El Sur

South American Politics and Government

Wednesday, July 31, 2002
Political analysis:
Miami Herald writer Jimmy Langman concludes that the big issue in Bolivia's recently concluded presidential popular voting was so-called neo-liberal economics.
Evo Morales, the Aymara Indian and coca growers' leader who has shocked the political establishment with his close second-place finish in the presidential election, made popular anger and frustration with ''el modelo'' -- not the legalization of more coca growing -- his main theme on the campaign trail.

But Morales was not alone. Almost all of the 11 presidential candidates in the June 30 national election here called for changing the nation's neo-liberal economic model.
Even the leader and likely next president (there having been a deal in the legislature, where the run-off will be held, no candidate having received more than 50 per cent of the popular vote), Gonzalo Sánchez de Lozada, is promising change. The problem:
Kevin Healy, a development sociologist at George Washington University, said the biggest problem with the neo-liberal model is that it is failing to create good jobs.

"Neo-liberalism's greatest claim is higher investment and job creation," said Healy. "But instead it's creating growth in the informal sector in Bolivia and elsewhere in Latin America. And those aren't really the kind of jobs people are seeking."
There is a real issue here, and a false one. The real issue is the failure of privatization, as it was practiced in Latin America, which must be conceded. It isn't that privitization is bad idea. Rather, the problem is what was available to privitize and the conditions under which it was privitized. About Bolivia's privitizations, Langman says:
Many Bolivians have railed against privatizations, complaining of high prices and inferior service.
Similar complaints can be found about privitizations all over Latin America, recently and violently in Peru (where there have been riots against further privitization) and in the aftermath of Argentina's economic collapse (where foreign banks in particular have been scapegoats). Not apparent yet, but likely to be established by in time by the Argentina case, is that European and North American companies are equally disenchanted with the businesses they purchased because, not only aren't they being allowed to make money, but they are expected to keep subsidizing services in the guise of "investment," that being the expectation created under government ownership. A good deal of the problem is that what was privitized were existing public services--electric, fuel and phone companies--and mineral producers, both of which are problematic, though for different reasons.

The public public service providers foreign companies bought had for years been run by governments at a loss to subsidize customers and provide cozy berths for relatives, friends and supporters. The first things foreign buyers of these companies needed to do and tried to do was to eliminate deadwood from workforce and raise prices to economically necessary levels. The improvement that was expected to offset the unpopularity of these measures improved service--phone installation in a matter of days not years. Unfortunately, while important, service improvements were important enough, in great part because business and the relatively affluent realized the benefits of improved service, while the the general public only paid higher rates and unionized employees worried about losing their jobs.

Resource extraction industries are always a political problem for owners and politicians alike. This is true even in in the arch-capitalist U.S., as the histories of mining regions from West Virginia to Idaho, among many others, will show. Where hand work is required, there are many dirty, dangerous jobs; where the work is mechanized, there are rew employed. Nowhere is resource extraction associated with off-site development. Even Saudi Arabia and Kuwait--where a relatively unintrusive extraction industry produces vast sums to lavish on small populations--face the problems unearned prosperity. Meanwhile, the neighbors of resource extraction industries worry about resource depletion or environmental degradation or both

Even populist politicians in Latin America say don't want to re-nationalize privitized companies. And why would they? The real issue is going to be how populist governments, or governments under populist pressure, like that of Gonzalo Sánchez de Lozada, are going to keep foreign owners and other private investors interested in the fact of public demand for subsidized services and a a bigger share of mineral revenues keep foreign owners interested. Already in Argentina, where the banking business has been wrecked by a forced conversion of assets from dollars to pesos and a seemingly interminable account freeze, nearly all foreign banks have refused to reliquify their Argentine subsidiaries and some have announced their intention to pull out altogether.

The false issue is neo-liberalism, the name for capitalism in Latin America and Europe. Privitization is not neo-liberalsim, though the effort is being made by capitalism's opponents to make that identification. As practiced by Latin American governments during the 80s and 90s, privitization was involved the sale of the title to previously nationalized property (for hard currency) without giving up effective control.

This worked for a while, during good times, when issues surrounding the interent contradiction between ownership sold and control retained ownership could be fudged. Now, bad times have called the question.

It is tempting for politicians to play to the local public with populist and nativist appeals to screw the rich foreigners. Some of them actually believe what they're saying. In the long run it doesn't work, however, even if the long run is as short as a single term as president. In fact, it is their habit of making populist appeals that explains why so many South American presidents enter office wildly popular and leave, at or before the end of their term, in disgrace. This seems to be the trajectory Venezuelan President Hugo Chávez is following.

The solution to Latin America's economic problems is not the privitization of existing industries, especially public service industries, which, even in the U.S. are highly regulated. The soloution is for government to foster an environment in which existing private companies can grow and new ones can be founded--to create the conditions for a home-grown capitalism. The necessary conditions include such things as developing a legal system that protects property, especially against government, eliminating corruption and setting up a tax regime that allows honest people to comply and encourages dishonest people to do so, none of which is common in Latin America.

posted by Richard 6:52 PM
. . .
The War:
Reuters reports that the FARC has forced the entire population of Puerto Alvira, in the central Colombian province of Meta, some 1,000 people, out of their village. The forced evacuation took place on Saturday.
The wild zone around Puerto Alvira, key to trafficking cocaine and arms, is disputed by the FARC and its fiercest foes: illegal far-right paramilitaries who massacred civilians in the area in 1997 to smoke out the leftist rebels.

The town is also near the borders of a Switzerland-sized chunk of jungle and savanna that the government ceded to the FARC for over three years as a safe haven for peace talks that collapsed in February.

About 2 million Colombians have fled their homes to escape fighting, death threats or forced conscription into illegal armed groups over the past decade. Thousands of people, mainly civilians, are killed every year in Colombia's war, which has flared in the last decade thanks to cocaine profits.

The FARC, which also makes money by kidnapping hundreds of people a year for ransom, has recently changed its tactics to concentrate on driving government officials out of the countryside instead of staging risky attacks against troops.

Latin America's oldest and largest insurgent force has told mayors and other local officials that they face killing or kidnap unless they resign. As it is impossible for the overstretched armed forces to provide adequate security throughout the country, the strategy has been cheap and effective, forcing dozens of mayors to quit.

The anti-mayor offensive has thrown down the rebel gauntlet to President-elect Alvaro Uribe, who will take office next week after winning a landslide election promising to boost military spending to crack down on the rebels and the paramilitaries.
According to El Tiempo, the fate of the villagers remains unknown.
To appearances, the residents--in a number still to be established--got in boats and set out by the Guaviare River that passes the village. It is speculated that some were kept by the FARC, but there is no confirmation of this fact.
Al parecer, los campesinos--en un número aún por establecer--se montaron en lanchas y partieron por el río Guaviare que pasa por el pueblo. Se ha especulado que algunos fueron retenidos por las Farc, pero no hay confirmación de este hecho.
As noted, even the number involved is unknown. El Tiempo quotes the army as saying there were 700 villagers, the mayor of the municipality of Mapiripán, in which Puerto Alvira is located, puting the number at 4,000 and the parish priest saying the number is no larger than 500. Whatever the number,
On Monday, the commander of the VII Bragade of the Army, General Carlos Olivdio Saavedra, who arrived at in the zone, affirmed that "the place remains practically empty. We could scarcely speak with some five people."
El lunes, el comandante de la VII Brigada del Ejército, general Carlos Ovidio Saavedra, que llegó a la zona, afirmó que ?el poblado quedó prácticamente solo. Apenas pudimos hablar con unas cinco personas''.

posted by Richard 5:53 PM
. . .
Freeze? Never: Facing market problems, Uruguay has declared a bank holiday, yesterday extended to Friday. But one measure Uruguay will not take, says its economy minister Alejandro Atchugarry, is an Argentina-style bank account freeze ("corralito").
"It is the one thing we are not going to do."
“Es el único plan que no vamos a hacer”.
Wonder why?

The minister made the comments yesterday in a press conference, according to

posted by Richard 12:38 PM
. . .
Two views:

On Sunday on television, U.S. Treasury Secretary Paul O'Neill said that the U.S. wouldn't new aid to Argentina, Uruguay and Brazil unless he could be assured that the money would benefit the people and not end up in Swiss bank accounts.

Brazil demanded an apology, reports
Brazilian President Fernando Henrique Cardoso on Monday requested a retraction of the remarks made this weekend by O'Neill who implied aid to Brazil, Argentina and Uruguay could be siphoned off into Swiss accounts,
after which the White House softened his comments.

However, Argentina's appointed president, Eduardo Duhalde, told radio Rivadavia "80 per cent of Argentines are in agreement with what O'Neill said" ("el 80 por ciento de los argentinos están de acuerdo con lo que dijo O`Neill"), according to La Nacion's report.

posted by Richard 12:19 PM
. . .
Disruptions at Supreme Court:
Bloomberg.com reports that police and Chávez supporters clashed in front of the Supreme Court, which is hearing the appeal of four officers who want their indictments for rebellion dismissed (see below for details). Two points: First, the Chavistas seem to agree with El Nacional that the court decision is likely to favor the officers. Second, they are trying to prevent that outcome by intimidating the court. Increasingly, Chávez is relying on force and the threat of force.

posted by Richard 12:07 PM
. . .
Armed groups proliferating:
The Miami Herald reports on the proliferation of illegal armed forces along Venezuela's western frontier with Colombia. The cause appears to be twofold--Colombian groups spilling over the boarder and Venezuela's own increasing polarization.
Many border residents blame Chávez, charging that after his 1998 election he made a ''nonaggression pact'' with Colombia's Marxist FARC and ELN rebels who had long operated on both sides of the thinly populated border.

