Thursday, February 28, 2002
Back and Forth: It's been a busy news week in Venezuela. Amidst the action, behind the confusion, its possible to see that the conflict between Chávez and the opposition entered new phase. Consider:
Feb. 20: The man himself may stay cool, but some of Chávez's allies are getting nervous, if this article from Yahoo! News - Dow Jones, in which they call for a new economic team, is any indication.
"'A new political and economic scene is thrown up and because of all that we need new actors,' Nicolás Ventura of the MVR (Venezuelan Revolutionary Movement) told the press. An ally of the MVR Francisco Solorzano agreed: 'We believe that it is better to replace members of the cabinet because now we have a new politics. This will give more credibility to the program.'"
"'Se lanzó una nueva política económica y por lo tanto tendremos nuevos actores,' informó a la prensa Nicolás Ventura de MVR. El aliado al MVR Francisco Solorzano agregó: 'creemos que es mejor reemplazar a dichos miembros del gabinete porque ahora tenemos una nueva política. Esto dará mayor credibilidad al programa.'"
Feb. 21: Meanwhile, Yahoo! News - Reuters reports that Chávez's poll numbers have tanked:
"The majority of Venezuelans want Hugo Chávez, who is confronted by military insubordination and a growing opposition, to leave the Presidency, according to a poll released Thursday. Fifty-three per cent of the 1,500 respondents believe that the former officer, who became President three years ago, ought to leave office. Thirty-eight per cent of the sample said that he should continue."
"La mayoría de los venezolanos quiere que Hugo Chávez, quien enfrenta insubordinaciones militares y una creciente oposición, deje la presidencia, reveló una encuesta difundida el jueves. El 53 por ciento de los 1.500 consultados opinó que el militar retirado, que llegó hace tres años a la presidencia, debe abandonar el cargo. El 38 por ciento de la muestra dijo que debe seguir."Feb. 26: The Associated Press, via The Las Vegas Sun, reported that "A fourth military officer has demanded that President Hugo Chavez resign, further undermining government efforts to reach out to foes and ease mounting political tensions."
Feb. 27: Moody's has changed to "negative" its outlook on Venezuela, according to Yahoo! News - Reuters, pointing out specifically that:
"The government's recent change to a floating currency exchange rate has not yet halted the loss of reserves, the flight of capital and high local interest rates"
"El reciente cambio que hizo el gobierno hacia un régimen de flotación cambiaria no ha podido detener hasta ahora la pérdida de reservas, la fuga de capitales y las altas tasas de interés locales", dijo Moody's."Feb. 28: Chávez's installation of a loyalist at the head of the state owned oil company, generated demonstrations from within the the company. Reports like this one, in El Universal, headlined "Nuevo grupo de empleados exige renuncia de directiva de Pdvsain," show they aren't stopping (more importantly, haven't been stopped) yet.
"in a press conference by the Hotel Tamanaco Intercontinental, the employees of the Pdvsa continued this afternoon their protests; this time with the Manager of International Financial Control, Juan Fernández, who asked anew, in the name of the workers of the company, the correction of the decisions taken by the President of the Republic, Hugo Chávez, in relation to the designation of a new board of Pdvsa."
"En una rueda de prensa desde el Hotel Tamanaco Intercontinental, los empleados de Pdvsa continuaron esta tarde con sus protestas; esta vez representados por el Gerente de Control Financiero Internacional, Juan Fernández, quien solicitó nuevamente, a nombre de los trabajadores de la corporación, la rectificación de las decisiones tomadas por el presidente de la República, Hugo Chávez, en relación a la designación de la nueva directiva de Pdvsa."Jan. 28: Stunningly,> according to El Universal:
"The ex-Minister of Defense, General of Division (R) Rafel Montero Revette, revealed today that the President Hugo Chávez is trying to divide the population into two groups in order to justify a coup."
"El ex ministro de Defensa venezolano, general de división (r) Rafael Montero Revette, reveló hoy que el presidente Hugo Chávez trata de fragmentar a la población en dos bandos para justificar un autogolpe.
It all adds up to is this: Chávez is no longer an irresistable force in Venezuela; he is no longer in full control of events there. He remains the single most important figure, because of his office, and because he continues to have control of the national legislature (due to electoral sweeps) and the judiciary (which he reorganized and filled with friends), both legacies of his popularity early in his tenure. This is now lost. As a result, he can no longer intimidate his opponents politically, but must do so (if he chooses to do it at all) through government institutions. But, his allies in these are getting nervous.
