the ramifications for Uruguay of the stumbling trend in the US dollar and Euro. The vice-president said that Uruguay is much better prepared commercially and economically, should another crisis occur. Astori referenced the fact that following the August 5th decision by Standard and Poor’s to downgrade the rating of US debt from AAA to AA+, world markets collapsed, down in some cases as much as 11%. World commodities bore some abuse, and the hardest hits were apparent in oil. “In coming months we might be faced with scarce availability of credit, and therefore it is possible we will be seeing a tendency for interest rates to increase”, predicted Astori, a former economist who held the Minister of Finance position from 2005 to 2008.

He added that he believes that in the commercial market, “trade flows suffer and some prices face a decreasing tendency”, regularly in times such as this. This aside, Astori insisted Uruguay is well prepared economically for such an event and whatever the scenario, the impact should be ‘reasonably moderate’. “Uruguay has the sufficient financial resources for the next two years, at least”, stated the Vice-president. He went on to state that from a commercial standpoint “Uruguay has the advantage that in recent years it has successfully expanded and diversified trade to other parts of the world which are undergoing the situation differently, I’m talking about Asia and China”.

Astori said that this expansion will allow Uruguay to count on possibilities that it did not have in the past to face this type of credit crunch. For much of the past, Uruguay’s trade economy was closely linked to it’s neighbors in the region, Brazil and Argentina, and later, the European Union. Current shifts in Uruguay’s trade portfolio have seen China become the nation’s second trade partner and trade with other Asian countries is increasing. Since 2009, Asian countries, specifically China, have increased their ties to South America, investing heavily in the commodities sectors to feed their hunger for manufacturing feedstock. The region is undergoing development of their own manufacturing and commercial markets, which may move them into the “first-world” tier in a very short amount of time, possibly through the subversion of US and Euro currency reserve paradigm.

Early in August, Japanese beverage and beer giant acquired a massive stake in Brazil’s Schincariol, part of a growing hunger for South American commodities by Asian investors. For example, that same week, China’s JAC Motors announced it would invest $900 million in a Brazilian auto plant. Brazil, Russia, India and China (BRIC) have all been deemed hot investment properties at roughly the same stage of development. Brazil is widely viewed as the manufacturing powerhouse of South America, though it’s unstable fiscal policies are a worry to some. China, in desperate need of energy, mineral and food resources worldwide, has surpassed the United States, becoming Brazil’s largest trading partner and the largest investor there in 2010, injecting about $30 billion.

China’s more developed rival, Japan, is also turning to South America for resources and markets, as the erosion of the island’s working population continues. “Companies long dependent on domestic demand are now going abroad, given that the home market is shrinking and we cannot expect high growth in Japan,” commented Hideyuki Araki, an economist at the Resona Research Institute, a privately-owned Japanese corporation. Araki added, “Brazil is one of the BRICs with high growth and rising income,” which makes it a natural market both for labor and consumption. Japan’s Kirin Holdings announced August 2nd it would spend more than $2.5 billion on a company which holds a majority stake in Schincariol, the second largest beer brewer in Brazil, and the nations third largest beverage producer. Skyrocketing yen in Japan has hurt companies looking to export, but allowed Japanese industry to expand their holdings abroad. Resource-rich Brazil has been a favorite destination for the flush investors.

These contributions seem paltry, however, when one considers the investments of the elephant in the room; China. No other country has been a more enthusiastic investor in Brazil, whose officials expect $9 billion in Chinese investment in 2011, half of which will go towards high-tech. This would shift the terms of trade with China away from roughly 70 percent raw materials and agricultural exports. The Chinese continue to look to the country for it’s agricultural needs. “China has an ongoing need to secure soybean and corn supplies that matches well with South America’s productive strengths,” Rabobank’s Food & Agribusiness Research and Advisory stated in a report published July 28. “Brazil has more resources that could be put into crop production than any other country in the world.” Perhaps the country can parlay it’s agricultural might into a tech sector large enough to compete globally. Either way, smart money in the region is on Asian investment.

