Archive for February, 2016

“It is sometimes more expensive to stop production than to keep pumping”

03/02/2016

An interesting piece  in the Economist notes that falling oil prices have not reduced oil production or assisted global growth.

It begins “Oil traders are paying unusual attention to Kharg, a small island 25km (16 miles) off the coast of Iran. On its lee side, identifiable to orbiting satellites by the transponders on their decks, are half a dozen or so huge oil tankers that have been anchored there for months. Farther down Iran’s Persian Gulf coast is another flotilla of similarly vast vessels. They contain up to 50m barrels of Iranian crude—just what a world awash with oil could do without. The lifting of nuclear-related sanctions against Iran on January 16th puts those barrels at the forefront of the country’s quest to recapture a share of international oil markets that it has been shut out of for much of the past decade. The prospect of Iran swiftly dispatching its supertankers to European and Asian refineries to undercut supplies from Saudi Arabia, Iraq and Russia helped push the world’s main benchmarks, Brent and West Texas Intermediate (WTI), to their lowest levels since 2003 on January 20th; WTI tumbled by 6.7% to under $27 a barrel, its biggest one-day fall since September”.

The author goes on to write “The slide marks the latest act in a dramatic reversal of fortunes for the oil industry that is, in turn, roiling the global economy. Less than a decade ago the world scrambled for oil, largely to fuel China’s commodity-hungry growth spurt, pushing prices to over $140 a barrel in 2008. State-owned oil giants such as Saudi Aramco had access to the cheapest reserves, forcing private oil firms to search farther afield—in the Arctic, Brazil’s pre-salt fields and deep waters off Angola—for resources deemed ever scarcer. Investors, concerned that the oil majors could run out of growth opportunities, encouraged the search for pricey oil, rewarding potential future growth in production as much as profitability. Now the fear for producers is of an excess of oil, rather than a shortage. The addition to global supply over the past five years of 4.2m barrels a day (b/d) from America’s shale producers, although only 5% of global production, has had an outsized impact on the market by raising the prospects of recovering vast amounts of resources formerly considered too hard to extract. On January 19th the International Energy Agency (IEA), a prominent energy forecaster, issued a stark warning: “The oil market could drown in oversupply.”

The piece goes on to mention “Last year the world produced 96.3m b/d of oil, of which it consumed only 94.5m b/d. So each day about 1.8m barrels went into storage tanks—which are filling up fast. Though new storage is being built, too much oil would cause the tanks to overflow. The only place to put the spare barrels would be in tankers out to sea, like the Iranian oil sitting off Kharg, waiting for demand to recover. For oil producers that is an alarming prospect, yet for the most part warnings such as those of the IEA have gone unheeded”.

Crucially the piece notes that “This poses two puzzles. When, in November 2014, Saudi Arabia forced OPEC to keep the taps open despite plummeting prices, it hoped quickly to drive higher-cost producers in America and elsewhere out of business. Analysts expected a snappy rebound in prices. Though oil firms have since collectively suspended investment in $380 billion of new projects, as yet there is no sign of a bottom. Projections for a meaningful recovery in the oil price have been pushed back until at least 2017″.

Interestingly the article mentions that “The economic impact of the oversupply is another enigma. Cheaper fuel should stimulate global economic growth. Industries that use oil as an input are more profitable. The benefits to consuming nations typically outweigh the costs to producing ones. But so far in 2016 a 28% lurch downwards in oil prices has coincided with turmoil in global stockmarkets. It is as if the markets are challenging long-held assumptions about the economic benefits of low energy prices, or asserting that global economic growth is so anaemic that an oil glut will do little to help”.

The author adds that “Iran is the most immediate cause of the bearishness. It promises an immediate boost to production of 500,000 b/d, just when other members of OPEC such as Saudi Arabia and Iraq are pumping at record levels. Even if its target is over-optimistic, seething rivalry between the rulers in Tehran and Riyadh make it hard to imagine that the three producers could agree to the sort of production discipline that OPEC has used to attempt to rescue prices in the past. Even if OPEC tried to reassert its influence, the producers’ cartel would probably fail because the oil industry has changed in several ways. Shale-oil producers, using technology that is both cheaper and quicker to deploy than conventional oil rigs, have made the industry more entrepreneurial. Big depreciations against the dollar have helped beleaguered economies such as Russia, Brazil and Venezuela to maintain output, by increasing local-currency revenues relative to costs. And growing fears about action on climate change, coupled with the emergence of alternative-energy technologies, suggests to some producers that it is best to pump as hard as they can, while they can”.