It is still to early to predict an outcome: There are many options: he could resign, stage a coup, be ousted in a coup, face a political rebellion among his legislative allies or a legal rebellion in among his judicial appointees, lead a strategic retreat away from his populist, big-government policies. All are possible.
Twenty years ago, the most likely outcome would have been a coup, either by Chávez, or against him. Today, although these remain possible, they are much less likely, for reasons discussed in ElSur a few days ago. So, whatever outcome is, it is likely to be political. This is good news and progress.
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Update: The cheerleaders in the Buenos Aires press continue to push hope. Today's Clarin, for example leads with three upbeat stories: "Deputies Debate the 2002 Budget," which looks toward its passage (foreign funds to follow), "If We Come to an Agreement with the IMF We Can Increase Access to Bank Accounts", quoting President Duhalde, and "The IMF Is Disposed to Send a Mission to Buenos Aires" (foreign funds to follow, again).
Not bad, huh?
"Below the fold" stories reveal a much more bleak picture.
Clarin reports that the Buenos Aires legislature today approved additional funds for education "amid incidents between teachers and police in the doors of the Legislature," ("medio de incidentes entre docentes y policías en las puertas de la Legislatura"), causing injuries.
Meanwhile, Clarin also reports, the equally unpopular judiciary continues to try to throw the posse off their trail by pursuing the banks "for allegedly defrauding savers whose savings are trapped in frozen accounts" ("por presunta defraudación a ahorristas cuyos ahorros están atrapados en el 'corralito'"), as if it was the banks who froze the accounts.
In fact, so tense has the country become, reports The Financial Times that politicians are increasingly unable to appear in the street without being confronted by outraged citizens.
"All over Argentina people are confronting politicians and publicly abusing them, regardless of their party affiliation or past record. They are hounded out of restaurants, shopping malls, bars and cafes by angry patrons - a treatment once reserved for army officers following the end of the last military government, under which as many as 30,000 people are thought to have died.
The 'political class,' as it is called in Argentina, is now universally blamed for the nation's century-long decline from the world's seventh richest nation to a basket case.
Nor are the other branches of government safe. The supreme court justices are facing so many protests outside their homes and their courts that one filed a complaint last week claiming illegal deprivation of liberty.
A bit overdrawn, perhaps containing just a tad of Schadenfreude? No, not according to an excellent local authority:
"Ex-President Carlos Menem stated today that 'no politician can travel quietly on the street,' without 'risking his physical integrity,' a situation he attributed to 'a merciless campaign against the political class."
"El ex presidente Carlos Menem sostuvo hoy que 'ningún político puede caminar tranquilamente por la calle,' ya que sería 'arriesgar la integridad física,' y atribuyó esa situación a ?una campaña despiadada contra la clase política."It's hard to see why, if it's true as Clarin and the other Argentine papers report each day, that the government is making progress toward freeing frozen bank accounts accounts, adopting a balanced budget, renegotiating financial arrangements with the provinces, and obtaining international aid, there is all this tension.
Part of the explanation is surely the day-to-day inconvenience and deterioration caused by the virtual severing of foreign economic ties. The Washington Post explains.
"In today's global economy, countries pay a steep price for breaking their promises. That lesson has been driven home in ways large and small in Argentina over the past couple of months, as the government defaulted on its debt, blocked Argentines from paying obligations to foreigners and stopped pegging the peso to the U.S. dollar. The import drought is just part of the punishment Argentina is undergoing.
The payment and pricing system is in chaos, with bank accounts partially frozen and companies scrambling to determine what to charge for their products as the peso, which has fallen to about half its previous value against the dollar, swings unpredictably on foreign-exchange markets."As a result,
"Printer cartridges have disappeared from store shelves, forcing some offices to reduce printing to a minimum. Argentine wineries face such a critical shortage of cork from Portugal that their trade associations warned this week of an "imminent danger" to the industry's exports of fine wine. Ford Motor Co.'s Argentine factory had to suspend production for a few days because some of its suppliers couldn't get imported components for door locks, armrests and other parts," and on, and on, and on.