Known the world over as one of the greenest and happiest countries in the world, Costa Rica, which literally means “rich coast”, has become an outstanding ecotourism center. In 1949, the army of Costa Rica was decommissioned in order to channel more funding into health care and education- an environmentally friendly, peaceful solution which has bettered the economy as a whole. Costa Rica also houses 5% of the world’s biodiversity and the country contains roughly 500,000 different species. Costa Rica contains various individual microclimates because of its geo-locational proximity to the equator and situation between two oceans. Dry forests as well as rain forests dot the country, and it is also blessed with a number of active volcanoes. All of this contributes to Costa Rica’s biodiversity, making it a logical choice for conservation, and a natural destination for ecotourism.

26 percent of all the land in Costa Rica is conserved and the government has announced plan is to be carbon neutral by 2021. The government is politically stable, and dedicated to environmental sustainability.  Many businesses as well as governmental organizations in the country are also making changes to become environmentally responsible. For instance, the domestic airline of Costa Rica, Nature Air, is the world’s first carbon neutral airline, and many hotels in the nation are focusing on ecotourism and true sustainability. For instance, Anamaya Resort features an organic restaurant, health retreats, non-toxic construction and non-polluting operating practices. Another example of an eco-friendly hotel is  Lapa Rios Ecolodge, which overlooks the point where the Golfo Dulce meets the Pacific Ocean and is situated in a tropical nature reserve.

Promoting sustainable tourism in an effort to conserve the environment is also a big responsibility, because it means making tough decisions to raise political, cultural and environmental awareness. For example; What is the environmental benefit of ecotourism if it means polluting the earth via plane travel? It seems that as time progresses, more travelers are developing eco-conscious practices, which promote sustainable tourism within one’s own country. Costa Rica has become a center for peace, sustainable development, and green practices; hopefully other countries will soon follow suit.

Finance ministers and other high ranking officials from the Union of South American Nations (UNASUR) trading group of South American nations announced August 5th that the group is attempting to build confidence ahead of any possible apparent crisis. Luis Miguel Castila, the Peruvian Finance Minister stated that the group’s meeting Friday should bolster investor’s confidence. and that countries in the groups are managing their economies well, and are trying to increase integration in order to confront any global economic challenges. “I think that it is a signal that should provide confidence to the rest of the world among a scenario [sic] of uncertainty,” the finance minister stated stated.

The meeting comes during a week of sharp declines in Latin American stock exchanges due to foreign concerns about the health of the U.S. and European economies. The biggest drops occurred on Thursday as the Lima Stock Exchange’s broad General Index ended 5.56% lower, Colombia’s Colcap index dropping 3.04%, Chile’s blue-chip Ipsa index falling 3.9%, and Brazil’s Bovespa stock index plummeting 4.9%. This was in direct correlation to deep hits in the U.S. financial markets. Castilla stated that Peru will be relatively untouched in the event of economic crises originating in Europe or the U.S. “We have very strong fundamentals,” he said, echoing “famous last words” of financiers everywhere. In recent years, Peru’s economy has been growing at tremendous rates. In 2010, the country’s GDP grew by an impressive 8.8% and it is expected to grow by about 6.5% this year. This economic miracle was due in no small part to foreign direct investment, and partnership in UNASUR. Castilla added that Peru is seeking further integration with all of Latin America. “What we want is a deep integration with the entire region, not only South America but also looking at other important partners like Mexico and countries in Central America and the Caribbean,” he said.

The officials from UNASUR will meet again Aug. 12 in Argentina. The purpose of the meeting is to discuss new methods of cooperation and integration. “We have regional trade that is important, but it is something that we have to deepen … in order to not be affected by a crisis abroad,” Argentinian Economy Minister Amado Boudou said. UNASUR is a political alliance made up of every nation in South America except French Guiana.

The government of Brazil has recently taken steps to improve the transparency of real-estate funds in an attempt to lure more investment to Brazil’s booming real estate sector. Breifs, as the Brazilian real estate funds are called, have ballooned in recent years, hand-in-hand with a real-estate boom driven by 10 years of strong, reasonably consistent economic growth. Real-estate values in some desirable regions of the country have skyrocketed, which is causing analysts to suspect a bubble. Others, however, still see plenty of room for growth, pointing to the fact that real-estate financing amounts to only 3% of GDP. Breifs- similar financial instruments to U.S. real-estate investment trusts, also known as REITs- buy and rent commercial properties in and around developed areas of Rio de Janeiro and Sao Paulo, although the fund’s structure is versatile, and they can be used for other purposes, like financing. One thing that separates them from their U.S. counterparts is that the Brazilian funds can’t take on loans to inflate returns.