The writer argues that there have been periods before when lower prices to drive out competitors have been tried before but he notes “there is also a reason for keeping the pumps working that is not as suicidal as it sounds. One of the remarkable features of last year’s oil market was the resilience of American shale producers in the face of falling prices. Since mid-2015 shale firms have cut more than 400,000 b/d from output in response to lower prices. Nevertheless, America still increased oil production more than any other country in the year as a whole, producing an additional 900,000 b/d, according to the IEA. During the year the number of drilling rigs used in America fell by over 60%. Normally that would be considered a strong indicator of lower output. Yet it is one thing to drill wells, another to conduct the hydraulic fracturing (“fracking”) that gets the shale oil flowing out. Rystad Energy, a Norwegian consultancy, noted late last year that the “frack-count”, ie, the number of wells fracked, was still rising, explaining the resilience of oil production”.

The author notes that it is not just shale producers that have tried to stay in business, “Those extracting in more expensive places, such as Canada’s oil sands and Brazilian pre-salt, have too. Canada, whose low-quality benchmark oil, West Canada Select, is trading below $15 a barrel, giving it the ignominious title of the world’s lowest-value crude, is one of the non-OPEC countries expected to add most to global supply this year. So is Brazil, despite debt and corruption at its state oil company, Petrobras”.

Interestingly he mentions that “the oil majors have said they will slash tens of thousands of jobs and billions of dollars in investment, but they too are reluctant to abandon projects that may add to future production. Shell, an Anglo-Dutch company, took the rare decision to abandon exploration in the Arctic and a heavy-oil project in Canada but its current output of 2.9m b/d in 2015 was only just shy of the previous year’s 3.1m b/d. In the industry at large, the incentive is to keep producing “as flat out as you can”, once investment costs have been sunk into the ground, says Simon Henry, Shell’s chief financial officer. He says it is sometimes more expensive to stop production than to keep pumping at low prices, because of the high cost of mothballing wells”.

Pointedly he goes on to argue that “In theory a long period of low oil prices should benefit the global economy. The world is both a producer and a consumer: what producers lose and consumers gain from a drop in prices sums to zero. Conventionally, extra spending by oil importers exceeds cuts in spending by exporters, boosting global aggregate demand. The economies that have enjoyed the strongest GDP growth in the past year have indeed been oil importers: India, Pakistan and countries in east Africa. It is hard to explain the consumer-led recovery in the euro area without assuming a positive impact from lower oil prices. In the IMF’s latest forecast, published on January 19th, the handful of big economies that were spared downgrades to GDP growth—China, India, Germany, Britain, Spain and Italy—were all net oil importers”.

Yet even this logic is being questioned, “There are doubts that this holds true everywhere. America is both a large producer and consumer of oil. At the start of 2015, JPMorgan, a bank, reckoned that cheap oil would boost GDP by around 0.7%—a boost to consumers’ purchasing power equivalent to 1% of GDP, offset by a smaller drag from weaker oil-industry investment. It now reckons the outcome was between a contraction of 0.3% and a boost of a measly 0.1%. Consumers may have saved more of the windfall than had seemed likely and the share of oil-related capital spending in total business investment in America, which had steadily risen for years, has fallen by half. Add in the indirect effects of the downturn in the oil industry and the net impact of cheap oil may even have been a bigger decline than JPMorgan’s most pessimistic estimate”.

Naturally the oil crash has had serious consequences for states like Russia and Nigeria but “Since the start of the year, the supply shock from Iran has also been accompanied by fears of a demand one from China. The bungled handling of China’s stockmarket and currency has raised fears about the economy, which has spilled over into the oil market. As global financial markets have descended into turmoil, there are mounting worries about the resilience of the global economy, too. That, in turn, raises anxiety about future oil demand. Macroeconomic concerns are paramount, but there are also microeconomic ones. Lower fuel subsidies in some oil-producing countries, aimed at plugging budget deficits, are encouraging car owners to drive less miles. China has said that it will not allow petrol prices to fall in line with oil below $40 a barrel, which will have the same effect. Even in the United States, the link between cheap petrol and gas-guzzling is less strong than it was. Part of the reason, analysts say, is that vehicles are more fuel-efficient”.