While the Argentine people continue to blame their political class, it is worth remembering that largest party in Argentina is still the Personist Justice Party and that this party was founded and is named after Juan Peron, the man who started the country off on the populist politics of confiscation that has brought it to ruin today.
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"Why do they hate us?" If anyone should be asking this question it's Fidel Castro, "they" being the Cuban people, as this item from Yahoo! News - Reuters indicates.
Apparently all it takes to set off a stampede to get out of Cuba is the rumor that there is a way out of Cuba. In this case, a report that Mexican Foreign Minister Jorge Castenada had stated in Miami that Mexico would accept Cuban asylum-seekers, led a group of Cubans to commandeer a bus and crash it through the gates of the Mexican embassy in Havana.
"Young Cubans loitering around the embassy before the bus break-in told Reuters they had heard the rumor, and came to the embassy to seek an exit visa.
'I heard it on Radio Marti. I want to get out of this country -- anywhere. Why don't they let us go?' Ana Rosa Sanchez said in the midst of an angry crowd of young Cubans."Why indeed? Better yet, why don't they just go themselves?
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Tuesday, February 26, 2002
The Miami Herald | 02/26/2002 | Go into Colombia fully aware
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Las Vegas SUN: Fears for Colombia Rebel Hostages Rise The FARC was responsible for roughly a third of the 3,041 kidnappings last year, the foundation said. As of Dec. 31, guerrillas and other armed bands still held 910 people hostage.
The FARC was believed to be holding more than 200 hostages.
"Kidnapping has become the most lucrative industry for the guerrillas, the right-wing self-defense groups and common criminals," Colombia's Defense Ministry says on its Web site. "The only requirement for becoming a kidnap victim in Colombia is to be alive."
The FARC earned $325 million from kidnappings over a recent 19-month period, the National Police said.
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Sunday, February 24, 2002
EL TIEMPO -> Primer plano -> La campaña de terror de las Farc se agudizará
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Saturday, February 23, 2002
Is Latin America going "populist" in the wake of the apparent failure of "neo-liberalism"? This question seems increasingly on the mind of North American and European commentators. Two examples are this article from The Financial Times and this articlefrom the Latin Business Chronicle.
Neither piece recommends populism on the merits. Both worry that it is succeeding in Venezuela and may succeed in troubled countries like Argentina.
What's wierd, and a bit amusing, is that the fears these articles report, and help spread, are not supported by the real situations they describe. At times--particularly in The Financial Times article--the discrepancy reaches absurdity.
Consider one little thing. The Financial Times labels Argentine President Eduardo Duhalde as a "centre-right Peronist," who has "toyed with radical policies to deal with the crisis," suggesting he's a classical liberal being pushed toward populism. This is idiocy. To became President, Duhalde resigned as governor of Buenos Aires province, in which job, he borrowed and spent the province into its own bankruptcy and inaugurated the practice of paying provincial civil servants in "bonds." If anything, his course is exactly the reverse of what The Financial Times suggests; a populist Duhalde is being pushed to recognize the rights of savers, investors and other owners of property.
This kind of misperception runs throughout the piece, in subjects big and small. Toward end, for example, after noting the success of more or less market-oriented governments in Brazil, Chile and Mexico, The Financial Times says: "But even these newer, more successful leaders face political challenges. Ricardo Lagos, Chile's reformist socialist president, lost ground in congressional elections last year, for example." Yessss. But not to some party of populist, socialists or communists. He lost them to an alliance that is a bit to his right politically, and right behind him electorally.
The Latin Business Chronicle article is better. For example: Populism is
"'not an attractive model to follow,' says Carol Graham, a senior fellow at the Brookings Institution. 'I don't think anybody who lives outside are looking to Argentina or Venezuela as desirable places to live in.'"Obviously, yet somehow there's enough of a worry about it to stimulate articles like these.
As a matter of fact, populism can't succeed. The populist demagogue's appeals to envy and his redistributionist promises may bring immense initial popularity. But, once in power, the most a populist can deliver is a one-time influsion of confiscated wealth, one-time because the confiscation drives money away--new foreign money obviously, but also whatever in-country money escaped the first round of theft. Once the stolen wealth has been exhausted, people find themselves worse off than before, and the populist demagogue finds himself with a big unpopularity problem.