The alleged deal, denied by Chávez, offered leniency to Colombian rebels caught on this side of the frontier in exchange for a halt to guerrilla abuses against Venezuelan civilians and attacks on military outposts.

''Under Chávez it's been easier for us,'' said a former FARC fighter now living on the Venezuelan side of the border. ``The police and National Guard used to beat and torture us . . . but now they are not so repressive.''
The most important groups assassination, kidnapping, extortion and drug smuggling are Colombia's FARC guerillas, Colombia's self-defense forces, the - Bolivarian Liberation Forces (BLF) and the United Self-Defense Forces of Venezuela, or AUV.

The most interesting force is the BLF, which claims to be "a 'people's reserve' pledged to defend Chávez in case of another coup," is perhaps "the world's first pro-government rural guerrillas..." The group is well-equipped and appears to be supplied by the Venezuelan military.
Military helicopters resupply them every 15-20 days and two military officers visit their hidden base camps near the town of Abejales on the southeastern foothills of the Venezuelan Andes, said residents who asked for anonymity.
Also interesting is the mysterious United Self-Defense Forces of Venezuela, or AUV, whose existence was announced on a videotape released on Bogata, Colombia. (The tape and ensuing controversy were noted in El Sur, here, here, here and here.)
Oddly, however, the AUV so far appears to be operating only in San Antonio, a commercial and industrial town of 75,000 people in the Andes astride the main highway to Colombia, and only against petty criminals.

San Antonio Mayor José Vivas said he officially knew nothing about the AUV and raised the possibility that it was simply a front for criminal extortionists.
The biggest problem these groups present for Venezuela is long term. Sponsored illegal armies are easy to launch but not so easy to rein in once the sponsors have achieved their aims.

posted by Richard 10:54 AM
. . .
Legal action:

1. Attorneys for the military officers accused of rebellion during April are confident that the Supreme Court will rule their way, reports
El Nacional.
Today, when the discussion of the report that contains the accusation by the attorney general of the republic, Isaías Rodríguez, against these four military officials begins, the division among the magistrates linked with the government and those linked with the opposition will be made clear.
Hoy, cuando comienza la discusión de la ponencia que acoge la acusación del fiscal general de la República, Isaías Rodríguez, contra estos cuatro altos funcionarios militares, se pondría de manifiesto la división entre los magistrados vinculados con el Gobierno y los vinculados con la oposición.
In El Nacional's analysis, there exists on the 20-member court an "alliance of 11" (“alianza de los once”), consisting of judges Franklin Arrieche, Alberto Martini Urdaneta, Pedro Rondón Haaz, Antonio García García, Rafael Pérez Perdomo, Blanca Rosa Mármol de León, Antonio Ramírez Jiménez, Alfonso Valbuena, Hadel Mostafá Paolini, Yolanda Jaimes and Rafael Hernández. In addition, the paper says a 12th judge, Alejandro Angulo Fontiveros, will have to join these judges to remain consistent with his position in similar case against Luis Miquilena, the former political mentor of President Hugo Chávez. El Nacional finds six likely to rule for the government and two whose opinion the paper considers unknown.

2. Attorney Álvaro Albornoz claims that the government corruptly awarded a contract to handle labor cases to Leonardo Rodríguez, the son of Attorney General Isaías Rodríguez, reports El Nacional. Albornoz charges that the solicitor general, Marisol Plaza, awarded the contract to the Centro Jurídico Laboral Rodríguez Chacón y Asociados as repayment for her own appointment by Isaías Rodríguez.
The attorney concludes that this public contract is the result of influence trafficking on the part of the attorney general of the republic.

"This image that many of us would have of the attorney general, as a man incapable of falling into things like this, correct and incorruptible, does not correspond with the truth. The government is paying him, with benefits like these for his family and friends, for his action in the public ministry with respect to the cases against Chávez. Plaza and Rodríguez are friends from Maracay and she entered the government through him, not by her own merit. Those who have worked with her know that her performance and her record do not correspond with the elevated office she occupies, concluded Albornoz.
El abogado considera que esta contratación pública es el resultado de un tráfico de influencias por parte del fiscal general de la República.

“Esa imagen que muchos teníamos del fiscal, como un hombre incapaz de caer en cosas como ésta, correcto e incorruptible, no se corresponde con la verdad. El Gobierno le está pagando a él, con beneficios como estos para sus familiares y amigos, su inacción en el Ministerio Público respecto a los juicios contra Chávez. Plaza y Rodríguez son amigos desde Maracay y ella entró al Gobierno por él, no por méritos propios. Los que hemos trabajado con ella sabemos que su desempeño y su currículum no se corresponden con el elevadísimo cargo que ocupa”, concluye Albornoz.
Albornoz says that the contract was awarded on June 28, 2001, just a day after the Centro Jurídico Laboral Rodríguez Chacón y Asociados was formed. Under the contract, the firm receives 13 million bolivares (about $10,000) a month.

Álvaro Albornoz was until April an employee of the solicitor general.

posted by Richard 6:58 AM
. . .
Tuesday, July 30, 2002
Conflict over April demonstrations and coup continues, peacefully:

1. Attorneys for military officers accused of rebellion are claiming that their clients were justified in refusing to obey illegitimate orders, reports
El Nacional. The attorneys have asked the Supreme Court to rule that that such the officers have the right and duty to disobey such orders and should not be prosecuted for it. In support of this proposition, they cite both domestic and foreign precedent.

The attorneys are representing three generals, Efraín Vásquez Velazco, Héctor Ramírez Pérez and Pedro Pereira Olivares and one admiral, Daniel Comisso Urdaneta. According to attorney Hermann Escarrá
I believe that this is a very grave moment for the Supreme Court, because in its hands is the destiny of the republic and all citizens are hanging on the decision that it is going to take."
“Yo creo que este es el momento más grave del Tribunal Supremo, porque en sus manos está el destino de la República, y todos los ciudadanos estamos pendientes de la decisión que va a tomar".
Escarrá said that if the high court decides to support the indictment of the officers it will deny military officers the right to disobey illegitimate orders, which is international practide. The other consequence, he said, is that it would consolidate the "subordination of the judicial branch to the dictates of the executive branch..." ("subordinación del Poder Judicial a los dictámenes del Poder Ejecutivo").

According to El Mundo, a decision is expected Thursday.

2. El Universal reports that there were competing demonstrations for and against the four officers who claim they acted during the April demonstrations not as rebels but as conscientious officers refusing to obey illegitimate orders.
The followers of the military men demand a decision that favors them. In response to this, a group of government partisans also had a presence by the doors of the Supreme Court of Justice in order to ask that they authorize an indictment.
Los seguidores de los efectivos militares exigen una sentencia que los favorezca. En repuesta a esto, un grupo de partidarios del oficialismo se hicieron también presentes a las puertas del Tribunal Supremo de Justicia para pedir que sí se autorice el enjuiciamiento.
3. A group of legislators affiliated with the government issues a report blaming four military officers (not those taking their case to the Supreme Court, above), three mayors and the governor of Miranda, the president of the national labor union and the former head of the national business organization, Fedecámaras, for the demonstrations and coup of April 11-14. According to El Universal:
The report presented by this group of legislators concludes "that on the 11th of April, 1002, a bloody, civilian-military coup was launched that put into effect, for 48 hours, an autocratic regime vested with all the forms of true totalitarianism," indicated the study.
El informe presentado por este grupo de parlamentarios concluye ''que el 11 de abril de 2002 se produjo un cruento golpe cívico-militar que puso en vigencia, por espacio de 48 horas, un régimen autocrático revestido de todas las formas de un verdadero totalitarismo'', señala el despacho.
The report also calls for a thorough investigation of the human rights violiations during the April 11-15 period and the beginning of a process of national reconciliation dialog.

posted by Richard 9:52 AM
. . .
Good News:
U.S. News columnist Michael Barone has a positive report on Mexico. Mexico is succeeding economically and President Vicente Fox is changing the culture of corruption in law enforcement. Still needed, he says: a U.S.-Mexico agreement to regularize the status of Mexicans illegally in the U.S.

posted by Richard 7:55 AM
. . .
Monday, July 29, 2002
The war:

1. Marta Lucía Ramírez, the incoming defense minister in the government of Álvaro Uribe Vélez, announced that the new government intends to increase the size of the country's combined police and military forces from 240,000 to 400,000, reports
El Tiempo. Much of the increment would come from calling up reserves, the paper said.
"There are many people who have called the president elect Álvaro Uribe, as have called me to tell me that the reserves are ready to be called to participate in this difficult moment in the country's history," assured the minister.
"Hay mucha gente que ha llamado al presidente electo Álvaro Uribe, como me han llamado a mí para decirme que las reservas están listas para se les llame a participar en este momento tan difícil para la patria", aseguró la ministra.
The announcement came just two days after current President Andrés Pastrana rejected a call up of reserves. He did extend the military service of some 10,000 soldiers by six months, however.

2. Military and civilian analysts cautioned the incoming government about its announced plan to augment the police and armed forces, according to El Tiempo.
To Armando Borrero, a security specialist, "it is an idea that has come into play recently in Colombia and it is evident that it necessary to increase the military strength in order to combat simultaneously the guerillss, the paramilitaries and the narcotrafficking mafias"...

