Unasur contingents join parade marking Peru's Independence Day in Lima

A military parade to mark the 190th independence anniversary of Peru brought together troops from seven member countries of the Union of South American Nations (Unasur) in the capital Lima.

Peru's Armed Forces were represented by some 10,000 personnel, who were joined by contingents from Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador and Venezuela.

Among the foreign units was a detachment of Argentina's Regiment of Mounted Grenadiers General San Martin.

The parade is attended by Peru's newly sworn-in President Ollanta Humala, ministers, congressmen, senior civil and military officials and thousands of people. (Andina)

South America News

UNASUR wishes Humala success, agrees to meet in Peru next year

The Union of South American Nations (Unasur) today wished success to the new government of Peruvian President Ollanta Humala and agreed to hold a meeting of Heads of State and Government in Peru in 2012 to discuss a range of social issues.

At the end of the extraordinary meeting held this evening at the Government Palace in Lima, Unasur Secretary General Maria Emma Mejia read a statement in which the bloc welcomed the work done by the South American Council of Social Development in this area.

"We renew our full confidence in the creative capacity of Unasur to meet successfully the challenges of today and we are sure that, together, will build a future of social justice, equality and prosperity for our peoples," she said.

The declaration instructs the Council to prepare and coordinate the action plan and agenda of social measures "for its evaluation and possible adoption at the Ordinary Meeting of the Council of Heads of State and Government in 2012 to be held in Peru."

Mejia pointed out that the bloc's urgent task is to implement and strengthen the action plan developed by the Unasur Social Development Council and to establish a Priority Social Action Agenda.

It also approved a suggestion by the Peruvian government to hold a high-level meeting to discuss this social agenda in the second half of this year in the Andean city of Cusco. (Andina)

South America News

video: http://www.youtube.com/user/telesurtv

Unasur summit to take place July 28 at Pizarro Palace

The Extraordinary Meeting of Heads of State and Government of the Union of South American Nations (Unasur) will take place on July 28 at the Pizarro Palace in Lima with the participation of 10 presidents.

According to the official program, the meeting will begin at 16:00 hours after president-elect Ollanta Humala’s swearing-in ceremony at the Peruvian Congress.

At that time, the Heads of State will take the official photograph and then they will hear the corresponding welcome speech from the new Peruvian president.

Then, all the members will approve the work agenda and Unasur’s Secretary General Maria Emma Mejia will present a report about the recent work.

As host of the event, President Humala will give an initial speech, then, the meeting will continue with an open dialogue between the heads of state and government within the regional bloc, who will also participate in Humala's taking office ceremony.

From the 12 nations belonging to the regional platform, 10 have confirmed their attendance; only Venezuela and Guyana will not be able to be attending the special summit.

The Secretary General of the Union of Unasur noted that the Lima Declaration will be signed during this summit.

This bloc is made up of Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Guyana, Paraguay, Peru, Surinam, Uruguay and Venezuela. (Andina)

South America News

Brazil Economists Increase Forecast for 2012 Inflation to Record of 5.28%

Economists covering the Brazilian economy raised their 2012 inflation forecast to its highest ever for that year, after the central bank last week signaled it may soon halt the cycle of interest rate increases that began in January.

Consumer prices will rise 5.28 percent next year, according to the median forecast in a July 22 central bank survey of economists published today. The figure was up from 5.20 percent the previous week and from 4.5 percent in January.

“This is basically saying that the central bank won’t do enough,” Pedro Tuesta, a Washington-based economist covering Latin America for 4Cast Inc., said in a telephone interview. “They don’t want to harm growth, so they are going to take a long time to bring inflation to the center of the target.”

The central bank raised its benchmark lending rate for a fifth straight meeting last week, after inflation accelerated to a six-year high in mid-July. In a statement accompanying the decision, policy makers withdrew a commitment to raise rates for a “sufficiently long” period, leading traders to increase bets that the bank will hold the rate unchanged at 12.50 percent for the rest of year.

The central bank targets inflation of 4.5 percent, plus or minus two percentage points.

Played Down

A government official in President Dilma Rousseff’s economic team played down the worsening of inflation expectations, saying that it was a result of just 11 analysts out of 110 increasing their forecast for consumer price increases next year. Of the analysts surveyed by the central bank, eight cut their 2012 forecast, said the official, who asked not be identified since he is not authorized to speak publicly about the survey.

