Frank Holder 2015 Latin America Security Index Report

2015 Latin America Security Index Report by Frank Holder

 By: Frank Holder

The Latin America Security Index examines how each country in the region is working towards reducing the levels of public insecurity, with particular focus on the business community. This allows us to see the long-term trends in terms of the improvement or worsening of the security situation.


Reference System for colors and numbers:

All rankings are from 1 to 5 with 1 representing a safe country and 5 representing a very dangerous country. A red dot means a trend toward a higher grade, yellow means stable with possible changes, and green means stable without changes.The rankings are based on official figures from the secretariats of public safety, local police, governments, multilateral organizations, nongovernmental organizations (NGOs) and research institutes on crime.

Our categories are based on official federal, provincial and municipal-level figures, concerning areas such as homicides, felonies, organized crime and drug trafficking, cargo and warehouse theft, home invasion, kidnapping, political and labor unrest, riots and violent demonstrations, as well as analyses of the effectiveness of government programs intended to address these problems. Only reliable government reported data has been considered as well as data and studies generated by NGOs and multilateral organizations. We analyze credible regional media, in order to obtain more specific information about certain phenomena, as well as academic research on the subject. Finally, we also utilize information gathered directly through our own work and business contacts in the region.

Regional Overview

In the past year, the region of Latin America suffered substantial political unrest. Countries such as Honduras, Guatemala, and Venezuela continue to undergo the effects of corruption thriving in their political and legal systems, igniting street protests and increased crime rates, facilitating the efforts of drug cartels. Meanwhile, an anticipated, slowing economic growth or outright recession has presented challenges for regional democracies. Most of the region relies on exporting commodities and energy. Populist policies in Venezuela, Argentina, and Bolivia, are discouraging foreign investment and trade. However, exporters like Mexico that are relying less on commodities and more on global markets to buy their manufactured goods have a lot of potential to attract additional foreign investment as these industries become deregulated. With renewed diplomatic ties in Cuba, American financial institutions can now open accounts with Cuban counterparts, easing restrictions on the export of U.S. agricultural and telecommunications products to Cuba. Detailed reports on Cuba will start when reliable information is available.

The state of security across the region has generally declined. Latin American leads the world as the most violent region, surpassing even Africa.  According to a U.N. report, while worldwide the homicide rate has dropped significantly (6.7 per 100,000 people in 2012 as opposed to 8.05 in 2000), the rate for Latin America and the Caribbean increased from 27.1 to 28.5 per 100,000 in those same years; it is now four times higher than the global average.

While a few countries in the region have made headway in improving their security situation, others have seen a spike in the numbers of crime-related violence and homicides. In particular, the pattern of organized criminal activities has led to increased levels of violence due to increased fragmentation, diversification and migration. Some governmental tactics have even exacerbated the problem, eliciting extreme reactions by organized crime. This is compounded by high levels of impunity, in part due to sufficient judicial infrastructure, with few effective measures implemented to rectify the problem.

Country situation

Venezuela Within the past year, Venezuela has been conflicted with the world’s highest inflation, its second highest murder rate, and crippling shortages of food, medicine, and basic consumer goods. The Maduro regime holds about 70 political prisoners, including the mayor of Caracas, opposition leader Leopoldo Lopez, and stands accused by human rights groups of illegal detentions, torture, and repression of independent press sources. This toxic political and economic environment has made protests and political demonstrations become commonplace, with many turning violent. In addition to this extreme unrest, the role of drug cartels within Venezuela’s military such as ‘Cartel of the Suns’ has only increased. In March 2015, the U.S. declared Venezuela a national security threat and ordered sanctions against seven officials, who continue to violate the human rights of Venezuelan citizens and engage in acts of public corruption. The country is still perceived as one of the most corrupt countries in the world by Transparency International, and is the most corrupt country in the region. Venezuela’s homicide and crime rates in general have also skyrocketed, though estimates on these rates differ. The national government reports a homicide rate of 39 per 100,000 people, the World Health Organization estimates 58 (in 2012), and the NGO Venezuelan Violence Observatory pushes that figure up to 82 for 2014.