Time was when this end was a long time coming. Juan Peron managed a 10-year run in mid-20th Century Argentina, with a half-decade reprise in the 70s (this last serving mainly to prove that historical tragedy does indeed repeat as farce). In the present more cynical, sophisticated time, people with money are quicker to see what's coming and fleeter of foot, when it comes to decamping with their dough. Moreover, they are greatly assisted in this by 21st Century systems of communications and finance, which didn't exist in the glory days of Juan and Evita. Consequently, it has taken Venezuela's Chavez but four years to travel from genuine popularity to the kind of rent-a-mob popularity that fading authoritarians muster. Moreover, Chavez has been able to put in place only the legal framework for his "Bolivarian Revolution." The putting into practice part is meeting surprising, and hearteningly peaceful, resistance. Hundreds of thousands demonstrate, active and retired officers suggest he resign, the executive staff of the state oil company protests when Chavez installs a crony. He keeps at it; "civil society," as they call it, keeps at it. But the daily flow of news from Caracas suggests the momentum has shifted against Chavez.
Time also was when a Latin American regime would end when someone appealed to force. This too is a much less credible threat than in the past. Consider:
1) A sitting President (demagogue, elected president, general, other) would attempt to turn himself into a real dictator: Next to wrecking the country's economy (which is proceeding apace) this is the big fear about Chavez in Venezuela. But, Chavez (or someone like him elsewhere), contemplating this option, must consider that failure today carries a risk it didn't used to carry. Even the demagogue who graduates to dictator can't be certain that, at worst, his fate will be a Swiss bank account and a villa on the Riviera, next door to Baby Doc, a yacht at the dock. Under the right circumstances, he could find himself in the Hague, in the dock next to Slobodan Milosevich, or maybe just in Caracas. Peru's Alberto Fujimori escaped this fate mostly because the still tribal Japanese took him in.
2) The military would take over: Paradoxically, overthrow by the military--the end of many a Latin dictator--was usually a good outcome for the overthrown (assuming he survived the moment). In the instance, foreign outrage at the coup, or, alternatively, foreign desire to see it succeed, helped ease the dictator into a comfortable exile. Longer term, the record of the military government worked to rehabilitate the former dictator at home, eventually turning him into something of a martyr and his time into something of a golden age, which is what brought Peron his low-rent second administration with his cut-rate second wife. It appears that generals all over Latin American have learned this lesson. In Argentina, the military regularly reiterates its disinterest in bailing out civilian politicians. In Venezuela, it's a bit more complicated, but the desire for a military coup seems greater in the streets than the barracks.
3) In action or reaction, the threat (or promise) of Communism would bring out the guns: Directly, more or less explicitly communist groups resorted to violence. The most successful example is Fidel Castro; others include the Shining Path (Peru) and the FARC, which plagues Colombia to this day. Because victory in Soviet days brought the communist dictator important and otherwise unobtainable support (a turnkey secret police apparatus, subsidies, and the protection of western leftists), turning communist held certain attractions for any generic left-wing and populist would-be dictator. Of course exercise of this option also brought violent opposition, internally and from the United States, as Salvador Allende (Chile) and Daniel Ortega and company (Nicaragua) learned to their sorrow. (More legitimate governments--see especially Mexico--made it a practice to cozy up to Castro, to irritate the United States and win some immunity from left-wing agitation at home. But, that's another subject.) Importantly, it's not only the threat to go communist that went when the Soviet Union went. Gone too is the ability to pressure the United States by threatening to go communist. Notice how little Chavez gains from his friendship with Castro--who has nothing to give and no longer threatens the United States--except a bit more hostility among already hostile segments of his own population, and the ability to pose as a bad boy next to the baddest boy in the hemisphere. Notice also the absence of urgency in the Bush administration's response to the Duhalde administration's pleas for money.
So the answer is "No," Latin America is not going populist. Absent interruption by an increasingly unlikely appeal to force, the politicians are going to have to work things out themselves. They're going to have to deliver successful economies, and deliver them over the long run. Once this sinks in and they begin casting around for a policy that can deliver over the long run, they will find there is only one, the one that they call "neo-liberalism" and that we call capitalism.
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Demographically, Mexico can be considered developed says the Fincancial Times.
* Couples average 2.3 children, down from seven in the early 1970s.