Economists held their prediction for 2011 inflation unchanged. Prices, as measured by the IPCA index, will rise 6.31 percent this year, the survey found.

Economists raised their forecast for the benchmark interest rate to 12.75 percent next year, from a week earlier forecast of 12.63 percent. In contrast to traders, economists expect the central bank to raise the Selic rate once more this year, by a quarter point at its August policy meeting.

Consumer prices rose 6.75 percent in the year through mid- July. The central bank aims to slow inflation back to the midpoint of its target in 2012.

Economists held their forecasts for economic growth at 3.94 percent this year, and 4.0 percent in 2012.

Brazil’s government seeks a “soft landing” that brings inflation under control without halting economic expansion, Rousseff told Sao Paulo-based Valor Economico newspaper in an interview July 22.

The yield on the interest rate futures contract maturing in January 2013, the most traded in Sao Paulo today, rose two basis points, or 0.02 percentage point, to 12.70 percent at 1:11 p.m. New York time. The real appreciated 0.9 percent to 1.5379 against the U.S. dollar, its strongest level since 1999.

To contact the reporters on this story: Matthew Bristow in Brasilia at mbristow5@bloomberg.net

To contact the editor responsible for this story: Joshua Goodman at jgoodman19@bloomberg.net

South America News

Companies from Asia, Europe, America to attend Fiagro 2011 in Lima

Companies from China, India, United States, Italy, France, Peru, and other countries from South America will take part in the upcoming International Fair of Technology for Food and Beverage Processing (Fiagro) 2011 to be held in Lima on August 18-20, reported Thais Corportation, a Peruvian company organizing the event.

This fair, first ever organized in Lima, in the Jockey Plaza Convention Center, expects the arrival of 6,000 agribusiness professionals such as suppliers, buyers, producers, manufacturers, and importers, both national and foreigners.

The General Manager of Thais Corporation, Guillermo Thais, said this event aims to provide new tools and technology skills to food and beverage sector.

Thais stated the investment of these important enterprises is geared to modernize the machinery and to obtain higher quality end product to compete and participate in national and international market. (Andina)

South America News

Peruvian Stocks Surge as Humala Says He’ll Keep Velarde Atop Central Bank

Peru’s benchmark stock index surged after Peruvian President-elect Ollanta Humala said Central Bank President Julio Velarde will remain in his post.

The Lima General Index rose 4 percent to 21,163.22 at 11:27 a.m. New York time, the biggest one-day gain since June 7, led by Canadian gold and copper exploration company Panoro Minerals Ltd. (PML) and Caterpillar Inc. distributor Ferreyros SA. (FERREYC1) Velarde will serve another five-year term to help ensure economic stability, Humala said yesterday.

“Velarde’s appointment is a very good signal,” said Sebastian Blondet, a trader at Celfin Capital SAB. “The markets were waiting for a sign that Humala will maintain macroeconomic policies and a stable currency.”

Humala, who takes office July 28, is seeking to reassure investors concerned that his plans to raise mining royalties may slow private investment fueling the region’s fastest economic growth of the last decade. 

Since being appointed in 2006 to head the central bank, Velarde, 59, has helped triple international reserves to a record $47 billion and raised lending rates to a two-year high in May to curb inflation, which has been the lowest in the region since 2006.

Stocks also advanced after gold rose to a record above $1,600 an ounce as debt concerns in Europe and the U.S. boosted demand. Fifteen of the 34 stocks in the index are mining shares, including five gold miners.

To contact the reporter on this story: Alex Emery in Lima at aemery1@bloomberg.net.

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

Peruvian pisco to be served at iconic venues across US

Gerber Group has selected Pisco Portón as its pisco of choice to be featured on the back-bars and cocktail menus at the group's bars worldwide.

Founded by preeminent tastemakers Rande and Scott Gerber who have an established reputation for creating cool, chic and classic bars with modern glamour, the Gerber Group encompasses 27 iconic nightlife institutions worldwide under such brands as The Whiskey, Whiskey Blue, Midnight Rose, The Penthouse and Stone Rose.

“Adding Pisco Portón to our bars will lend a new layer of adventure and discovery to our cocktail menus. It’s a rare and very exciting moment for us to introduce our clientele to a spirit of both unique history and inimitable quality that most have never tried before,” said Jeff Isaacson, Managing Partner of Gerber Group.

Pisco Portón is a new, ultra premium white spirit that is versatile in cocktails while also offering complexity with a delicate finish when savored on its own.