He adivsed, nevertheless, that "the possibilitiy of a military mobilization on a grand scale are limited. They can call reservists but they cannot call them on a very large scale."

According to Borrero, they present two problems: "first, for the shortage of staff, since if reserves are called one must call...officers and non-commissioned officers in order to put them in units. For another thing, it is necessary to provision and equip them.
Para Armando Borrero, especialista en temas de seguridad, "es una idea con la que se ha venido jugando en los últimos tiempos en Colombia y es evidente que es necesario incrementar el pie de fuerza para combatir simultáneamente a la guerrilla, a los paramilitares y las mafias del narcotráfico"...
Advirtió, sin embargo, que "las posibilidades de una movilización militar a gran escala son reducidas. Se pueden llamar reservistas pero no se pueden llamar en una escala muy grande".

Según Borrero, se presentan dos problemas: "primero, por la escasez de cuadros, pues si se llaman reservistas hay que llamar (...) a oficiales y suboficiales para poderlos encuadrar. Por otra parte, es necesaria la provisión de equipo".
General Harold Bedoya (Ret.), said that calling reserves is only a partial solution.
The ex-commander noted that the mobilization of reserves ought to include not only those where were in the ranks of the armed forces but also those who have evaded this responsibility, because the recruitment law ought not to be only for the poor.

The ex-military stated that, moreover, the mobilization is not only of men, but that implied is to put the entire country in the defense and security function.
El ex comandante anotó que la movilización de reservas debe incluir no sólo a quienes estuvieron en las filas de las Fuerzas Militares sino también a quienes han evadido esa responsabilidad, porque la ley de reclutamiento no debe ser sólo para los pobres.

El ex militar manifestó que, además, la movilización no es sólo de hombres, sino que implica poner a todo el país en función de su defensa y seguridad.
Outside observers have long pointed out that Colombia's refusal to distribute the burdens of fighting and paying for the war to the urban middle and upper classes reveals a fundamental lack of seriousness in confronting the illegal armies.

3. El Nacional (Caracas) reports that a town councilor was assassinated on Monday in the municipality of Colosó, in Colombia's northeast. He was shot by men on a motorcycle. Officials attributed the killing to Fuerzas Armadas Revolucionarias de Colombia (FARC).

posted by Richard 11:33 AM
. . .
Struggling: The
Financial Times has an overview of Uruguay's economic problems.

posted by Richard 7:29 AM
. . .
Crime wave II: Rural Argentina too is suffering an increase in crime, reports
Bloomberg.com. As the economy continues to slide, desparate rural dwellers resort to cattle rustling.
"They come in the middle of the night with horse-drawn carts, shoot or slit the animal's throat and carve up the meat in the field," said Horacio Ciurlandi, 48, who owns a 4,500-hectare (10,800-acre) ranch in San Vicente, a rural community 45 kilometers (28 miles) south of Buenos Aires. "All we find is tracks in the mud and a carcass stripped of flesh"...
To feed their families, some steal cattle. Other crime is also on the rise, including kidnapping. With the economy set to contract a further 15 percent this year, illegal activities will probably continue to increase, police and sociologists say.

Some officials view the new rustlers with sympathy. "When cattle are killed and slaughtered in the field, it's because the people need to eat," said Commissioner Carmelo Lombardo of the Buenos Aires province rural crimes division. "This isn't theft for profit."
Last week, Bloomberg.com gave figures detailing the depths to which conditions in Argentina have fallen. Among the statistics provided:
- Half the country's 36 million people live in poverty;

- 21.5 per cent of the workforce is unemployed;

- 22.7 percent of Argentines are "indigent," lacking money for basic nutritional, housing and other needs;

- Argentina has lost 750,000 jobs in the last year;

- The peso has lost 70 per cent of its value this year, and

- Consumer prices have risen 30 per cent since the first of the year.
With disastrous economic conditions and a deteriorating social climate, quick action is imperative. It is especially necessary to rapidly write off all losses, thereby establishing the real economic value of assets and forcing every individual and institution in the country to deal with actual conditions. Until this has happened, the economy can't grow. But, instead of encouraging this process--even permitting it--the government of appointed President Eduardo Duhalde continues to attempt to preserve pre-crash values. Just last week, for example, the government banned new lawsuits to release funds from frozen bank accounts (see El Sur) and Economy Minister Roberto Lavagna announced that the account freeze would continue at least to the end of the year (see La Nacion).

Why does Duhalde temporize and improvise? Because, despite all evidence, Duhalde continues to cling to the illusion he brought with him into office at the beginning of the year--that an IMF bailout is just around the corner. New evidence that no IMF funds will be coming--beyond what's needed to roll over old loans, sparing the IMF an embarrassing default--appeared in the person of Treasury Secretary Paul O'Neill, on Fox News Sunday this week. Reiterating that he will not be bringing money when he visits Argentina, Uruguay and Brazil this week, O'Neill was, in La Nacion's description, "very hard" ("muy duro"):
Before his trip, he once again classified (Argentine) leaders corrupt and said that his visit has the purpose of speaking with the people and assuring them that foreign help benefits them and does not end up in secret Swiss bank accounts. "What they principally need is to apply policies that assure that the money that comes does some good and doesn't just stop in accounts in Swiss banks," added the North American official.
Antes de su partida, calificó otra vez de corruptos a sus dirigentes y dijo que su visita tenía el propósito de hablar con el pueblo y asegurarse de que la ayuda exterior lo beneficie y no termine en cuentas secretas en bancos suizos. "Lo que principalmente necesitan es aplicar políticas que aseguren que el dinero que venga haga algún bien y no sólo vaya a parar a cuentas en bancos suizos", añadió el funcionario norteamericano.

posted by Richard 7:25 AM
. . .
Sunday, July 28, 2002
Crime wave: Argentina has been in recession since 1998; it has been in full economic collapse since the government of Fernando de la Rúa froze bank accounts and repudiated foreign debt. As noted in the post just below, the longer the crisis the more fundamentally the country's foundations are undermined. Today's
La Nacion contains a study of the incidence of crime in Buenos Aires that suggests that Argentina's social bonds are breaking down.

According to the study, done by the city's Office of Criminal Policy of the Justice Ministry (Dirección de Política Criminal del Ministerio de Justicia) poll 88 per cent of the capital city's residents believe that they are likely to become the victim of a crime and nearly 40 per cent were victimized in 2001.

La Nacion provides detailed results in charts linked to the story.

posted by Richard 10:31 AM
. . .
Saturday, July 27, 2002
Markets: In the "Americans" column in yesterday's Wall Street Journal (sorry, they don't put it on the web), Mary Anastasia O'Grady says that the difference between the "fast, sharp rationalization of prices in the U.S. market and the paralysis that is Argentina is the ability to assign costs, rapidly and efficiently, in the midst of a debacle." Long after the U.S.'s economics-driven process has cleared markets and imposed discipline, O'Grady says, Argentina's politics-driven process will be seeking to delay harm and find scapegoats.
In a market, adjustment costs drop like a guillotine across the board, swiftly, impersonally and automatically, penalizing to varying degrees shareholders, creditors, employees, retirees and management. In the case of Argentina's state-induced, state-managed crisis, the costs have to be assigned through the political process and politicians must bear the responsibility for imposing them."
Since politicians' incentives direct them to avoid imposing costs on constituents, they delay critical adjustments as long as possible. The result is a protracted crisis, that more fundamentally attacks the country's social, political and economic foundations.
"Time is the enemy here," says Adam Lerrick, director of the Gailliot Center at Carnegie Mellon, "The longer the delay, the greater the costs."
Political Argentina's first choice to bear the costs of adjustment was foreigners. In December, members of the National Assembly cheered when the government of President Fernando de la Rúa announced that the country would default on its foreign debt. In January, the government of de la Rúa's appointed successor, Edurado Duhalde, announced that obtaining new foreign credit would be its central policy aim. Seriously.

This hasn't worked. Initially, large sums were transferred to Argentine customers from foreign-owned banks and utilities, when their revenues were converted to pesos while their dollar debts remained, and when retail price controls were imposed. By now, however, the accumulated surpluses in these subsidiaries are long gone, and their foreign parents have simply refused to send good money after bad. Most importantly, international lenders have refused Argentina new loans, except when needed to prevent default on existing debt, which mainly saves lenders' face.

O'Grady ends her column on a pessimistic note. She offers only two recommendations, both partial, neither likely to be adopted. First, she suggests that the government abandon its efforts to get bank depositors to accept government debt for their frozen bank accounts and simply let the parties work it out themselves. Second, she suggests that the IMF withdraw from the situation, except to the extent of providng a floor-price to foreign-held, sovereign Argentine debt, permitting debt holders to get this loser off their books.

But she is under no illusions:
"This is a transition government that has not been willing to accept the political costs of taking decisions," says Martin Krause, dean of the guaduate business school Eseade in Buenos Aires. "That means the next government will have to be a transition." And that means the suffering will only drag on.

posted by Richard 6:33 PM
. . .
The war:

1. Amnesty International is worried that increased U.S. aid to Colombia could increase human rights violations, reports
El Tiempo.