The piece concludes “After the Paris summit on climate change in December some pundits reckon that the latest oil crisis reflects a structural change in oil consumption because of environmental concerns—what some call “peak demand”. It is true that as climate consciousness grows, oil companies are developing more gas than oil, hoping to deploy it as an energy substitute for coal. But it may be too early to assume that the era of the petrol engine is coming to an end. More likely, the oil price will eventually find a bottom and, if this cycle is like previous ones, shoot sharply higher because of the level of underinvestment in reserves and natural depletion of existing wells. Yet the consequences will be different. Antoine Halff of Columbia University’s Centre on Global Energy Policy told American senators on January 19th that the shale-oil industry, with its unique cost structure and short business cycle, may undermine longer-term investment in high-cost traditional oilfields. The shalemen, rather than the Saudis, could well become the world’s swing producers, adding to volatility, perhaps, but within a relatively narrow range”.

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Qatari reshuffle

03/02/2016

Qatar’s emir issued a decree on Wednesday replacing the foreign minister and merging some portfolios, state news agency QNA reported, in what was seen as a move to consolidate his power and cut costs after the sharp drop in oil prices. Qatar, the world’s biggest liquefied natural gas exporter, is one of the Gulf’s richest countries, although the value of its energy exports almost halved last year. The new foreign minister was named as Sheikh Mohammed bin Abdulrahman al-Thani. The ministers of energy and finance were unchanged. Khalid al-Attiyah, the outgoing foreign minister, will become state minister for defense affairs”.

“Berlin’s new attention to the Bundeswehr”

03/02/2016

An article in Foreign Affairs discusses how the German army, the Bundeswehr, has backed away from “the brink”.

It opens “NATO’s purpose, Hastings Ismay, its first secretary-general, once said, is “to keep the Russians out, the Americans in, and the Germans down.” In terms of the latter, the military alliance has succeeded spectacularly well. Throughout the Cold War, the German Bundeswehr loyally played sidekick to Berlin’s more powerful allies, the United Kingdom and the United States. And since the Cold War ended, Germany has consistently cut its defence budget, leaving the Bundeswehr so poorly equipped that it has become a laughing stock among its allies and ill-prepared to counter territorial threats and participate in foreign missions”.

The author goes on to write “Over the past year, that picture has brightened. “We’re seeing a major change,” said Michael Essig, a professor of military purchasing and supply-chain management at the University of the Bundeswehr in Munich. “2015 was the first time since the end of the Cold War that the constant cuts were stopped.” In fact, last year, spending on the Bundeswehr’s equipment increased by 8.4 percent, to 9.5 billion euros (around $10.4 billion), according to the Stockholm International Peace Research Institute (SIPRI); in 2016, SIPRI predicts a further 6.4 percent rise in equipment spending. According to the German Defense Ministry, maintenance spending will increase by 3.3 percent this year, to 2.9 billion euros (about $3.2 billion), and the Bundeswehr’s overall budget will grow by 4.2 percent, to 34.3 billion euros (about $37.4 billion). Given Germany’s low inflation, the increases are notable”.

The piece adds thankfully that, “They also present a radical departure from two and a half decades of cuts that saw the Bundeswehr’s budget shrink almost every year—from 3.2 percent of German GDP in 1983 to 1.2 percent in 2014. “It’s also a significant change because other long-time members of NATO, including the United States, are cutting their defense equipment spending,” Sam Perlo-Freeman, head of SIPRI’s Project on Military Expenditure, told me. “Britain, for example, has large arms expenditures only because of its very expensive nuclear program. With those expenses taken away, its equipment spending is decreasing.” In Germany, however, spending less on weaponry and maintenance is not a politically viable option. That is both because the Bundeswehr has already been embarrassed by its malfunctioning equipment and because the United States has been urging its European NATO allies to spend more on defense, in part to counter Russia, which has itself dramatically expanded military spending over the past few years”.