* Life expectency is 75, just five years short of the most developed countries, and increased 15 years from 1974.Reasons include access to family planning and government investment and health, the paper says. Perhaps even more important is this: Kids used to be their parents only support in retirement. More recently, the government has created a social security system, which oversees the pensions of about one-third of Mexico's citizens, mostly former employees of the state and large corporations.
Of course, little has changed for the millions of Mexicans in impoverished rural areas, where it is still common to see families with 10 children." Still, here is an example of success and a practical lesson in development.
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Economist Steve Hanke, in the below cited Forbes explains that "there was no moral or factual justification for Argentina's devaluation and nullification of contracts." So, he continues,
"The Bush Administration should refuse to offer any direct aid and should veto any proposal for the International Monetary Fund, the World Bank or the Inter-American Development Bank to lend money to Argentina."and concludes,
"The U.S. should not tolerate the plundering. It should pressure Argentina's rulers to restore people's property and the rule of law."
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"(T)he hoodlums running Argentina". That's how the editor of Forbes described the hoodlums running Argentina, notes Mary Anastasia O'Grady in her Feb. 22 "The Americas" column in The Wall Street Journal (paper only, no link). Hoodlums because, they are the current, blatant practitioners of that "intractable Argentine tradition of shredding the rule of law and stomping on property rights..." They blame markets and promise good behavior but, O'Grady states "What sank Argentina was a stubborn resistance to accepting limits on government scope and power." And, as they wreck companies and steal savings, they're still doing it.
By the way, the item in Forbes suggests Argentines could soon safeguard their money against domestic kleptocrats by keeping it in foreign banks, in foreign countries, and in foreign currencies, yet easily accessible for daily transactions in Argentina via the internet. This could come as soon as software like Passport becomes reasonably hack proof.
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Friday, February 15, 2002
Free trade: Uruguay and the United States have agreed to create a bilateral commission to negotiate a free trade agreement, reports Noticia Observador, quoting Uruguayan President Jorge Batlle. Good news, if they can get it done.
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La Nacion reports that German Chancellor Gerhard Schröder, on a visit to Argentina, asserted his support for new IMF aid to Argentina without new conditions. The U.S. has insisted that Argentina produce a credible and sustainable plan before the country gets new aid.
What's behind Schröder's move?
First, many individual investors in Germany bought Argentine debt directly, and stand to lose their entire investment if Argentina doesn't agree to eventual repayment. (U.S. investors, by contrast, tend to own Argentine debt through mutual funds, in each of which it is a minor part). Facing an election he might lose later this year, Schröder no doubt anticipates some reciprocal soothing noises about repayment from Duhalde for his German constituents Duhalde.
Second, the German electronic giant Siemens is in a business dispute with the Argentine government over a cancelled contract. Although Schröder stated that the matter "is the subject for nogotiation between the business and the government of Argentina," ("es una negociación entre la empresa y el gobierno argentino"), he added that "the German government supports the position of German busines..." ("el gobierno alemán apoya la posición de una empresa alemana...") Again, Schröder no doubt expects Duhalde to show his gratitude in this case.
Third, it is probable that Schröder finds this an easy opportunity to slap the United States for its "unilateralism." Certainly his statement can only complicate U.S. efforts to get Argentina to develop economic policies that don't depend on unending infusions of foreign aid.
Needless to say, Schröder's stance was much appreciated by President Eduardo Duhalde.
One small point to the good: Schröder did urge Argentina to avoid protectionism, saying that
"in order to bring more investors from Germany and to keep existing ones, the government must not produce protectionism in the country."
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Difficulty of change: Mexico and the world were understandably optimistic when Vicente Fox and the National Action Party (PAN) broke the Institutional Revolutionary Party's (PRI's) 80-year monopoly on national political power in July 2000. Unsurprisingly, that initial euphoria disapated long ago, to the point that the PRI has had considerable success in recent state elections. Still, it is sobering to be faced with an account that shows clearly how long and difficult the road that still lies ahead is if Mexico is to become, politically and economically, a thoroughly open and honest country.
Such an account appears in today's "The Americas" column in The Wall Street Journal. The piece, by Sergio Sarmiento, begins with the apparent transfer of as much as $120 million in cash from Pemex, the national oil company, to the company's union, to the PRI to buy votes during the 2000 presidential campaign, which Fox won. For complete details, see Sarmiento's column.