2. Colombian mayors at a Summit of Threatened Mayors (Cumbre de Alcaldes Amenazados) on San Andrés island asked the government to renew negotiations with the FARC guerillas and rejected the FARC's demand that they resign, reports El Tiempo.
According to the leader (Luis Pérez Gutiérrez, president of the Federación Colombiana de Municipios), all are subjected to a "war of paper" that was seeking in a manner economical to the guerilla to intimidate the officials and create a climate of chaos and ingovernability.
Según el mandatario,
todo se trató de una "guerra de papel" que buscaba de una manera económica para la guerrilla intimidar a los funcionarios y crear un clima de caos y de ingobernabilidad.
The mayors also asked that the central government do more to protect them, including moving troops to urban areas, in response to the urbanization of the war.

3. El Colombiano (Medellin) reports that constant fighting between the communist guerilla FARC and self-defense paramilitary AUC are forcing residents to flee affected parts of the city. In Comuna 13,
"Five families alreagy have gone, others are looking for a place to go, but some don't want to run the risk of losing their apartments, which are the only ones they have, and others don't have anywhere to go," indicated a resident of the zone.
"Cinco familias ya se fueron, otras están buscando para dónde irse, pero algunas no quieren correr el riesgo de perder sus apartamentos, que son lo único que tienen, y otros no tienen para dónde irse", sostuvo un residente de la zona.
Owners who leave risk losing their property to squatters.

posted by Richard 5:49 PM
. . .
Free Trade: The U.S. House of Representatives approved a bill giving the Bush administration "fast track- trade negotiation authority, reports
Bloomberg.com. The main feature of such legislation is that Congress cannot amend trade agreements signed under it, but must vote up or down on the whole thing. The bill that passed the U.S. House has the support of the administration and the Senate Democratic leadership and so is expected to pass the Senate and be signed into law by the President.

To get agreement, the administration had to agree to authorize aid for workers displaced by competition that results from any trade agreement negotiated under the authority. In addition, the administration agreed to provisions intended to protect the environment and labor rights and to ongoing consultation with the congress during trade negotiations.

Of immediate importance, the legislation will re-activate an Andean area trade agreement that expired in December, was extended to May and expired again. Since its expiration, duties on imports to the U.S. form the four Andean countries involved--from Bolivia, Colombia, Ecuador and Peru--have been at 70 per cent. The new agreement pact will significantly reduce them. In part, the Andean pact is part of the U.S. government's efforts to encourage these countries to produce something other than coca for export.

El Colombiano (Medellin) called the decision to renew the pact "historic." More than 6,000 products are benefited, including flowers, leather, footwear and clothing. The paper estimates that reduced tariffs will result in 100,000 new jobs in clothing manufacture within five years.

Cooincidentally, 10 South American presidents today concluded a summit at Guayaquil, Ecuador, at which trade with the U.S. was very much a subject. According to the Yahoo! News - AP story on the summit, the South American presidents spent much of the week complaining that the rich countries, while refusing to open their domestic markets, constantly lecture poorer countries about liberalizing their economies and substituting legitimate crops for cocoa.
In a news conference after the presentation of the final document, Ecuadorean President Gustavo Noboa replied testily when a reporter asked about specific measures the region could take to combat drug trafficking.

"If the idea is that countries where drugs are sown develop alternative crops, that is magnificent. But just as they ask us not to plant drugs, they should buy those alternative crops," he said.

Otherwise, he said, it is "hypocrisy" on the part of drug-consuming countries like the United States to demand eradication of coca crops, which are the raw material of cocaine.

"They're saying, 'Starve to death'," Noboa said.

posted by Richard 4:37 PM
. . .
Friday, July 26, 2002
Religion: One of the most important and least known trends in Latin America today is the rise of evangelical protestantism. On the eve of the Pope's visit,
Financial Times examines the phenomenon's impact in Mexico and Guatemala.
Roberto Blancarte, a sociologist who once worked in Mexico's embassy to the Vatican, describes the canonisation of Juan Diego (the Indian whose vision of the Virgin of Guadalupe converted post-conquest Mexico to Catholicism) as a "counter-attack against the Protestants".

Many devout Mexican Catholics fear the country could go the same way as Guatemala, which has become the most Protestant nation in Latin America, with one-quarter of the population already converted.

Twelve per cent of Mexico's population calls itself "evangelical" as the Protestants are known, with high concentrations in the Maya regions of southern Mexico and among drifters flocking to the US border.
Unfortunately, the paper lets its bias infect its treatment of this important subject:
In spite of centuries of effort in the region, Protestant missionaries only achieved their objective in the last two decades in Guatemala. They promised a better afterlife to those mired in poverty, and translated the Bible into Mayan languages. They offered a refuge from violence that targeted clergy and laymen teaching peasants about self-empowerment through Jesus's words.
That business about "clergy and laymen teaching peasants about self-empowerment through Jesus's words" is a veiled reference to "Liberation Theology," the largely failed attempt to subsume Latin Catholicism into Marxism that had its heyday in the 1970s. The Financial Times clearly wishes it, rather than evangelical protestantism, was the fastest growing religious movement in Latin America.

posted by Richard 1:07 PM
. . .
The war:

1. An assembly of indigenous leaders in the southwestern state of Cauca (see map, linked right) has adopted a plan to resist pressure from the illegal communist guerillas, the Fuerzas Armadas Revolucionarias de Colombia (FARC), reports
El Tiempo. The assembly (the Consejo Regional Indígena del Cauca, CRIC) also is preparing a letter to send to President-elect Álvaro Uribe, asking him to respect guarantees of autonomy contained in the constitution.

2. Government prosecutors in Medellin have ordered the the arrest for human rights offenses of the FARC leaders who ordered the attack on Bojayá, Chocó province, on May 2, during which 120 civilians seeking shelter in a church were killed, reports Diario El Pais (Cali). Those ordered arrested are Pedro Antonio Marín, alias Tirofijo; Guillermo León Sáez Vargas, alias Alfonso Cano; Rodrigo Londoño Eceheverry, alias Timochenco; Luciano Marín Arango, alias Iván Marquez; Noel Mata Mata, alias Efraín Guzmán; Jorge Briceño Suárez, alias El Mono Jojoy; Luis Edgar Devia, alias Raúl Reyes y Juvenal Ovidio Ricardo Palmera Pineda, alias Simón Trinidad. El Sur noted the Bojayá atrocity here, here, here, here, here, here, here.

3. El Colombiano (Medellin) and El Espectador have reports on an anti-war demonstration by some 20,000 women. According to El Espectador's report, the women marched to the Plaza Bolivan in Bogata under the banner:
"Nor one day more, nor one peso more, nor one man more, nor one woman more for the war. All for life."
“Ni un día más, ni un peso más, ni un hombre más, ni una mujer más para la guerra. Todo para la vida”.
A little more than a month ago, Colombians voted overwhelmingly to elect as president Álvaro Uribe, who ran on an explicitly get-tough platform. Has public opinion changed? Or are demonstrations not representative?

4. Colombian mayors threatened by the FARC have put the European Union's vocal humanitarians on the spot. The mayors have asked that EU countries relax their immigration requirements to grant refuge to the families of local Colombian officials under FARC death threats. The request was presented to German Ambassador Peter von Jagow at a meeting in San Andrés, reports El Tiempo. Some 200 local officials have resigned under pressure from the FARC, which is attempting to wreck the country's elected local governments in this manner.

posted by Richard 10:25 AM
. . .
Thursday, July 25, 2002
Property and law: A front page story in The Wall Street Journal (no link) looks at conditions in Latin America and finds them bleak. Worst of all:
"In the 1970s, the easy answer was to democratize," says Riordan Roett, a Latin America scholar at Johns Hopkins University. "In the 1980s, the easy answer was market reforms. Now we're out of easy answers."
Writer Matt Mofett runs down the list of Latin American "debacles": Argentina's economic collapse, Venezuela's coup attempt, Peru's and Paraguay's street demonstrations, Brazil's financial shock, and Colombia's guerilla war (for some reason omitting Uruguay's economic near-collapse, Bolivia's near election of a pro-coca activist and violent demonstrations in Paraguay). Only Mexico ("under the umbrella of the North American Free Trade Agreement") and Chile ("a small island of prosperity") have avoided the chaos.

Similarly suffering, the article says, are North American and European corporate investors, which have pulled back after losing large sums. Meanwhile,
Latin America hasn't developed sufficient export earnings or internal savings to break its dependence on foreign capital, including volatile portfolio investments from Wall Street.
As to causes, Latin Americans tend to blame the U.S. and Europe for maintaining barriers to foreign trade, Mofett says. Meanwhile he, and his North American sources, like the academic Riordan Roett quoted above, seem mostly at sea.

In fact the current Latin America disaster can be attributed to the absence of secure private property and the rule of law. Without these, although democracy and markets were able pull South America back from a militarist-Marxist-merchantilist abyss, they could only take countries so far. Elections made clear the real place of militarists and Marxists in Latin societies, broadly unpopular minorities dangerous only because armed. Markets--in the Latin context, only the reduction of restrictions on external trade and the suppression of internal monopolies--released entreprenerueal energies and attracted foreign investment. Unfortunately, reform never went beyond freeing up transactional mechanisms. The result was the creation of enough wealth excite envy without providing the protection needed to permit it to continue to grow. Instead, democracy descended into populism, as still-poor majorities elected leaders who promised to confiscate and redistribute the wealth of the minority, while markets, unable to promise security to long term investments, became casinos--and crooked ones at that--in which players replaced investors.