In the last six years, the total value of the funds has quadrupled to $6.5 billion, in tandem with excellent growth in Brazil’s real-estate market. As it stands, Breifs only make up 1% of the Brazilian fund market. The government of Brazil is in agreement with most analysts, who think that more information would allow for more growth. To this end, new rules are being prepared by the securities exchange of Brazil, or CVM, which would force funds to publicize any changes in the appraised market value of their properties, a disclosure which they aren’t currently required to make. At the moment, pricing relies on changes in rental income. It is also expected that the new rules will encourage the development of a market for trading Breif shares. At the moment, only 54 Breifs are publicly traded on Sao Paulo’s Bovespa Stock Exchange, though there are 114 registered in the country.

Brazilian fund managers are looking forward to the changes, in hopes that they will attract more foreign investment which currently accounts for as little as 3% of the Breif market. In order to deter foreign investment and the resultant market overheating, the Brazilian government forces foreign investors to pay a 6% financial-operations tax on any investments in certain securities, including Breifs. Much investment interest is currently focused on Brazil because of the growing economy and sky-high interest rates, which have led to a steep appreciation of the Brazilian real. The country is attempting to move into the middle class, a feat it may be able to achieve if it can only avoid overheating and collapse.

Zimbabwean President Robert Mugabe and Prime Minister Morgan Tsvangirai disagree strongly about the nation’s land redistribution policy, but both have recruited South Africa to persuade Prime Minister David Cameron to “honour Britain’s obligations” by funding land reform efforts in Zimbabwe. The controversial land seizures have been taking white owned lands and redistributing them to black veterans of Zimbabwe’s revolutionary war since 2000. Mugabe recently vowed that his land seizures would continue, in defiance of the global political agreement (GPA) which requires an end to the practice. The formal disbandment of the Namibia-based SADC Tribunal ruling, has accelerated the land grabs from white farmers in recent months. Prime Minister Tsvangirai has called for an immediate stop to the accelerated land grabs and an audit to determine who owns what. This would shed light on the multiple ownerships and to ensure security of tenure for all farmers, black and white. Mugabe, a former leader of the liberation movement has denied the land audit every time it arises.

Mugabe continues insistence on the land reforms as veterans of the 1970s war for independence from white colonist rule proceeded to evict the remaining 250 of the nation’s formerly 4,500 commercial farmers. The veterans have requested land they say was stolen by the British in the 1890s. “The few remaining white farmers should quickly vacate their farms, as they have no place there,” Mugabe declared. “I am still in control and hold executive authority.” Tsvangirai, a moderate, has warned against the “wanton disruptions of productive farming activities” that are continuing, stating that they were threatening crop production. According to some sources food production in the country has slumped to 70 percent. “In the GPA we have committed ourselves and our parties to recognising that all land is used productively in the interests of all the people of Zimbabwe. A farm is a business that should provide food for our nation, revenue to our economy and employment for our people,” Tsvangirai said. Donors nations to Zimbabwe have made maintaining white ownership of well over 90 percent of the arable land a linchpin for resuming development aid which would fund the agricultural sector – the mainstay of the country’s economy.

The Prime Minister is seeking aid from abroad to pay white former farmers whose land has been redistributed and to provide support for new farmers. British diplomats have again stated that Britain is willing to consider a £36m donation it pledged during a 1998 donors conference to pay for land redistribution, but only once the state-regulated occupation of white-owned farms by war veterans is stopped. The funding was never delivered to the nation, which resulted in the redistribution scheme being set up.