Born from grapes that grow in the shadows of the Andes Mountains, this pisco is artisanally crafted at Peru’s Hacienda La Caravedo distillery, the oldest working distillery in the Americas (est. 1684).

Unlike most other piscos, this one is distilled using the Mosto Verde method, which prevents the grapes from fermenting completely, resulting in an extremely smooth, velvety and full-bodied flavor.

A blend of three grapes (Quebranta, Albilla and Torontel), each chosen for their unique character, Pisco Portón takes approximately fifteen pounds of grapes to produce each bottle.

Portón’s Master Distiller Johnny Schuler is one of the foremost experts on pisco in the world and, for decades, has been building the pisco category as Peru’s unofficial ambassador.

For his countless efforts as a pisco ambassador, Schuler was awarded the Medal of Honor by Peru’s Congress in 2007, and for several years has hosted his own television show, Por Las Rutas del Pisco, which celebrates the making and enjoyment of the spirit. Pisco Portón is a culmination of Schuler’s knowledge, expertise and passion.

“Pisco Portón is one of the finest examples of a mosto verde pisco coming out of Peru today, and I’m so proud that the Gerber Group will now be showcasing it in their extraordinary bars. It’s a beautiful, aromatic and complex spirit that I think will pleasantly surprise people upon first sip – and each one thereafter,” Schuler said.

Pisco Portón launched in the U.S. in April 2011 and will be available in 27 markets by the end of the year. In May, the spirit earned numerous gold medals at the prestigious Concurso Internacional de Vinos and Espirituoso (CINVE) wine and spirits competition held in Miami and the Concours Mondial de Bruxelles competition 2011. (Andina)

South America News

Barack Obama meets President-elect Ollanta Humala - Stronger Peru-U.S. relation forseen after Obama-Humala meeting

U.S. President Barack Obama welcomed Peru's President-elect Ollanta Humala during his visit to the White House to meet U.S. officials, reported official sources.

The unexpected encounter occurred when President-elect was holding a meeting with National Security Adviser Tom Donilon, according to Peruvian Congressman Daniel Abugattás, who accompanied Humala during his visit to the U.S.

Peruvian diplomat Luis Chuquihuara, who also traveled with Humala, said the dialog between Obama and Humala lasted several minutes and was "highly praised by President-elect", as it was a "gesture of political courtesy" from the head of the most powerful nation in the world.

Humala's agenda in Washington did not include an official meeting with President Barack Obama.

Today, Humala met with U.S. Secretray of State Hillary Clinton and Secretary General of the Organization of American States (OAS), José Miguel Insulza.

During the meeting with Clinton, both discussed common issues such as fight against drugs.

Stronger Peru-U.S. relation forseen after Obama-Humala meeting

Peru's former Minister of Foreign Affairs Manuel Rodríguez Cuadros stated Wednesday that U.S. President Barack Obama's political gesture to greet Peru's President-elect Ollanta Humala in the White House would mark the start of a stronger and more fruitful bilateral relation. (Andina)

South America News

Humala Will Assure Clinton He’s No Peruvian Chavez During Washington Visit

By John Quigley - Jul 5, 2011 Bloomberg

President-elect Ollanta Humala will seek to assure U.S. officials as he visits Washington today that Peru under his leadership won’t allow relations with its biggest trading partner to sour.

Humala will discuss economic relations and drug trafficking with Secretary of State Hillary Clinton before meeting with officials including National Security Adviser Tom Donilon at the White House. He has no encounter scheduled with President Barack Obama.

The 49-year-old former army rebel will use his one-day trip to Washington to try to allay concerns he’ll restrict investment when he takes office July 28, said Michael Shifter, president of the Inter-American Dialogue, a policy research group.

“Humala has become more moderate and more centrist, and this is an opportunity for him to tell the U.S. administration who he is and what his positions are,” said Shifter in a telephone interview from Washington. “The U.S. won’t be a high priority for the Humala administration, but he’ll want to have good relations on trade, drugs and other issues.”

The U.S. has indicated it wants to cultivate ties with the resource-rich nation at a time when China is playing a larger role in Latin America.

‘Important Partner’

U.S. officials including Clinton “look forward to continuing to strengthen our ties with Peru” during Humala’s visit, State Department spokeswoman Victoria Nuland said yesterday at a briefing in Washington. Speaking to reporters in Lima July 3, Humala said the trip will serve to fortify Peru’s relations with an “important partner.”