Just one example of the problem: Earlier this week, Argentine President Eduardo Duhalde issued a decree freezing court suits by savers seeking return of funds locked in frozen bank accounts since last December (noted in
El Sur yesterday). Today, according to La Nacion, Economy Minister Roberto Lavagna told savers that the account freeze will remain in place at least until the end of the year. Already, for every $1,000 in an account that was forcibly frozen last December and then forcibly converted to pesos at the rate of 1.4-to-1 last January has fallen in value to $388 (at 3.6 pesos to the dollar). And still, by this week's decree, an honest saver can't expect to get his or her money out at least until next year. Both property rights and the rule of law were trampled in this one decree.

The irony, if that's what it is, is that this kind of behavior is self-defeating. Argentina's gross domestic product is down; unemployment is up. Everyone is poorer, especially the poor. Domestic companies are bankrupt; foreign parent companies leave their Argentine subsidiaries to fend for themselves. Crime is up, including kidnapping for money, probably the only thing Argentina has imported more of from Brazil this year. Even the government, perpetrator of this ongoing bank heist, is worse off: The president who froze the accounts is gone; his ultimate successor, who can't unfreeze them, has been forced to call early elections (albeit on an extended timetable). Unionized workers and government workers--all supposedly beneficiaries of populist confiscation schemes--find their incomes falling way behind inflation.

And yet, they persist.

posted by Richard 1:19 PM
. . .
The War

1. Colombian police claim to have thwarted a plot to crash a plane into either the national legislature on Independence Day, July 20, or the presidential palace on innauguration day, August 7, reports the
Miami Herald. Arrested was the plot's alleged mastermind, Jorge Enrique Carvajalino, who is the brother of one of the leaders of the communist guerilla FARC.

2. Colombia's second communist guerilla army, the National Liberation Army (ELN), dissents from the FARC's demand for the resignation of the country's local elected officials, reports El Tiempo.
In the communication, the ELN justified that under some circumstances they have sought the resignation of mayors because, according to the organization, the officeholders were not compling with the program they promised to achieve in their electoral campaigns.

But, they assured: "not every mayor is an expression of central power and on many occasions, they represent more the abandonment and neglect of the oligarchy...that they constitute important forces to pull their regions forward.
En la comunicación, el Eln justifica que en algunas oportunidades han pedido la renuncia de alcaldes porque, según esa organización, los funcionarios no han cumplido con el programa que se comprometieron a realizar en las campañas electorales.

Pero, aseguran: "no todo alcalde es expresión del poder central y que, en muchas ocasiones, representa más que el abandono y el olvido de parte de la oligarquía (...) que hacen esfuerzos importantes por sacar adelante sus regiones".
3. The press organization Reporters without Frontiers (RSF) is worried about a climate of terror against reporters in Colombia, says El Tiempo.
The press liberty defense organization recalled that the FARC declared as "military objectives" several journalists, two of whom have exiled themselves from the country after receiving threats.

In a letter directed to the commander in chief of the FARC, Manuel Marulanda, RSFdemanded respect for those persons that don't directly participate in the conflict, such and as is recognized in Article 3 of the Geneve Convetion.
La organización de defensa de la libertad de prensa recordó que las Farc declararon "objetivos militares" a varios periodistas, dos de los cuales se han exiliado del país tras recibir amenazas.

En una carta dirigida al comandante en jefe de las Farc, Manuel Marulanda, RSF reclamó el respeto de las personas que no participan directamente en el conflicto, tal y como está recogido en el artículo 3 de la Convención de Ginebra.
Fat chance.

posted by Richard 8:01 AM
. . .
Wednesday, July 24, 2002
Carlos Menem II: Monday, El Sur noted an article in The New York Times, and widely reported elsewhere, accusing former President Carlos Menem of taking $10 million from Iran to cover up that country's participation in the bombing of the Jewish Mutual Aid Association in Buenos Aires, during Menem's presidency. Menem denied the allegation and threatened to sue. But, even if Menem's denial turns out to be true, reports
Pagina/12, in making it he effectively confessed to three smaller crimes: malicious omission, fiscal evasion, and illicit enrichment.
Carlos Menem reacted desperately before the publication in The New York Times of the declaration of the witness called C in the AMIA case...

"It is a clumsy fabrication," Menem reacted before publication,"I only have an account in Switzerland. I opened in in 1986 with $200,000 that was paid me as indemnification for the years that the dictatorship had me under arrest and with time and interest, now the account does not have more that $600,000. The $10 million is a lie."

Surely the ex-president entered into panic before the accusation of C and the publication in the principal North American daily, because this confession that he has an account in Switzerland makes him responsible for three crimes that could inhibit his participation in the electoral campaign...
Carlos Menem reaccionó desesperadamente ante la publicación en The New York Times de la declaración del llamado testigo C del caso AMIA...

“Es una burda patraña –reaccionó Menem ante la publicación– sólo tengo una cuenta en Suiza. La abrí en 1986 con los 200.000 dólares que me pagaron como indemnización por los años que me tuvo preso la dictadura y con el tiempo y los intereses, ahora la cuenta no tiene más de 600.000 dólares. Lo de los diez millones es mentira.”

Seguramente el ex presidente entró en pánico ante la acusación de C y la publicación en el principal diario norteamericano, porque esa confesión de que tiene la cuenta en Suiza lo ubica como responsable de tres delitos que podrían inhabilitarlo de participar en la campaña electoral....
The paper suggests that $200,000, plus interest at Swiss bank rates, doesn't yield $600,000. More importantly, the paper describes the several occasions on which Menem failed to report this long-existing account on disclosure forms, which omissions form the basis for the paper's allegations of criminal misconduct. Conviction on one of two of the three--malicious omission or illicit enrichment--would bring penalties that include a lifetime ban on holding public office (inhabilitación perpetua absoluta). As such, they would end Menem's 2003 presidential hopes (always, barring some judicial fix, of course).

A big BUT: Left unaccounted for by Pagina/12 is the alleged $10 million bribe. Until--and unless--this bribe-taking is firmly pinned to him, Menem can't be completely counted out.

posted by Richard 5:37 PM
. . .
Bleak view: Thor Halvorssen puts the worst possible construction on recent events in Venezuela in the
National Review. If totalitarian power is indeed Hugo Chávez's goal, he will find it more difficult to achieve than Halvorssen allows. Nevertheless, it is always worthwhile to keep worst case in view, as here.

posted by Richard 12:34 PM
. . .
Deeper freeze: The government of Argentina issued a decree freezing court suits by savers seeking return of funds locked in frozen bank accounts, reports
Reuters. The decree halts such suits for 120 business days. Cabinet Chief Alfredo Atanasof, hinting at corruption while defending the decree to La Nacion,
questioned "some decisions" that permitted the departure of large sums of money from the bank freeze and that, he said, "left room for suspicions," and assured that this "damaged the immense majority of savers" who continue having their money trapped in the banks.
cuestionó "algunos fallos" que permitieron la salida de grandes sumas de dinero del corralito y que -dijo- "dan lugar a sospechas", y aseguró que esto "perjudicó a la inmensa mayoría de los ahorristas" que siguen teniendo su dinero atrapado en los bancos.
Consulted by La Nacion about the constitutionality of the decree, constitutional attorney Eduardo BarcesatInitial "frankly and grossly unconstitutional ("franca y groseramente inconstitucional"). He said the decree intruded into the powers of both the legislative and executive branches. The first court to deal with the case freeze has declared it "juridicially valid" (“jurídicamente válido”), however, reports Clarin.

According to Reuters, savers have withdrawn $1 billion from frozen accounts pursuant to court orders. The value of funds in frozen accounts has dropped from $40 billion to $15 billion this year, mostly due to the loss of value of the peso, into which the accounts were converted. So easy to declare last December, the account freeze has turned into burden that's seemingly impossible to lift. Says the news service:
Analysts say that Latin America's third largest economy, immersed in debt default and its worst ever economic crisis, will not be able to recover until an end to banking curbs is agreed and some confidence restored to the financial system.

posted by Richard 10:50 AM
. . .
The War:

1. The communist guerilla Revolutionary Armed Forces of Colombia (FARC) released a videotape of kidnapped presidential candidate Ingrid Betancourt and her running mate Clara Rojas,
Bloomberg.com reports. The two were kidnapped on February 23, when they entered FARC-controlled territory. Betancourt won less than two per cent of the vote in May's election., which was won by Alvaro Uribe, who promised a hard-line against the guerillas.
In the tape, Betancourt called on the government to resume peace talks with her kidnappers, the Revolutionary Armed Forces of Colombia, known as FARC, the country's largest rebel group. She condemned the government for leaving her ``rotting'' in the jungle, the BBC reported...
El Tiempo reports that Betancourt also suggested that she was siezed in part due to the actions of military and government officials.
The ex-candidate criticized the government and the military forces for not having permitted her to board helicopters in which reporters were transportated to San Vicente del Caguán from Florencia, which obligated her to travel in a vehicle in which the two women were kidnapped.

According to what she indicated in the tape, when she asked in Florencia that they allow her to board, they told her that they would not be able to permit it because of a presidential order. She indicated that the president, who travelled to San Vicente on the same day, saw it and gave no gesture to make it possible for her to travel in his helicopter or in one of the others.

"I ask myself if when the President of the Republic got off the presidential plane (in Florencia), instead of seeing Ingrid Betancourt, had seen Horacio Serpa or Alvaro Uribe (two other candidates), if his attitude would have been the same."