The article goes on to point out that “Since the end of the Cold War, NATO members’ defense expenditures, which include arms as well as personnel and facilities, have dropped dramatically. In the United States, for example, defense spending has fallen from around six percent of GDP in the 1980s to 3.5 percent in 2014, and in France, it has fallen from almost four percent of GDP in the 1980s to 2.2 percent in 2014. But none of NATO’s larger members have cut their defense spending since the Cold War more than Germany, whose spending measured as a percentage of GDP is well below NATO’s target of two percent—a deficiency that is especially striking given Germany’s position as the alliance’s second-largest economy”.

The scale of the problem has become clear when the piece notes “The defence cuts have left the Bundeswehr so poorly equipped that even Germany’s former adversaries, once worried about Berlin’s own aggression, are alarmed at the country’s potential inability to help protect them from potential Russian advances. “For centuries, our main worry in Poland was a very strong German army,” explained Janusz Onyszkiewicz, who as defence minister in two Polish governments during the 1990s oversaw the purchase of some of the Bundeswehr’s equipment. “Today, we’re seriously worried about German armed forces that are too weak. The permanent underfunding of the defense sector could create the impression that Germany is not taking its commitments to NATO’s common territorial defence very seriously.” (Poland, no stranger to aggression on the part of its larger neighbours, was one of the first post-Warsaw Pact members to join NATO and has consistently spent around two percent of GDP on defence; last year, its defence budget increased by 20 percent, the world’s third-highest rate after Ukraine and Iran, according to IHS Janes.) A NATO exercise in September 2014 made painfully clear the state of the Bundeswehr’s armour. Missing the pipe for the ammunition compartment in one of their GTK Boxer armored fighting vehicles, German soldiers participating in the Noble Ledger exercise simulated one with a broomstick they had painted black. More alarmingly, a report by one of the Bundeswehr’s inspectors leaked to a German television station last February noted that “100 percent” of the GTX Boxers that were going to be used by Germany’s contingent in NATO’s Response Force were missing ammunition”.

The article adds “The German military doesn’t just lack equipment: over recent years, maintenance has been so neglected that much of Germany’s existing stock has been unusable. Testifying to the Bundestag’s defence committee in September 2014, the Bundeswehr’s three top inspectors reported that only 42 of the force’s 109 Eurofighter aircraft were in deployable condition, as were only ten of its 31 Tiger attack helicopters. Of its 33 NH90 battle helicopters, eight were in usable condition, as were three of its 21 Sea King helicopters, four of its 22 Sea Lynx helicopters, and 16 of its 83 CH-53 Sea Stallion transport helicopters”.

Interestingly the writer makes the point that “Berlin has tried both to support German and EU defence companies and to save money on  arms purchases—goals that have often been incompatible. In addition to commissioning the KMPG report, which was delivered in October 2014 and identified some 140 problem areas in the Bundeswehr’s structure, the Ministry of Defence replaced the Bundeswehr’s two separate armaments agency—one responsible for acquisitions, the other for maintenance—with an integrated agency that will be better able to consider future maintenance costs when making equipment purchases”.

The article concludes “the ministry will act on 117 measures to improve the state of the Bundeswehr’s equipment, with a particular focus on airborne systems, by, for example, hiring private firms to perform equipment maintenance and making the transfer of equipment between units easier. “In November 2015, the situation was still unsatisfactory, but we have managed to stabilize the development in our equipment readiness, and in crucial areas we have managed to reverse the [negative] trend,” the spokesperson explained. Such changes, of course, will not make Germany a strong military power or even one able to defend its own territory without NATO’s assistance. But Berlin’s new attention to the Bundeswehr will, no doubt, send a signal to the country’s allies and antagonists that Germany is committed to its own defence—and that it takes the responsibilities of NATO membership seriously”.

 

Clinton and Cruz

03/02/2016

Senator Ted Cruz has won the Iowa Republican caucuses, in the first vote of the US presidential campaign. “Tonight is a victory for courageous conservatives,” he declared, to great applause, as he railed against Washington, lobbyists and the media. He took 28% of the Republican vote, beating his rival, the frontrunner Donald Trump, and Marco Rubio. Votes in the Democratic race are still being counted, with Hillary Clinton’s camp saying they have narrowly won.