The fundamental problem Sarmiento highlights is the conflict Fox faces between investigating and punishing past abuses on the one hand, and preventing future abuses on the other.
"PRI leaders are claiming that, even if the investigations prove to be well founded, the details were leaded to the media for political reasons. They have served notice that they will not accept any parlimentary collaboration with the PAN.
President Fox has responded...that he will not close his eyes to corruption in previous PRI governments in order to get support for his reforms in Congress. The stalemate could mean Mr. Fox's hopes of reforming major areas of the country's ecnomic and political legislation will be dashed."Even complete success, should Fox press the investigation, might not further the the country's long-term interest, Sarmiento suggests.
"Under present electoral rules, the use of government funds by a political party could mean the cancellation of its registration...But government officials say that they are not interested in destroying the PRI..."because
"Banning it could threaten Mexico's political stability."If this is the situation in Mexico, consider how much farther must Argentina and Venezuela come, not to mention Colombia, Uruguay, Peru, Ecuador and the small states of South and Central America.
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Thursday, February 14, 2002
Dollar stable; no pesos to buy it: All concerned--from government officials, to IMF functionaries, to the Argentine people--are relieved that the peso hasn't collapsed against the dollar, bringing back the bad old days of hyperinflation. But, as information near the end of this story from Yahoo! News - Reuters suggests, the peso's stability is due to the economy's weakness, not its strength.
"Speculators, who locals call 'arbolitos,' or little trees, stand on street corners offering black-market dollars to those who cannot face waiting in line for hours at foreign exchange houses.
But the locals don't have enough cash in pesos to snap up the dollars available and produce the dive in peso value that had been feared with Monday's full flotation. The country had a dual system for just over a month with a fixed peso for exports and a floating peso for the public.So, how bad is it:
"'I had saved up $7,000 to move out on my husband and get a divorce,' laments Rosa, an unhappy Buenos Aires hairdresser.Now, her money's tied up, and so is she.
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Economic growth, but...: Yahoo - Dow Jones reports that industrial production in Colombia grew by 2.6 per cent in 2001 over 2000. But, quoting a spokesman for the author of the report, the Asociación Nacional de Industrialistas:
""In this country, the guerilla war continues being one of the biggest obstacles to production, limiting the possibility of internal and international investment, which compromises present and future growth.' indicated the spokesman."
"'En este país, el conflicto interno continúa siendo uno de los grandes obstáculos para la producción, limitando las posibilidades de inversión interna e internacional, lo cual compromete el crecimiento presente y futuro', señaló el informe."
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Wednesday, February 13, 2002
Back to barter: The return of barter to Argentina (La Razón) is an indicator of just how bad the country's economic climate has begun. It's also a tribute to the people's resilience and, perhaps, a school for understanding the usefulness, honesty and creativity of markets.
Barter clubs, "trueques," may well be the only economic institution in the country that is growing today. The product of four years recession, trueques have grown rapidly, in number and membership, since December's bank account freeze (the "corralito") and January's devaluation, until, says La Razon,
"...already today there are a million 'prosumidores' (producers and consumers) that participate actively in the clubs, trading goods and services worth about three billion pesos per year."
"...hoy ya son un millón los 'prosumidores' (productores y consumidores) que participan activamente en los clubes, que mueve cerca de 3 mil millones de pesos por año."The clubs operate not by direct exchange by providing members with credits for the products or work they bring to the club. These credits can then be used to purchase the products or work of other members.
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Cause and effect: "Chavez Promises Less Combative Style" is the headline on this Associated Press item. No doubt, Chavez is a bit chastened by the demonstrations in recent weeks and the evidence of unrest in the military that surfaced last week. Even less doubt that the subject of this article from the BBC had something to do with it. If Chavez does indeed moderate his rhetoric, it would be an important development. It would indicates some loss of confidence and a new tentativeness on his part. It would encourage the opposition.
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Success? The peso float has bought the Duhalde government time to solve more fundamental problems, says, (among others) Financial Times. But, remaining problems include "over-optimistic budgetary projections...the abuse of property rights in a draft bill designed to protect local companies from creditors" (to be vetoed, in part, according to this article in La Nacion), scores of bankrupt companies, scores of other companies unable to pay offshore bills, and on and on and on.