Guatemala With one of the lowest GDP per capita in the region, Guatemala’s growth continues to face the same challenges as in prior years: lack of high-skilled labor, low quality infrastructure, high crime and corruption. In the past two years, the country has made an effort toward fighting white-collar crime and corruption, with several charges leveled against prominent government officials. The most recent was when Vice President Roxana Baldetti was forced to resign amid mass protests sparked by revelations that her former private secretary was involved in a corruption ring within the SAT tax agency. Another scandal arose regarding the Social Security Institute (IGSS) awarding a $15 million contract for kidney treatments to a company lacking a license to perform such services, leading to the arrests of the heads of the central bank and the IGSS. The country’s constitutional court revived a process that stripped President Otto Perez Molina of his political immunity from prosecution amid these growing corruption scandals. He is accused of masterminding a scheme where businesses bribed officials to clear their imports through customs at a low tax rate. Protestors turned to the streets to demand his resignation, which occurred after Congress lifted his political immunity. He now faces charges of customs fraud, racketeering and bribery and will remain in a military jail until the trial. Additionally, many ministers, vice ministers and commissioners in the Molina administration have resigned or fled the country. Vice President Alejandro Maldonado is acting as the interim leader until a new president takes power in January. However, despite spending nearly 9 percent of its GDP ($7.1 billion each year) on security and violence containment, Guatemala’s homicide rate remains the fourth-highest in Latin America, exceeding that of Colombia and Mexico. Indeed, more money per person is spent on security than many Guatemalans make each year. Like neighboring Honduras, Guatemala sits in between the Colombia-Mexico drug trade route and is home to a number of sophisticated drug trafficking organizations, and was also a major source country for unaccompanied children fleeing to the U.S.

Honduras As in prior years, the country’s growth has been hampered by its widespread poverty, endemic corruption, and worryingly high levels of crime. However, Honduras’ controversial militarization of its police force appears to be having a positive effect on crime in the country. According to the Honduran government, it reduced its homicide rate down from 86 per 100,000 in 2013 to 66 people in 2014. Still, Honduras is one of the world’s most violent countries, and critics are skeptical about the accuracy of the figures announced by the government and the effectiveness of the country’s security strategy, as just in the first 10 days of 2015, 100 murders were reported. Additionally, Honduras was one of the principal source countries for unaccompanied children (UACs) fleeing to the United States in response to conditions of violence and poverty. Several scandals have taken place within government entities: the arrest of the Vice President of Congress, Lena Gutierrez, and fifteen other people accused of defrauding the country’s healthcare system; embezzlement costing the Social Security Institute an estimated $120 million; President Hernandez admitting his 2013 campaign received funds linked to the scandal. This corrupt political environment has ensued large street protests demanding the president’s resignation as well as an independent prosecutorial team similar to a United Nations-backed commission that led corruption probes in Guatemala. As the country remains a strategic point between Colombia and Mexico in the global drug trafficking trade, it continues to face significant challenges in regard to any anti-crime efforts.

Haiti Five years after Haiti’s disastrous earthquake, the island remains in the same stagnation it did prior to the disaster, with little participation in the global economy, heavy reliance on foreign aid, and poor infrastructure which is compounded by a history of unstable and corrupt governments, convoluted bureaucracies, and ineffective policies. With the massive quantity of deportations from the Dominican Republic, Haiti is now dealing with an influx of more than 14,000 people, which President Martelly claims is the limit of how many people the country can welcome without substantial problems. Currently, accurate data on crime and security for the country is difficult to obtain and contradictory; while the country’s National Police indicate that crime has decreased, other figures point to an increase. In the last five years, homicide in the country has doubled, from 5.1 per 100,000 to 10.2 per 100.00.

Mexico The country appears to be making significant strides in improving the economic, political, and social environment within the country. Its economy has experienced significant recovery since the crisis, largely in response to growth in neighboring United States. According to The World Bank, the Mexican economy continues to expand at a moderate annual rate of growth of 2.4 percent. Economic recovery is expected to continue with economic growth projected as strengthening to 3.0 percent in 2017. Furthermore, the Mexican government has passed numerous structural reforms that are expected to facilitate this growth even further. For instance, after falling from the world’s fifth biggest oil producer to tenth, Mexico has opened up its oil industry to foreign investors for the first time in nearly 80 years. These auctions are being held to encourage private investment and boost oil production after crumbling infrastructure, bureaucracy, and corruption have affected its state-owned company Pemex since the industry was nationalized in 1938. Additionally, according to Mexico’s Secretary of Public Security, 2014 saw a 28 percent drop in homicides (compared to 2012) to a relatively low 12.7 per 100,000. However, various organizations contest this figure, particularly in light of the mass kidnapping and presumed deaths of 43 college students late last year, in which the local police were accused of conspiring with a criminal organization. The second escape of cartel kingpin Joaquin “El Chapo” Guzman from a maximum-security prison highlights the continued widespread government corruption in Mexico and the urgent need for reform.