Humala, a one-time ally of Venezuelan President Hugo Chavez, rattled investors during the presidential campaign with pledges to revise mining contracts and free-trade agreements with the U.S. and other nations. Like Chavez, who as a paratrooper in 1992 led a coup attempt, Humala as an army lieutenant colonel in 2000 led 50 soldiers who seized and occupied for a week one of Phoenix-based Southern Copper Corp (SCCO)’s mines to protest corruption in the government of then-President Alberto Fujimori.

Humala shifted his stance during this year’s campaign to defend policies that made Peru the fastest-growing Latin American economy over the past decade. Instead of Chavez, whom he praised during an unsuccessful presidential bid in 2006, he said he now will seek to emulate the business-friendly policies of former President Luiz Inacio Lula da Silva in Brazil.

Silver and Copper

Peru, the world’s largest silver producer and third largest in copper, has seen gross domestic product expand an average 5.7 percent a year over the past decade. It will lead Latin America with 6.6 percent economic growth this year after expanding 8.8 percent in 2010, according to the International Monetary Fund.

The yield on the nation’s benchmark 7.84 percent sol- denominated bond due August 2020 has fallen 30 basis points, or 0.30 percentage point, since the June 5 election, while the Lima General Index of stocks has dropped 8.7 percent.

Investors remain concerned that once in office the Nationalist Party leader will fulfill earlier pledges to rewrite the constitution and unilaterally boost mining royalties.

President Alan Garcia signed free-trade agreements with the U.S. in 2007 and China in 2009 and completed trade talks with the European Union last year. Humala’s 198-page campaign platform said Garcia “has indiscriminately opened our internal market to subsidized products from other countries” and that the agreements will be revised where necessary.

Humala’s visit to Washington comes when competition for natural resources in Latin America is heating up. The U.S. accounted for 16 percent of Peru’s exports and 19 percent of its imports last year. The Andean nation shipped to the U.S. $5.7 billion in exports, mainly gold, copper and gasoline. China, Peru’s No. 2 trading partner in 2010, overtook the U.S. as the biggest market for Peruvian goods in the first five months of this year.

Brazil and Chile

A similar dynamic is evident elsewhere in South America. China, the world’s second-largest economy, passed the U.S. as Brazil’s biggest trading partner in 2009 after becoming Chile’s leading export market in 2007.

The U.S. is also concerned about rising illegal drug output in Peru. The nation last year rivaled Colombia as the world’s largest producer of cocaine after a government eradication program failed to stem rising cultivation of coca, the raw material used to make the drug, according to a United Nations group. In his campaign platform, Humala vowed to stop the forced eradication of coca, a program for which Peru receives U.S. anti-narcotics aid.

Since being elected June 5, Humala has said Peru needs U.S. support in its fight against drugs.

“The trip is an opportunity for Humala to recast his reputation in Washington, which is based on a lot of gossip,” said Larry Birns, director of the Council on Hemispheric Affairs, a Washington-based research group. “Ollanta will do what Brazil has done and say we feel we can have cordial relations with Venezuela and Cuba and the U.S. We don’t have to pick sides.”

To contact the reporter on this story: John Quigley in Lima at jquigley8@bloomberg.net

To contact the editor responsible for this story: Joshua Goodman at jgoodman19@bloomberg.net

Peru to sue Gothenburg city council in Sweden over missing Paracas textiles

The Peruvian government said Monday it will take legal action against the Gothenburg City Council to secure the return of a hundred 2000-year-old textiles from the Paracas culture.

President Alan Garcia made the announcement in his opening speech at the Second Conference on International Cooperation for the Protection and Repatriation of Cultural Heritage in Lima, the capital of Peru.

"I have ordered to initiate proceedings against the Gothenburg City Council in Sweden because it is complicit in the theft of more than 100 textiles of the Paracas culture," he said at the ceremony, attended by Egypt's Minister of State for Antiquities, Zahi Hawass.

Garcia said "it isn't right that this city council in Sweden -land of peace, understanding and consultation- misappropriates these 100 mantles that were stolen from Peru."

"If so, they are complicit in a theft and we have the right to sue them in Peru and use the assistance of the International Police (Interpol) to arrest those who plunder and loot a country and a civilization," he added.