In response to this affirmation, the minister of the interior, Armando Estrada Villa, limited himself to saying that he would not get into the controversy.
La ex candidata criticó al Gobierno y a las Fuerzas Militares por no haberle permitido abordar helicópteros en que eran trasladados periodistas a San Vicente del Caguán desde Florencia, lo que la obligó a trasladarse en un vehículo en el cual las dos mujeres fueron secuestradas.

Según indicó en la cinta, cuando ella pidió en Florencia que le permitieran abordar, le indicaron que no podían permitírselo por una orden presidencial. Indicó que el presidente, quien viajó ese mismo día a San Vicente, la vio y no tuvo ningún gesto hacia ella para que pudiera viajar en su helicóptero o en alguno de los otros.

"Yo me pregunto si cuando el Presidente de la República bajó del avión presidencial (en Florencia), en vez de ver a Ingrid Betancourt hubiera visto a Horacio Serpa o Alvaro Uribe, si su actitud hubiera sido la misma".

En respuesta a esta afirmación, el ministro del Interior, Armando Estrada Villa, se limitó a decir que no entra en controversia.
The government did respond later. High Commissioner for Peace Camilo Gómez said that the government had not abandoned kidnap victims and continues working for their liberation. The government also emphasized that the responsibility for kidnappings rests primarily with the kidnappers, in this case the FARC.

2. Two police were killed and several wounded by a car bomb near the Plaza de Toros of San Juan de Rioseco, in Cundinamarca province, reports El Tiempo. According to Reuters:
The explosion went off as the officers were inspecting an abandoned car parked near the bull ring of the central village of San Juan de Rioseco, some 46 miles west of the capital Bogota. The blast damaged nearby buildings.
The provincial governor, Alvaro Cruz, blamed the bombing on the FARC.

posted by Richard 8:17 AM
. . .
Warnings: Andres Oppenheimer,
The Miami Herald's Latin American columnist worries about the state of Mexican politics in his Sunday column. Oppenheimer acknowledges Mexico enjoys advantages over the rest of Latin America--no economic disaster, a relatively popular president, NAFTA and a consensus on the need to join the world economy. But, he says,
Mexico is suffering from a serious case of political paralysis.

The opposition-controlled congress kills Fox's most important legislative packages, his own National Action Party leaders often undermine the president by criticizing him in public, and members of the Cabinet insult one another in public.
Officials struck him, Oppenheimer says, as burned out after less than two years in office. Still he is optimistic, believing the Fox administration is beset not by effects of disaster but of missed opportunities.

posted by Richard 8:04 AM
. . .
Tuesday, July 23, 2002
The war:
El Colombiano (Medellin) reports that two were killed Monday morning, including a former member of congress Hildebrando Giraldo Parra, in a bomb attack on a cafeteria in Medellín. Ten were injured, including two reporters. The cafeteria was frequented by local political leaders. Officials attributed the attack to unspecified urban guerillas.

El Tiempo also has a story.

posted by Richard 3:58 PM
. . .
Alleged snipers back in trouble: The Venezuelan Supreme Court (Tribunal Supremo de Justicia, TSJ) today overruled the decision to free three Chavista's accused of shooting and killing demonstrators during the April 11 demonstrations, reports
El Universal. The three--Richard Peñalver, Henry Atencio and Rafael Cabrices--were released by Judge Norma Sandoval on July 11. Sandoval did not believe that the evidence linked the three to those killed. The TSJ left it to a lower court whether or not to arrest the men or take other precautions.

El Nacional has a similar story. The decision to release the three was previously noted in El Sur, here, here and here.

posted by Richard 2:28 PM
. . .
Monday, July 22, 2002
Carlos Menem: The
New York Times (registration required) reports that it was Iran that blew up the Jewish Mutual Aid Association on July 18, 1994 and, the critical point for Argentina today, paid former President (and current presidential candidate) Carlos Menem $10 million to cover it up. The Iranian government denies involvement in the bombing. Menem spokesman Alberto Kohan denies any coverup. The Financial Times and Miami Herald both have reports of The Times' story, not requiring registration.

It is also alleged in the story that Iran provided Menem with financial support while he was governor of La Rioja province, in hopes that he would be elected president.

posted by Richard 12:58 PM
. . .
More Elisa Carrió: Argentina's leading presidential candidate talked with
-Pagina/12 about her economic program should she be elected in next year's elections. One innovation, Carrió has announced the name of her economy minister, who will be Rubén Lo Vuolo, a University of Pittsburgh-educated economist.
The program, that consists of 10 points, and, as its authors (Carrió and Lo Vuolo) explain it, still needs to be revised and completed, includes a distributive shot, based in the proposition of the FreNaPo (National Front Against the Poverty of the Republic of Argentina, or El Frente Nacional contra la Pobreza de la República Argentina), with subsidies for the unemployed, children and the elderly, as the starter motor of the economy. It proposes, moreover, that the state drive the development of the productive sectors that generate the major quantity of employment.
El programa, que consta de diez puntos y, según aclaran sus autores, aún tiene que ser revisado y completado, incluye un shock distributivo, basado en la propuesta del Frenapo, con subsidios para desocupados, niños y ancianos, como motor de arranque de la economía. Propone, además, impulsar desde el Estado el desarrollo de los sectores productivos que generen mayor cantidad de empleo.
If these two points place the plan firmly in the center-left tradition, Pagina/12 says, the remaining points constitute, in Carrió's words, "a 'plan of transparent and competitive capitalism'" ("un 'plan de capitalismo transparente y competitivo'”).

Among these other points are: offering national capital equal opportunity with foreign, keeping privatized public services private, continuing the opening-up of the economy, and maintaining fiscal equilibrium. Carrió's plan also includes ending local monopolies and regulating capital movements in order to guarantee the reinvestment of earnings in the country. Assuming that government spending is not too high, but is inefficient, the plan forsees gradually increasing spending in such areas as health, education and welfare.

posted by Richard 12:15 PM
. . .
Sunday, July 21, 2002
In Sunday's
Pagina12, Felipe de la Balze, professor of international economics provides a brief lesson for Argentines in the history of interrupted reform and living with the U.S.
"If Argentina wants accelerated growth it needs to build, in the next years, the modern state, effective and autonomous, that it did not know how to create during the last 100 years...to create a civil bureaucracy, highly professional, stable in its functions and non-partisan." Felipe de la Balze, director of the Argentine Council for International Relations (CARI), did not write this projection yesterday but in 1993, when Carlos Menem and Domingo Cavallo were enjoying the best times of convertability. The problem, according to de la Balze, is that "Menem did not do it," and that this absence of reforms finally controlled the drove national collapse. Viewed in this light, the Menemist pretense of recovering power--Would it be against or without the support of Washington and the G7? This is the subject of this interview.

Q. Menemism presents an electoral proposition based on its presumed special relationship with the United States, as a way to extract the country from the pit. Reality or fiction?

A. In order to answer this question one must understand how the situation in Argentina is seen from there. They don't think that the vices have stemmed from the Washington Consensus (the pro-market reforms, designed by John Williamson, that were applied after 1990) but from the corrupt leadership classes of the country that applied them, among these Argentina. No one heeded from 1995 the second generation of calls for reform, necessary to improve the quality of government, "governance": to reduce corruption, assure an independent judiciary, improve education...Such was the initial success of the Consensus that they forgot to apply the missing half.

Q. But here it fell into discredit with the economic collapse...

A. In the United States and Europe they don't think that the Washington Consensus has collapsed, only not enough was done to open the economy, eliminate exchange controls and to deregulate. Also it is necessary to reform the state, to make it independent of politics of the lobbies and to arrest some of the corrupt, at least. I believe that (Eduardo) Duhalde did not understand that they think this way not only in the United States, but also in Europe.

Q. Some think that to this country always goes over the line...

A. Argentina is not seen as Uganda or Thailand. Its problem is that it is sufficiently similar to Europe as to be measured with the same ruler that they apply to themselves. Argentina is not Zaire nor Malaysia, but a western country, that has collapsed. Because of this it will not be possible to get them to measure with another measuring stick. It is the same reason that they did not accept the military dictatorship in the 70s, although they recognized similar regimes in other countries.

Q. What merit or guilt do they assign to Menem?

A. If the question is who did not make the missing reforms, the response is not Duhalde nor de la Rua but Menem. Menem did not do it! He bailed out the state, but did not transform it. He occupied himself with the economic agenda, but not the institutional.

Q. How is this viewed from Washington?

A. The United States sees the world from two different perspectives. One is that of ideals: democracy, human rights, free markets. The other is of that of pragmatism, which permits it be be the partner of a Mubarak or of a Musharraf if their strategic interests--oil, Israel, the fight against terrorism--demand it. This was always so. Washington was the partner both of Adenauer and of Somoza, of De Gasperi as of Duvalier. But when there is nothing vital in play, the only regime that governs is that of ideals. This is precisely the Argentine case. With this country, they can permit themselves to be moralists. We are not in the Persian Gulf.

Q. As posed it appears as good as bad...

A. In reality, in giving us this treatment they do us a great favor, because Argentina needs reforms, to end the colonization of the state by politics, to change this state that is at the Africal level, to the extent that its residents don't feel themselves the owners. The challenge is here. Nobody is going to save us. Here geopolitics is not in charge. So long as we don't have second generation reforms they will not give us dollars.

Q. And as to dollarization?

A. Days ago, in Boston, Anne Krüger, who is the official U.S. delegate to the IMF, destroyed the dollarization project. In the Treasury they don't want it either. Dollarization does not exist: No one defends it. Senator Connie Mack is gone; he was not re-elected.