El Salvador The country has seen little improvement in its economic development, and for the eighth year in a row, it had the slowest growth rate in the entire region. The country’s population relies heavily on remittances, which reached nearly $4 billion, or 16% of the nation’s GDP, in 2013. The situation of poverty has worsened, with a resulting tide of illegal immigration into the U.S., including nearly 16,000 unaccompanied children. The country’s security situation is faring even worse. Nearly 4,000 murders were reported in 2014, according to Medicina Legal, the country’s forensic unit, which reflects a homicide rate of 68.6 per 100,000 and a 57 percent increase from the previous year. The elevated homicide rate is considered to have been caused by a failed truce between El Salvador’s two most powerful gangs (which, when it was initiated in 2012, had brought the homicide rate down from 70 per 100,000 in 2011 to around 40 by 2013).

Brazil The country has faced a considerably poor year. Economic growth has disappointed expectations as the recession in Brazil is projected to continue into 2016. Deficits have widened, the value of the real is at the lowest it has been in over 10 years, the country is suffering an epic drought, extreme poverty has increased to over 10.4 million, and the country is facing fall-out from the recent, and ongoing, Petrobras corruption scandal. Additionally, despite the country’s bolstering of its police forces in key areas, as well as the earlier success of its community policing program, crime surged in advance of the 2014 World Cup, with a particular rise in public transit muggings and general robberies - though it is important to note that no significant security breaches occurred during the games. In regard to corporate crime, the government appears to be taking a stance, with the passing of the Brazilian Clean Company Act, which took effect in January 2014. The law holds companies responsible for the corrupt acts of their employees and provides strict civil and administrative penalties.

Colombia The country overtook Peru this year as the region’s fastest growing economy, thanks to, according to finance minister Mauricio Cardenas, several financial reforms implemented over the last few years. Additionally, Colombia’s former reputation as a dangerous and crime-filled country appears to be diminishing in light of a reduction in murder-related deaths. The national homicide rate for 2014 was approximately 26.1 per 100,000 people, the lowest it has been since the 1980s. With some exceptions - such as Bogotá, where robbery, assault, and homicides have actually increased slightly - the general trend is one of declining violence, which may be due to the success of the country’s security policies, or to truces between major criminal groups operating in the country.

Bolivia The country has continued to keep a brisk pace of approximately 5% economic growth since 2006, with the implementation of various new economic policies and reforms. Additionally, various social programs have improved the general state of the country’s population, reducing extreme poverty from 38% of the population to 18%. However, despite these improvements, the country faces a significant security challenge, as it is appears to be the new drug hub for foreign criminal organizations. As neighboring Colombia and Peru pursue aggressive coca and marijuana eradication efforts, cultivation in Bolivia, especially of coca leaf, is expected to increase. Despite the relatively good levels of security in Bolivia, we could expect to see an uptick in the homicide rate in light of increased numbers of organized crime groups and levels of narco-trafficking.

Peru Long having been Latin America’s star performer economically, with an average 6.4% growth over the past 10 years, it has not escaped the regional slowdown, although its 2015 projections still sit higher than many other countries in the region. Additionally, investment in major infrastructure projects are expected to contribute to increased growth rates in the next couple years. However, this has had little effect on improving the country’s security situation. While the country has ramped up coca drug crop eradication efforts, political and judicial corruption stifles any serious headway, particularly in addressing smuggling networks and criminal organizations. Additionally, foreign criminal groups, such as Mexican drug cartels, are expanding into the country. The regrouping of local guerillas groups, particularly in the central Sierra region, has the potential to impact the extractives industry in Peru.

Argentina Corruption, a deteriorating economy and lack of investment has been reflected in greater public insecurity. Though still boasting one of the lowest homicide rates in the region, criminal activity, including violent crime, has increased and is concentrated in urban areas, especially Greater Buenos Aires, Córdoba, Rosario, and Mendoza. Due to the public’s perception of a degrading political system and economy, we can also expect to see a growing number of social protests (kicked off this year with a silent march of 250,000 people in February), particularly as a presidential election looms.

Nicaragua Although Nicaragua’s economy has seen little improvement, it now has the lowest homicide rate in Central America of 8.7 per 100,000, according to figures reported by the UNDP in May of last year. Experts point to efforts by Nicaragua’s police force to seize over 19,000 weapons (between 2008 and 2013) as key in reducing crime and homicide in the country. Nevertheless, Nicaragua continues to have a particular problem with femicides, hate crimes and killing of women, with 65 registered in 2013. While crime rates are lower in Nicaragua in comparison to neighboring countries like Honduras, general crime is persistent.