Large quantities of embroidered textiles were smuggled out of Peru and illegally exported to museums and private collections all over the world around 1930. About a hundred of them were smuggled to Sweden and ended up at the Gothenburg Ethnographic Museum, which is now the Museum of World Culture. (Andina)

South America News

Venezuelan Dollar Bonds Rally After Chavez Says He’s Fighting Cancer

Venezuelan bonds rallied, pushing yields on its benchmark bonds to a seven-month low, after President Hugo Chavez said he is being treated for cancer in Cuba.

The yield on Venezuela’s dollar bonds due in 2027 fell 31 basis points, or 0.31 percentage point, to 12.74 percent at 4:25 p.m. in New York, according to data compiled by Bloomberg. The price on the bonds rose 1.68 cents to 76.25 cents on the dollar.

Chavez’s announcement sparked speculation he may not seek re-election, opening the door for a new government that may reverse policies that made the country’s debt the riskiest in emerging markets. Chavez, in a videotaped message read yesterday from Havana, said he was recovering favorably after doctors removed a tumor in a second, previously undisclosed operation since arriving in Cuba on June 8. The self-declared 21st century socialist revolutionary gave no date for his return, saying only that his treatment “can’t be rushed.”

“The news lessens the probability that Chavez can stay in power for an indefinite period of time and increases the probability that you get more of a market friendly government in Venezuela,” said Bret Rosen, a Latin America debt strategist with Standard Chartered Bank in New York. “That said, the market may be underestimating what a potential transition could look like.”

Chavez’s nationalizations and currency controls have made Venezuela’s bonds the highest-yielding debt in JPMorgan’s benchmark EMBI+ index. The extra yield investors demand to own Venezuelan bonds instead of U.S. Treasuries shrank 37 basis points today to 1,013, according to JPMorgan.

A Finance Ministry official declined to comment.

‘Complementary Treatments’

Chavez, 56, said he remains in charge of his nation’s affairs from Cuba and is in constant contact with his cabinet, which immediately swore its allegiance to the convalescing leader. Still, with nobody in the government matching Chavez’s clout with the poor, his hold on power may be challenged by the opposition if he doesn’t return home soon, said Luis Vicente Leon, director of Caracas-based pollster Datanalisis.

Venezuelan state television aired a new video today dated June 29 that showed Chavez discussing government policies with his foreign minister, head of the army and older brother. In the 45-minute video, Chavez said he was focused on recovering from the operations.

Chavez, who plans to seek re-election for a third term next year, said in yesterday’s videotaped message that he continues to receive “complementary treatments” to kill the cancerous cells found by his doctors.

‘Weakened’

The prospect of Chavez’s prolonged absence could further embolden the opposition, which was strengthened after winning the majority of votes in congressional elections last September. Support for Chavez fell to near the lowest in eight years in March as a 40 percent devaluation of the bolivar and the fastest inflation among 78 countries tracked by Bloomberg erode the purchasing power of his working-class base.

“Even if Chavez returns to Caracas to resume his presidency, his candidacy has been weakened and with it the likelihood that his economic policies will be sustained,” said Jaime Valdivia, who helps manage $1.4 billion of emerging-market assets at Bluecrest Capital Management in New York. “The news of Chavez’s health is a definite game-changer.”

Venezuela is facing at least 16 investment dispute cases from nationalizations, including a pending decision with Exxon Mobil Corp. that may cost the country as much as $3.7 billion, according to Barclays Plc.

Debt Sales

Chavez, who imposed currency controls in 2003, has ramped up bond sales by the government and state oil company Petroleos de Venezuela to meet demand for U.S. currency. Venezuela, the largest oil producer in South America and a founding member of OPEC, depends on crude for 95 percent of export revenue.

PDVSA, as the state oil company is known, has issued $7.93 billion of debt this year after selling $4.6 billion of bonds in 2010. The government sold $3 billion of new securities last year.

PDVSA said that it re-opened a bond issue due in 2013 yesterday for $1.78 billion in a private placement with the central bank.

Bonds are rallying as the prospect for more nationalizations is reduced as Chavez rules from abroad, said Boris Segura, a Latin America strategist at Nomura Securities International Inc.

“This limbo is probably good for Venezuelan asset prices, Segura said in an interview in Caracas. “There’s a policy paralysis, which given the latest moves by the government, should be welcome in the sense that you shouldn’t expect anymore irrational policies to be enacted during this period.”

Daniel Cancel and Leon Lazaroff - Bloomberg

To contact the reporters on this story: Daniel Cancel in Caracas at dcancel@bloomberg.net;

To contact the editor responsible for this story: Joshua Goodman at jgoodman19@bloomberg.net