Q. But Menem doesn't acknowledge defeat...

A. For Menem it is a pure game of images. If he promises to end the curruption, etc., the United States perhaps would support him, as whichever. But can he at this juncture convert himself into the modernizer of the Argentine political system? The assets that he generated for the country are already acquired goods: to have sent ships to the Gulf, to have privatized. De la Rúa dollowed in the same line. That Argentina stopped being the country of refuge of the Nazis is an achievement of all the democratic governments since 1983. No longer do we incite the North Americans in international conferences in order to play jokes on them, the southern cone is peaceful, we are integrated in the forces of peace of the U.N. But this politics is not the property of Menem.

Q. Neither did he serve it much...

A. The problem is that Argentina converted itself into an ally of the United States, but not in partnership. Mexico, by contraxt, is a great partner of Washington, but not an ally (they have between them problems like immigration and drugs), while Brazil has as much cooperation as conflict with the United States. Argentina does not posess a conflicting agenda, but exports to North America $3.5 billion, while Chile sells $4.5 billion, Brazil $12 billion and Singapore $25 billion. Neither did Argentines know how to generate a flow of U.S. investments trade sectors in order to convert ourselves into an export platform.

Q. So that Menem...

A. No. The magical realism doesn't function.
”Si la Argentina realmente quiere crecer aceleradamente deberá construir, en los próximos años, el Estado moderno, eficaz y autónomo que no supo crear durante los últimos cien años..., crear una burocracia civil, altamente profesional, estable en sus funciones y poco partidista.” Felipe de la Balze, director del Consejo Argentino para las Relaciones Internacionales (CARI), resalta que eso no lo escribió ayer sino en 1993, cuando Carlos Menem y Domingo Cavallo gozaban del mejor momento de la convertibilidad. El problema, según De la Balze, es que “Menem no lo hizo”, y que esa ausencia de reformas condujo finalmente al actual hundimiento nacional. Vista bajo esta luz, la pretensión menemista de recuperar el poder, ¿contaría o no con el respaldo de Washington y el G7? De eso trata esta entrevista.

–El menemismo presenta una propuesta electoral basada en su presunta relación especial con Estados Unidos como vía para sacar al país del pozo. ¿Realidad o ficción?

–Para contestar esta pregunta hay que entender cómo se ve la situación argentina desde allá. Ellos no piensan que los vicios hayan sido del Consenso de Washington (el decálogo de reformas promercado, diseñado por John Williamson, que se aplicó desde 1990) sino de las clases dirigentes corruptas de los países que lo aplicaron, entre ellos la Argentina. Ninguno hizo a partir de 1995 las llamadas reformas de segunda generación, necesarias para mejorar la calidad de gobierno, la “gobernancia”: reducir la corrupción, asegurar una Justicia independiente, mejorar la educación... Fue tal el éxito inicial del Consenso que olvidaron aplicar la mitad faltante.

–Pero aquí cayó en descrédito con el fracaso económico...

–En Estados Unidos y en Europa no piensan que el CW haya fracasado, sino que no basta con abrir la economía, eliminar el control de cambios y desregular. También se necesita reformar el Estado, independizar la política de los lobbies y meter presos a algunos corruptos, por lo menos. Creo que (Eduardo) Duhalde no entendió que no sólo en Estados Unidos piensan así sino también en Europa.

–Algunos piensan que a este país siempre le corren la raya...

–La Argentina no es vista como Uganda o Tailandia. Su problema es que es lo suficientemente similar a Europa como para que la midan con el mismo metro que se aplican a sí mismos. La Argentina no es Zaire ni Malasia, sino un país occidental, por más que haya fracasado. Por eso no podrá conseguir que la midan con otra vara. Es la misma razón por la que no aceptaron la dictadura militar en los ‘70, aunque admitiesen regímenes parecidos en otros lugares.

–¿Qué mérito o culpa le asignan a Menem?

–Si la pregunta es quién no hizo todas las reformas faltantes, la respuesta no es Duhalde ni De la Rúa sino Menem. ¡Menem no lo hizo! Achicó el Estado, pero no lo transformó. Se ocupó de la agenda económica, pero no de la institucional.

–¿Cómo se ve esto desde Washington?

–Estados Unidos ve el mundo con dos miradas diferentes. Una es la de los ideales: democracia, derechos humanos, mercados libres. La otra es la del pragmatismo, que le permite ser socio de un Mubarak o de un Musharraf si sus intereses estratégicos –el petróleo, Israel, la lucha contra el terrorismo– lo demandan. Esto fue siempre así. Washington fue socio tanto de Adenauer como de Somoza, de De Gasperi como de Duvalier. Pero cuando no hay nada vital en juego, el único decálogo que rige es el de los ideales. Este es precisamente el caso argentino. Con este país pueden permitirse ser moralistas. No estamos en el Golfo Pérsico.

–Así puesto parece tan bueno como malo...

–En realidad, dándonos este tratamiento nos hacen un gran favor, porque la Argentina necesita reformas, terminar con la colonización del Estadopor la política, cambiar este Estado que es de nivel africano, para que sus ocupantes no se sientan sus dueños. El desafío está acá. Nadie nos va a salvar. Acá no manda la geopolítica. Mientras no hagamos las reformas de segunda generación no nos darán los dólares.

–¿Y en cuanto a la dolarización?

–Días pasados, en Boston, Anne Krüger, que es la delegada oficiosa de Estados Unidos en el FMI, destrozó el proyecto dolarizador. En el Tesoro tampoco lo quieren. La dolarización no existe: nadie la defiende. El senador Connie Mack ya no está, no fue reelegido.

–Pero Menem no se da por vencido...

–Lo de Menem es un puro juego de imágenes. Si prometiera acabar con la corrupción, etcétera, Estados Unidos tal vez lo apoyaría, como a cualquiera. ¿Pero puede a esta altura convertirse en el modernizador del sistema político argentino? Los activos que él le generó al país ya son bienes adquiridos: haber enviado naves al Golfo, haber privatizado. De la Rúa siguió en la misma línea. Que la Argentina dejara de ser ese país refugio de nazis es un logro de todos los gobiernos democráticos desde 1983. Ya no azuzamos a los norteamericanos en las conferencias internacionales para embromarlos, pacificamos el cono austral, integramos las fuerzas de paz de la ONU. Pero esta política no es propiedad de Menem. –Tampoco sirvió de mucho...

–El problema es que la Argentina se convirtió en aliado de Estados Unidos, pero no en socio. México, en cambio, es un gran socio de Washington, pero no un aliado (mantienen entre ellos problemas como el de la inmigración y la droga), mientras que Brasil tiene tanta cooperación como conflicto con Estados Unidos. La Argentina no posee una agenda conflictiva, pero exporta a Norteamérica por 3500 millones de dólares, mientras que Chile les vende 4500 millones, Brasil 12 mil y Singapur 25 mil millones. Los argentinos tampoco supimos generar un flujo de inversiones estadounidenses en sectores transables para convertirnos en una plataforma exportadora.

–De modo que Menem...

–No. El realismo mágico no funciona.

posted by Richard 5:41 PM
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Bloomberg.com reports that Argentina will receive as much as $150 million in World Bank loan funds. The funds supposedly are a "reward" for the government's program to release funds frozen in bank accounts.
"Increasing disbursements under ongoing development projects will have multiple benefits,'' said Myrna Alexander, World Bank Director for Argentina. "Goods and services will be bought, mainly from local suppliers, the general population will benefit from project services, and the poor and needy will receive vital social assistance.''
In fact this is a drop in the bucket. The amount Argentina defaulted on last December was $95 billion.

2. A measure of how miniscule that World Bank disbursement is comes from Argentina's Economy Ministry, which reports that Argentina's financial system has lost $3.5 billion in assets since December (20+ times that World Bank loan) and anticipates losing $17 billion more (100 times that disbursement). So reports La Nacion:
The financial system will lose $17 billion by the end of the year, according to a frightening calculation of the Economy Ministery that will be presented today to the international experts landing in Buenos Aires in order to outline with the government the bank restructuring. In the Palacio de Hacienda they indicated yesterday to La Nacion that this figure is arrived at because between last month an next December it is expected to lose $6 billion by some 200,000 judicial orders. The $11 billion remaining will leave by the departure of funds through applicable restrictions (which allow withdrawl for specified purposes), according to the numbers that the Bank Central (BCRA) already had.
El sistema financiero perderá $ 17.000 millones hasta fines de año, según el escalofriante cálculo del Ministerio de Economía que será presentado hoy a los expertos internacionales que aterrizarán en Buenos Aires para diagramar con el Gobierno la reestructuración bancaria. En el Palacio de Hacienda indicaron ayer a LA NACION que se llega a esa cifra porque entre el mes pasado y diciembre próximo se perderán $ 6000 millones por unos 200.000 amparos judiciales. Los $ 11.000 millones restantes se irían por la salida de fondos dentro de las restricciones vigentes, según las cuentas que ya había hecho el Banco Central (BCRA).
3. José Manuel de la Sota, governor of Córdoba, announced that he will run for president in the Justicialist Party's (Partido Justicialista, or Peronist) internal elections, reports La Nacion.
"I have thought about it and decided to accept the challenge. I have a very simple reason: I am 52 years old and I am part of a generation that sees that its children are going to or want to go from Argentina," emphasized the governor in a brief discourse.
"Lo he pensado bien y he decidido aceptar el desafío. Lo hago por una razón muy simple: tengo 52 años y soy parte de una generación que ve que sus hijos se van o se quieren ir de la Argentina", enfatizó el gobernador en un breve discurso.
De la Sota has had presidential aspirations, but deferred to Santa Fe Governor Carlos Reutemann, until he dropped out. De la Sota is expected to pick up much of his support. Two other possible PJ candidates, Néstor Kirchner, governor of Santa Cruz, and Adolfo Rodríguez Saá, last December's president-for-a-week, haven't decided whether to run, within or outside of the Peronist party, the paper says.