Sisi’s Egypt, five years on

03/02/2016

A piece notes the problems for President Sisi in Egypt with the 25 January marking the fifth anniversary of the Egyptian protests, “that sparked Egypt’s Arab Spring uprising, and the Egyptian government is on edge. Fearing that activists will use the occasion to launch a new round of mass protests, the regime has intensified its crackdown on oppositionists in recent weeks, arresting members of prominent revolutionary organizations, anti-government Facebook page administrators, and critical journalists. The regime has also taken its fight to the mosques, with the minister of Islamic endowments decreeing that protesting on Jan. 25 “contravenes sharia law, as it drags Egyptians into violence.” President Abdel Fattah al-Sisi provided perhaps the direst warning about the potential dangers of new civil unrest. In a speech in December, heaccused those “calling for a new revolution” of trying to “ruin this country and destroy the people.” Sisi is right to be worried — but not necessarily about the prospect of renewed protests. While his popularity has declined in recent months due to Egypt’s sputtering economy, another mass uprising appears unlikely. Instead, Sisi’s vulnerability comes from an entirely different source — from within his own regime, where new tensions have emerged in recent months”.

The writer notes that “Sisi’s anxiety about another mass uprising isn’t surprising. It reflects his intimate knowledge of recent Egyptian cataclysms and his perhaps inevitable fear that history could repeat itself. After all, he was Egypt’s director of military intelligence when the Supreme Council of the Armed Forces responded to the January 2011 uprising by toppling then-President Hosni Mubarak, and he was Egypt’s defense minister when the military once again responded to mass protests in June 2013 by ousting the country’s first elected president, Muslim Brotherhood leader Mohamed Morsi. That latter decision made him public enemy No. 1 for the Brotherhood, which vowed to avenge Morsi’s overthrow. But it also made Sisi a national hero to many millions of Egyptians who feared that the Brotherhood was governing Egypt into the ground, and it carried him to victory in the barely contested May 2014 presidential election”.

The piece mentions that “With economic growth slowing, currency reserves falling, inflation rising, and youth unemployment still soaring, Egyptians are feeling the pinch — and complaining about it more audibly that at any point in the past two years. For the time being, however, there appears to be little popular enthusiasm for another uprising. The experience of the past five years has made many, and perhaps most, Egyptians politically risk-averse, and the absence of any clear alternative to Sisi makes them fear that another uprising could spark significant instability. The severe chaos that has overtaken other Arab Spring countries adds to their sense of caution. Egyptians commonly point to state collapse in Syria, Libya, Yemen, and Iraq and embrace their unhappy status quo by comparison. But new tensions within Sisi’s regime could spell instability down the road. Although analysts frequently speak of the country’s “deep state” as if it is a unified and omnipotent entity, it is in fact a loose coalition of power centers that includes state bodies such as the military, intelligence, police, and judiciary — as well as nonstate entities such as the powerful clans of the Nile Delta, tribes of Upper Egypt, private media outlets, and the business community. And while these power centers often have competing interests (for example, the Interior Ministry and the military were rivals during Mubarak’s latter years), they unified behind Sisi following Morsi’s ouster forone overarching reason: They viewed the Muslim Brotherhood as a threat to their respective interests”.

Yet this compact seems to be breaking up, “In recent months, however, this fear of the Brotherhood’s return has diminished. With tens of thousands of Muslim Brothers in prison, its exiled leadership increasingly divided, and fewer Muslim Brothers within Egypt willing to risk getting killed at demonstrations, the organization no longer exists as a coherent entity on the ground. “We don’t hear much about them now,” a military general told me in November. “They create some problems … but they see no result from what they are doing.” Without the threat of the Brotherhood to unify the Sisi regime’s core power centers, latent tensions are now coming to the fore”.

The author notes the problems of Sisi with the business community and the dramatic arrest of a tycoon, “The problem, multiple Egyptian businessmen told me, wasn’t the fact that Diab was arrested — “we support upholding the law,” one told me — but the manner in which he was arrested. At 5 in the morning, an armed counterterrorism team stormed into Diab’s bedroom where he was sleeping with his wife, handcuffed him and his son, and then leaked the photographs to the press”.

The article adds that “There are also signs of tension between Sisi and the security services. While the security services’ activities are opaque, they exert significant influence over the country’s private media networks and are likely permitting, if not encouraging, the sudden upsurge in criticism that Sisi has faced in recent months”.