Paraguay The country has been making strides in improving the state of its economy in recent years and is projected by the IMF to grow 4% in 2015. Despite this, the country still faces widespread corruption - a Transparency International report released in December 2013 named Paraguay as the second most corrupt country in South America behind Venezuela - and it continues to fail in reducing smuggling and terrorist activity in the tri-border area (with Brazil and Argentina). While there was a slight decrease in homicides in 2013, with a rate of 8.8 per 100,000, this number is expected to increase in the near future.

Dominican Republic The country has experienced robust growth in 2014, and is expected to increase to 6.2% in 2015, making it one of the fastest growing economies in Latin America and prompting Fitch to boost the nation’s credit rating to a B+. Additionally, the government has taken a firmer stance against corruption, providing for increased prison sentences for officials found guilty of “illicit enrichment.” The nation has also seen a significant decline in violence, with a homicide rate of approximately 18.1 per 100,000 in 2014; an 8% drop from 2013. In April 2015, protests in several cities across the country ensued after the acquittal of Senator Felix Bautista, who was accused of money laundering and embezzling more than $100 million of public funds through contracts he approved to a foreign development firm. Two months later, the country began enforcing new legislation which deports any foreign-born worker who is not promptly registered in campaign “Operation Shield”, affecting hundreds of thousands of Haitian migrant workers.

Ecuador In recent years the economic and social environment of Ecuador has significantly improved, with an average of 2.5% growth annually and a 30% reduction in poverty (from 36.7 percent of the population to 24.8 percent) over the course of the last 7 years. Likewise, the homicide rate dropped from 18 per 100,000 in 2013 to 8 per 100,000 in 2014, according to the country’s Interior Ministry, which they attribute to increased spending on their police forces and stiffer sentences for hired assassins. However, the OSAC still rates the country as “critical” and indicates low rates of apprehension and criminal conviction, sparse police coverage outside major urban areas, and extortion of businesses, particularly in the northern border region, as key concerns. Drug trafficking is indicated as major contributor to an increase in crime in the country.

Panama Another economic star in the Latin American region, Panama’s growth rate in 2013 was 8.5%, a decline compared to its double-digit rates in prior years, but still among the highest in the region. Panama’s homicide rate has also continued its downward trend since 2009, from 23 per 100,000 to 15 per 100,000, according to the Ministry of Public Security. This is attributed to an increase in spending by the government on violence and crime containment. Nevertheless, the murder rate remains more than double that of 2004, with the vast majority linked to drug trafficking organizations or gangs. Interestingly, despite this decrease, the number of street gangs in the country continues to rise, though they do not appear to be as violent or sophisticated as street gangs found in other countries in the region.

Uruguay In the midst of a region-wide slowdown, Uruguay has continued to maintain relatively healthy growth, with an estimated growth rate of 3.4% (though a significant decline from the 4.4% recorded for 2013), a 9% increase in foreign direct investment (when the rest of the region decreased approximately 20%), and a World Bank ranking of 9th out of the 32 countries in the region for “ease of doing business”. Transparency International also listed Uruguay as the least corrupt country in Latin America in their 2014 Corruption Perceptions Index. The biggest headline for the country in the last year has been its legalization of marijuana by the government in December 2013, in an effort to spoil the black market and more adequately address drug abuse. Over the course of 2014, the Mujica administration created regulations for the new market, as well as a regulatory agency, enabling the government to have end-to-end regulatory power over the market, from licensing to production and pricing. Additionally, Uruguay remains one of the safest countries in the region, with a homicide rate of 7.5 per 100,000 (with little change from the prior year).

Chile Although Chile road out the global crisis with an average growth rate of approximately 5%, it has since stalled and recent scandals involving illegal share trading and illegal campaign financing has tarnished the country’s image as one of the least corrupt nations and most transparent business climates in the region. Nevertheless, general public security in the country is relatively safe. Although credit card fraud has seen an increase, violent crimes and kidnappings are not particularly common. Additionally, the national police are considered to be one of the least corrupt, most professional and well-trained in the region.

Costa Rica The country continues to be one of the most economically stable countries in the region, with approximately 3.7% growth in 2014 and between 3.5% and 4.% growth projected for 2015. However, the country is experiencing a slight increase in violence - the homicide rate increased from 8.6 per 100,000 in 2013 to 9.5 per 100,000 in 2014 - as well as an increase in organized crime activity, particularly related to drug cartels. In response, the government has put into motion a renewed commitment to fighting corruption, crime and drug trafficking. For example, in May, the Supreme Court established a special Investigatory Commission on the Penetration of Organized Crime and Drug Trafficking, and in November the nation’s Judiciary Court announced its approval of plans for a new court exclusively for investigating and prosecuting organized crime and drug trafficking cases, which will be presented to the legislature for approval. 

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