4. Also running for president in the Justicialist Party's November internal election is former President Carlos Menem, a figure as formidable as he is unpopular. No sooner had de la Sota announced, than he was attacked on Carlos Menem's behalf by his nephew, the senator from La Rioja, Edurado Menem, reports Clarin. Senator Menem charged that de la Sota is the candidate of current President Eduardo Duhalde and a stand-in for non-candidate Carlos Reutemann. As it happens, Clarin reports in a second story, the Duhalde forces are waiting to see how he does, before committing de la Sota's candidacy. There are two reasons for the Duhalde faction's caution, the paper says: first, they want to wait to see what support de la Sota attracts, second, they are concerned with his low poll numbers. A poll taken in Buenos Aires (capital and greater) the second week of July, placed de la Sota second last in a field of 10. Of course, there are also suspicions that Duhalde's coolness to de la Sota is the product of a Menem-Duhalde deal, crafted during a recent Duhalde visit to Menem's La Rioja base.

posted by Richard 7:48 AM
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As recently as January of this year, Luis Miquilena was minister of interior and justice in the government of Hugo Chávez. On Saturday, reports
El Nacional, the former general secretary of Chávez's Fifty Republic Movement (Movimiento Quinta República, or MVR) attended a press conference of a new political grouping, Solidarity Party (Partido Solidaridad) and called for continuous demonstrations against the Chávez government and his political street gangs, the Bolivarian Circles.
Miquilena clarified that this movement, created by a group of citizens and politicians of different tendencies, ought to form part of a combination of united forces that want to eliminate the partisanship and confrontations that, in his judgment, the government of President Hugo Chávez created. In this sense, he explained that, although he participated in the process of creating the current government, bad administration and the diversion of public resources obliged him to take "the true democratic road that will help ease the current social situation that confronts the nation," he indicated.
Miquilena aclaró que este movimiento, creado por un grupo de civiles y políticos de diferentes tendencias, debe formar parte del conjunto de fuerzas unidas que desean eliminar el sectarismo y las confrontaciones que--a su juicio--creó el gobierno del presidente Hugo Chávez. En este sentido, explicó que, aunque participó en el proceso de construcción del actual Gobierno, la mala administración y el desvío de recursos públicos lo obligaron a tomar el "verdadero camino democrático que ayudará a aliviar la actual coyuntura social que enfrenta la nación", indicó.
Miquilena urged rejection of what he said were the anti-democratic actions--and celebrations--of the Chávez party.
For Miquilena is is time that the country "leaves behind bad this is a moment for the country "to leave behind the bad times," as the intended coup of February 4, 1992 (by Chávez) and the antidemocratic mobilization of April 1 which, according to his descripition, took on the same characteristics and kept the country submerged in the lie, "reduce the harassment of armed bands that want to limit the liberty of the people,", argued the ex minister in a clear reference to the attackes on the part of the Chavista circles. In this way he rejected the celebrations that the government has held to commemorate the 4th of February. "It is unacceptable to pretend to claim the 4th of Feburary as the beginning of a democratic process...what we should celebrate, are the elections of '98," he added.
Para Miquilena es momento de que el país "deje atrás los malos ratos", como la intentona golpista del 4 de febrero de 1992 y la movilización antidemocrática del pasado 11 de abril las cuales--según detalló--tuvieron las mismas características y mantienen al país sumergido en la mentira, "bajo el acoso de bandas armadas que quieren limitar la libertad del pueblo", agregó el ex ministro en clara referencia a los ataques por parte de los círculos chavistas. En este sentido rechazó las celebraciones que el Gobierno ha realizado para conmemorar el 4-F. "Resulta inaceptable que se pretenda reivindicar el 4 de febrero como inicio de un proceso democrático...lo que debiéramos celebrar, son las elecciones del 98", añadió.
According to El Universal, which also has a story on this press conference, he was a key Chávez associate during rise to power in 1998 and in the government, until he was ousted in January. Also at the press conference: National Assembly deputies José Luis Farías, Ernesto Alvarenga and Alejandro Armas, the general secretaryof the Movement toward Socialism (Movimiento al Socialismo, MAS) Leopoldo Puchi.

posted by Richard 6:52 AM
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Saturday, July 20, 2002
Elisa Carrió: The
Miami Herald profiles the leftwing Argentine parliamentarian, Elisa Carrió, the early leader in the campaign for the presidency. The election is next March. Apparently, the paper likes what it sees.
Instead of blaming foreigners for her country's economic misery, she is winning public support by asking Argentines to accept responsibility for supporting policies that were doomed to failure...
Interviewed in a simple rented apartment in Buenos Aires, filled with statues of the Virgin Mary, Carrió exudes the confidence of someone who believes her time has come. Hearing a question that started with ''if'' she were elected, she interrupted to insist, ``I will be president.''

A burly, straight-talking woman from the rural Chaco province, ''Lilita'' has little patience for formality. She is the exact opposite of Argentina's other famous female politician, the rags-to-riches Evita Peron, who dazzled with glamour.

Carrió, 45, obtained a law degree at 21, was a judge by 26, co-founded her political party, Alternative for a Republic of Equals, and has been a crusading congresswoman since 1995. She is a single mother, with children ages 7, 11 and 28.

She insists she is neither anti-American nor anti-capitalism. But she does blame U.S. foreign policy for leading to and deepening Argentina's collapse. She complains that Washington did nothing as Argentina replaced government monopolies with private ones, instead of with free and open markets.

She plans to be elected without accepting a peso from big business or running slick television advertising campaigns.
Carrió was slightly ahead of the competition in the most recent polls, all taken before her most formidable competitor, the Peronist governor of Santa Fe, Carlos Retuemann, said he would not run. Increasingly, it looks like she will be opposing Carlos Menem, the Peronist who was president from 1989-1999, and who is generally reviled but apparently in firm control of his party. Recent items noting Carrió and her electoral prospects appeared in El Sur here, here and here.

Argentine political observers believe she offers hope amid hopelessness. She is one of the few Argentine political leaders who can walk the streets without being harassed and attacked.
Carrió sees the race against Menem as one of good vs. evil. And she said she is ready to lead a country in crisis...
Carrió earned her crusader reputation when her congressional panel unearthed corporate fraud in privatization programs like those the United States backed throughout the region.
Carrió's election is by no means certain, of course, there being a long way to go until March. Should she be elected, however, she will launch Argentina on an experiment in utopian socialism not seen since...Since what?--Parallels fail (the totalitarian option gone)...the Paris commune perhaps? It will (would, still) be fascinating to watch from a safe distance, a bi-polar ride to live through, and as doomed to rapid failure as every other non-religious, non-coercive socialist scheme in the history of the universe.

posted by Richard 6:23 AM
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Rare hope: Reporting the FARC's attack on the mountain village of Toribio, the July 19
Miami Herald finds surprising unarmed civilian resistence.
When guerrillas attacked this remote mountain hamlet a few days ago, they ran into unexpected trouble from an outraged populace that refused to be bullied even as their town was being cut to pieces.

Instead of cowering in their homes, the villagers ran into the streets to demand that the rebels safeguard the local community center and respect the lives of the local police force...
The Toribío town tale is one of bravery and resistance. It's about a place where thousands of Colombians who don't take either side in the nation's 38-year-old war rose up against men with rifles, grenades and cooking-gas cylinders used as improvised mortars.

Beside the rubble where the Toribío police station and local bank once stood are 30 bombed houses, riddled with fresh bullet holes that mark 22 hours of heavy combat. But the community center and radio station are unscathed, and the police officers are alive. Toribío's story started at 1:20 p.m. on July 11 when leftist rebels from the Revolutionary Armed Forces of Colombia, or FARC, bombed the police headquarters. The 14 officers inside were besieged by about 300 guerrillas. When fighting knocked out electricity, many of the Paez Indians who live in the town of 28,000 mistakenly believed the FARC rebels had blasted their radio station. They ran from their homes -- toward the combat. As government soldiers in military helicopters fired from above and rifles rattled below, hundreds and then thousands flocked to the street. They stood in front of the indigenous community's town center and started making demands.

''People lost their fear,'' explained Gustavo Santacruz, whose home was destroyed.

The people asked guerrillas to spare their community center and radio station and even made rebels move an explosives-laden truck parked too close for their liking. The FARC complied.

And 22 hours later, when the police officers were out of ammunition and their headquarters was blasted to bits, the community pleaded for the FARC to spare their lives.

Again, the guerrillas complied.

''Those officers struggled all night defending this town -- so they could be taken out and killed or kidnapped? No, no, no, no,'' said Flor de María Alzate. ``We saw our local priest out there and the indigenous leaders out there, so we went out there, too.''
The Herald indicates that such unarmed resistence is a growing phenomenon in Colombia, especially in indian communities. Citing a report in Diario El Pais (Cali), El Sur noted this battle and its unusual outcome on July 12.

posted by Richard 6:06 AM
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