He gives the example of how “The tensions among the security agencies are even more apparent on Egyptian satellite networks, where specific security agencies are suddenly being criticized quite openly. In late December, TV host Tawfiq Okasha, who has long promoted pro-regime conspiracy theories, claimed during a live television interview with TV host Youssef el-Husseiny that Egypt’s General Intelligence Service and the NSS had turned against him after previously offering support”.

The writer ends noting that “Perhaps most significantly, foreign officials have reported strains between Sisi and the military. While the military might seem like the president’s natural base of support, officials attribute the tension to Sisi’s notoriously narrow political circle, which breeds mistrust and perhaps jealousy among other high-ranking officials. Egypt’s rising economic and security challenges have only amplified the military’s concerns. “[Generals] say that Sisi is isolated and surrounded by guys who don’t have answers,” one official told me. “They are starting to ask questions. ‘Why is Alexandriaflooding? Why are Mexican tourists getting killed? This is embarrassing.’” There are also hints of friction within the top brass, with high-ranking generals showing a lack of deference to their superiors during meetings with foreign officials. It is difficult to assess the depth or urgency of these intra-regime rifts. The Sisi regime’s inner workings are barely visible to outside observers, and even members of the core power centers find the current situation confusing. “There is definitely a power struggle,” one well-connected businessman told me”.

“India has signed a deal with France to purchase 36 Rafale fighter jets”

01/02/2016

India has signed a deal with France to purchase 36 Rafale fighter jets, Indian Prime Minister Narendra Modi has said. The announcement followed talks between Mr Modi and French President Francois Hollande in Delhi. Mr Modi said the two countries would work to sort out financial issues over the defence deal, one of the world’s largest. Mr Hollande is in India for three days, and will be chief guest at Tuesday’s Republic Day celebrations. “We have completed an inter-governmental agreement for the purchase of 36 Rafales, with the exception of the financial aspects,” Mr Modi said after meeting Mr Hollande. India is looking to modernise its ageing Soviet-era military and the deal is the fruition of years of negotiation, with India intent on buying 126 jets in total for an estimated cost of $12bn (£8.2bn). Mr Modi announced the purchase of 36 Rafale jets from France last April”.

How Latin America accepted gays

01/02/2016

An interesting article discusses how homosexuality become normal in Latin America, “From the early 1970s through the late 1980s, no place in the world was more unfriendly, dangerous, and potentially lethal for gay, lesbian, bisexual, and transgender (LGBT) people than Latin America”.

This is of course a sweeping statement. Swathes of Asia were, and still are openly hostile to gay people to say nothing of Africa and the Middle East.

He goes on that those in Latin America, “Viewing homosexuality as the ultimate sign of bourgeois decadence, Communist Cuba imprisoned and tortured gays by the truckloads, a horror captured in novelist Reynaldo Arenas’ gripping memoir, Before Night Falls. Argentina’s right-wing military regime targeted gays through the so-called Proceso Nacional, a dirty war waged between 1976 and 1983 to rid the country of political dissidents and so-called social undesirables. By the late 1980s, the scale of deadly violence against homosexuals in Brazil was so vast that it prompted gay rights activists to declare a “homocaust” and instigated a 1995 Amnesty International report, Breaking the Silence, about worldwide violence against LGBT people. This marked the first time that a major human rights organization had shined a spotlight on gay issues”.

He writes that “Today, however, Latin America stands, alongside Western Europe and the United States, among the most progressive regions on LGBT rights. All Latin American nations have decriminalized homosexuality, with Panama being the last country to abolish an anti-sodomy law, in 2008; and all of them have laws in the books protecting gays and lesbians against discrimination. Same-sex marriage is legal in Argentina, Brazil, Uruguay, and in several Mexican states and the Federal District of Mexico City. Bolivia, Chile, Colombia, and Ecuador allow same-sex civil unions that offer same-sex couples all the benefits of marriage save for the name”.

The writer notes that asks how attitudes changed in Latin America, “External influence has certainly played a big role in Latin America’s “gay rights revolution.” For starters, for several decades now, the region has been engulfed in a tidal wave of “global queering,” a term that refers to the worldwide spread of homosexual identities and cultural practices launched by the gay liberation movement born with the 1969 Stonewall Riots. Widely known as the launch pad for the contemporary gay rights movement, Stonewall inspired a generation of Latin American gay activists to import the gospel of gay liberation to the region. They were led by the Frente de Liberación Homosexual (FLH), Latin America’s first viable gay rights organization. Founded in Buenos Aires in 1971, the FLH promoted sexual nonconformity, pride in being gay, and repeal of the infamous edictos policiales, federal ordinances that made homosexuality a crime in practice although not in law. (Argentina, like most of Latin America, decriminalized homosexuality in the nineteenth century, influenced by France’s Napoleonic Civil Code). Although the FLH was viciously crushed by the military in 1976, after the return of democracy to Argentina in 1983, its legacy inspired a new generation of gay activists to pick up the cause”.