According to several sources, the Saudi Arabian property market is expected to boom thanks in large part to a boost in government spending. The stimulus has been significant enough to affect economic growth forecasts by the IMF. The forecasts for 2011 were around 6.5 percent, up 2.4 percent from 2010. The stimulus in question was announced in March, when King Abdullah vowed to spend 30 percent of Saudi Arabia’s economic output, or approximately $130 billion on public spending, such as mass housing and job creation. $67 billion of the funds will go towards building 500,000 homes, in addition to earlier investments of $15 billion to bankroll the construction of 1.65 million homes in the next five years. A ministry will also be established with an annual budget of $4 billion. The IMF and other observers are speculating that these measures will increase the productivity of the country as a whole. “We will have to see how this new supply affects the market,” said Mike Williams, the senior director of Middle East Research and Consultancy at CB Richard Ellis, in relation to the supply of new homes that will come on the market.

Saudi Arabia’s increasing population has led to a tense, high demand market which has resulted in skyrocketing property prices, some of which have risen by as much as 60 percent in the first half of 2011. “As the housing demand and supply gap continues to widen due to robust population growth and limited supply [particularly of low and middle income houses], Saudi Arabia continues to face a housing shortage,” stated a report by CB Richard Ellis.

What stands in the way of acceptable demand for these properties is the lack of mortgage, and other financial borrowing instruments in Saudi Arabia. Sharia law specifically forbids the charging of interest, which makes mortgages unprofitable. While Saudi Arabia has the largest property market in the region, because of this law, it also has virtually no mortgage market said the CB Richard Ellis report. The country’s mortgage penetration rate is thought to be only two percent in Saudi Arabia, much lower than the 14 percent penetration rate in other countries in the United Arab Emirates and the nearly 70 percent mortgage rate in the UK. A lower mortgage rate typically means a lower rate of owner occupied housing, or personal home-ownership, which is currently at less than 35 percent. “The government is going to help out the lower income sector, but the middle income sector is a huge potential which won’t be fulfilled until the mortgage law comes in,” said Mr. Williams. In other Islamic countries, such as Iran, mortgage law loopholes have been put in place which allow Sharia to be upheld, and profit to be made in the mortgage industry. However, the Sharia hardliners in Saudi Arabia have resisted these measures, arguably for the last thousand years.

In a ruling being called everything from dictatorial to Kafkaesque, the inhabitants of a Bedouin village in Israel’s Negev desert are being held financially liable for the expense of vacating and demolishing their own homes. The Israeli government filed a roughly $500,000 claim with a court on July 26 for the expense of demolishing the structures and evicting the residents of the al-’Araqib village, Amnesty International claims. The villagers have been evicted almost 28 times over the past year, most recently on July 25. The resident have long claimed that the settlement is part of their ancestral lands, but authorities claim that they are illegally squatting. 

The most recent destruction of al-’Araqib occurred during a festival and children’s summer camp were in progress. Armed with a minimum of 20 vehicles and a bulldozer, Israeli authorities demolished the ramshackle houses and structures in order to turn the land into a forest. Earlier evictions by the Israeli government had ended in hospitalization of the villagers resulting from violence by police officers. In February of 2010, bulldozers and roughly 40 riot police forced the population into the village cemetery, and pummeled them with sponge-tipped bullets and tear gas. Five people, all women and children, were hospitalized as a result. Later, in July of that year, more than 1,000 police officers came to the village and destroyed as many as 46 homes and other structures.

Al-’Araqib’s Bedouin residents have long claimed that their ancestors have held the land since the Ottoman empire, well before the establishment of Israel. In the 1950s, the Israeli authorities got the residents to leave the land by saying that the land was needed for a brief military training and promising that they would be allowed to return shortly. The residents complied with the military order at the time but they have not been allowed to return. Through various channels, ownership of the land has been transferred to the state. When the families re-inhabited the area in the 1990s, it became known that Israeli authorities were planning to use the land to build a forest. Residents have filed fresh land ownership claims, some of which are still pending, but many of which have been rejected outright. The outlook for the other cases does not look good.