He adds that “Pressure and shaming from international human rights organizations has also facilitated gay rights by aiding in the “socialization” of Latin American governments into human rights norms and practices. During the 1980s, gay activists at the Inter-American Gay and Lesbian Human Rights Commission created a splash by pushing the United States and Canada into granting political asylum to a number of Latin Americans who claimed that their lives were endangered by the fact that they were homosexual. The most famous of these cases was that of Marcelo Tenorio, a gay male from Brazil, the first person to be granted asylum in the United States on the grounds of his sexual orientation. Tenorio told U.S. immigration officials that he fled Brazil in 1990 after he was stabbed outside of a gay bar in Rio de Janeiro in 1989 and that he feared for his life if forced to go home. In coming to his rescue, activists were aiming as much to save gay lives as to embarrass the Brazilian government for its horrid treatment of gays and lesbians. International pressure has also encouraged Latin American nations to enact policies and legislation specifically intended to advance gay civil rights. In 1991, after denying legal recognition to the Comunidad Homosexual Argentina (CHA), Argentine President Carlos Menem was treated to a shaming campaign while traveling in the United States. It was waged by ACT-UP Americas, an offshoot of the AIDS Coalition to Unleash Power (ACT-UP), the New York-based organization famous for its attention-grabbing activism. Menem was accosted virtually everywhere he went, including at the Argentine consulate in New York”.

He then mentions that “the timely intervention by several individual foreign nations, most notably Spain. After 2005, when Spain became the first Roman Catholic nation to legalize same-sex marriage, the Socialist administration of José Luís Rodríguez Zapatero made LGBT rights a priority in its diplomatic relations with Latin America. This intervention, ably aided by a host of Spanish NGOs, such as Fundación Triángulo and the Federación Estatal LGBT, is credited with spurring gay rights policies throughout Latin America, especially same-sex civil unions and same-sex marriage. No other Latin American country was more impacted by this “diffusion” effect than Argentina, a country that is predominantly populated by people of European descent, has high levels of social and economic development, and possesses Latin America’s richest history of organized activism around the issue of homosexuality”.

He then argues that since the “homegrown” factors also helped such as the rise of democracy on the continent and “the growing secularisation of the public, as can be seen in the rise of so-called lapsed Catholics, also known as “cultural Catholics.” These are self-professed Catholics who do not see themselves as beholden to the Church’s teachings. In countries such as Argentina, Chile, and Uruguay, about two-thirds of all Catholics fall into this category. These religious trends, which have undoubtedly have been accelerated by the Church’s loss of moral authority ensuing from its support of bloodthirsty dictatorships and sex abuse scandals, have made the public more accepting of homosexuality and more supportive of gay rights”.

He ends “Latin America’s gay rights successes cannot be fully understood without accounting for the smart advocacy by gay rights activists. What Latin American gay activists have lacked in the way of organizational resources relative to their counterparts in the United States and Western Europe—such as large membership bases and political connections—they have more than compensated for by crafting some of savviest gay rights campaigns around. Most notably, whereas gay activists in the United States have waged a “civil rights struggle” to advance gay rights, including same-sex marriage, in much of Latin America gay activists have waged a “human rights crusade.” The former seeks to legitimize gay rights through national law while the latter finds the legitimacy of gay rights in the universality of human rights. The framing of the struggle for gay rights as a human rights crusade was most expertly realized in Argentina. After the transition to democracy, in 1983, Argentine gay activists folded their aspiration for ending antigay discriminatory policies and for extending civil rights protections into the large and influential Argentine human rights community born from the political excesses of the Dirty War. To drive home the point that gay rights are human rights, activists adopted the slogan “the freedom of sexuality is a basic human right.” That slogan foreshadowed the popular idea that “gay rights are human rights” in European and American gay politics”.