Argentinian authorities have announced plans to develop a nuclear-powered submarine for it’s navy, which it plans to arm with conventional weapons, for the time being. The armament of choice for such subs is typically nuclear torpedoes. Despite political rhetoric to the contrary, many South American countries are spending their gains from the current commodities boom on military endeavors, expensive new war toys, and rearmament of aging military forces. Richer countries, such as Venezuela, which benefits heavily from oil exports, have even borrowed against future income to arm their military. Though Argentina is only the third largest economy in South America, and has not benefited as much as other states from the commodities boom, the country seems bent on a nuclear sub. The uses for such a device are limited as well; the region is entering a new era of co-operation, threats are almost non-existent, and the only military interest the area is the oil-rich Falklands, an archipelago off the coast ruled by the United Kingdom.

Argentina has attempted to take the country before, but was beaten back by the British Forces in 1982. Argentina and the U.K. reached a compromise which allowed Argentina exploration rights for oil and natural gas, but Argentina unilaterally withdrew from the arrangement in 2007. Officials in Argentina are tight-lipped about the need for the sub, but experts claim that it may be a simple case of keeping up with the Joneses. Brazil is blowing tens of billions of dollars on regenerating it’s military, which it hopes will be a future export earner, and a nuclear-powered submarine will be part of that plan. France will build the submersible, along with four others, and expects to profit from increased military hardware sales to Brazil. Argentina has no such strategic future plans, but it has been argued that increased defense will be necessary if Argentina is to gain rights to the Falklands.

Argentina has ramped up it’s hostilities towards the British-ruled island since breaking off from the oil agreement in 2007. It currently blocks Falklands shipping, punishes vessel operators suspected of supporting the Falklands, and encourages it’s South American allies to support it’s claims of sovereignty. The nuclear sub would be a useful tool in the ongoing battle for sovereignty of one of Britain’s last colonies. Since Argentina is both heavily in debt and struggling regain it’s investment-grade status, it is unclear what monies the government is using to buy the TR-1700 Thyssen submarine. Argentina’s past attempts to produce nuclear weapons were met with opposition by the U.S. government, which effectively prevented their development. No time frame has been released, though sources close to the project say that it is still in it’s early stages.

In order to address the distortions on local currency caused by increased worldwide liquidity and import dumping, South America’s top economic analysts, policymakers and monetary authorities will be meeting in Lima and later in Buenos Aires to formulate a plan of action. The announcement was made by Argentine president Christina Fernandez and Brazilian president Dilma Rousseff in Brasilia, during July 29th  ceremony inaugurating the Argentine embassy in Brasilia. Referring to a joint statement by the presidents, Ms. Roussef said,“We must define joint and specific actions to defend our countries from the excessive liquidity that artificially revalue our currencies, and from the avalanche of manufactured goods which can’t find a market in advanced countries and impact on employment and industry in our region.” The plans for the meetings were originally made during the UNASUR (Union of South American Nations) meeting held in Lima on July 28th, following the official inauguration of Peruvian President Ollanta Humala, who chaired the UNASUR meeting.

Political dust-kicking and posturing dominated the UNASUR round in Lima, a meeting of nations irrelevant on the international scene only years ago. Rousseff pointed out the excellent recent economic track record of the continent as a whole, the strength of South America, and it’s progressive social platform compared to current situations in developed countries. “We are a very attractive and tempting region (globally) and we must face the challenge with an armour of integration, not of isolationism”, said Rousseff adding the asteism, “Argentina and Brazil have a major responsibility over the rest because I believe we have higher industrial, scientific and technologic [sic] developments.” For her part, Argentine president Cristina Kirchner bragged, “What a difference with other parts of the world today dominated by recession, unemployment, financial and fiscal chaos and above all by political paralysis in solving the challenges they have before them.” Ms. Kirchner also stated that during the Unasur meeting in Lima, “for the first time the region had a shared vision towards global economic problems” adding that Colombia’s leader Juan Manuel Santos proposed the economic planning summits.

The meetings are scheduled for next August 4th in Lima and on August 11th in Buenos Aires. The first meeting will consist of economic ministers, who will pass on recommendation to the Central Bank presidents in attendance at the second meeting. With the U.S. dumping it’s dollars on the region for lack of otherwise motivated buyers, South America’s currencies have appreciated substantially which has made imports cheaper and manufactured exports more expensive, threatening the domestic market manufacturing jobs which were once the region’s backbone. Poor handling of the influx of cash has also led to credit bubbles and inflation crises, all of which the leaders at the meeting will address.