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Big government: The business daily Estrategia reports that government spending in Chile has reached a record 24.6 per cent of gross domestic product. This is high.
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Bad news for rural Colombia: Colombian coffee falls to its lowest value in 100 years, ("Café colombiano cae al valor más bajo en 100 años") reports El Tiempo (Bogata).
The paper attributes low prices to the elimination of a world-wide export control agreement in 1989. And Colombian government export subsidies have been limited, from lack of funds.
"The difficulties of 300,000 farm families who derive their income from growing have led, together with the new world coffee scene, to a tremor in Colombian coffee sector institutions..."
"Las dificultades de 300.000 familias campesinas que derivan sus ingresos de la siembra del grano han llevado, junto con el nuevo escenario mundial cafetero, a un remezón en las instituciones colombianas del sector..."
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Avances: S&P rebajó perspectivas de Venezuela por fuga de capitales
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FT.com | News and Analysis | World Article
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Tuesday, February 12, 2002
Dissident officers released: According to The Financial Times:
"A Venezuelan air force colonel and a national guard captain who called on President Hugo Chávez to resign turned themselves in for questioning by their respective military superiors on Monday but both were released by the afternoon."
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Not so free float? Like other papers, The Financial Times reported that the peso surged then fell back during yesterday's trading. Unlike most other papers, however,The Financial Times does not see the relatively stable peso as reflecting entirely good news, in part because to achieve stability
"the central bank had dipped into some of the $14bn (£9.9bn) in reserves it says it will use to offset demand for the dollar."In addition, the paper suggested, to a great extent stability is being encouraged by other government controls, which have not been removed, among them
"strict controls on dollar sales, including a ban on hard currency operations by banks in greater Buenos Aires and paperwork designed to slow the turnover of customers." Moreover, the peso's stability is also a secondary benefit of otherwise undesirable economic circumstances, including weak liquidity (the absence of pesos to put into dollars), capital controls (reducing the demand for dollars) and the immediate need of many people to sell hoarded dollars to buy pesos to pay bills.
As a result, not all assessments were positive:
"Some analysts said the government had used the exercise to shore up public support, which remains precarious because of continuing social unrest. 'The fact that the peso hasn't exploded does not mean we are suddenly OK in Argentina,' said Norberto Sosa, economist at Raymond James, a stockbroker in Buenos Aires.
'There is still no balanced budget, there are no obvious signs of economic reactivation. . . the financial system has to be shored up.'"
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On the first day of the peso's free float, "The dollar moves without major change," reported Clarin. (El dólar se mueve sin mayores cambios.) Mostly, the dollar moved between 1.8 and 2.1 pesos, about where its been since the one-to-one link was cut. The absence of a quick drop marks a victory for the Duhalde government.
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A lengthy article in The Wall Street Journal (International section, no link) examines the apparent loss of support within the Venezuelan military for the country's President Hugo Chávez.
The piece begins by noting last week's public requests for Chávez's resignation from two active officers. The military has stayed out of politics since it helped overthrow the Marcos Perez Jimenez dictatorship in 1958 (the notable exception being Chávez's own failed coup in 1992).
Evidencing military opposition to Chávez, The Journal notes that
"Political analysts suspect it was armed-forces members who recently leaked key memos and videos to the media documenting secret contacts between the Chávez government and neighboring Colombia."In addition, the article reports that many military officers have been uneasy about Chávez's close ties with Castro.
Among the sources of discontent in the military is the fact that Chávez has been continually reshuffling the officer corps, probably to install loyalists in key posts. In addition, Venezuelan media has fanned discontent by reporting on currupton among top military commanders, Chávez himself created these opportunities by deciding, early in his presidency, to put the military in charge of social welfare and education programs.
Considering that: 1) elements of the military have apparently joined the middle classs, business and labor in opposition; 2) the historical similarities to the situation that led to the overthrow of Perez are familiar to Venezuelans, and 3) the opposition's demonstration on Jan. 23 (the anniversary of the anti-Perez coup) drew far more support than either Chávez's demonstration that day or his celebration on the Feb. 4 anniversary of his own coup, it's no wonder there has been a lot of recent talk of a coup in Venezuela.
Still, the talk of a coup seems premature. Chávez maintains 35% popularity in recent polling (late December). He retains the enthusiastic support of some 20 per cent of population. And, he continues to control major government institutions, including the military. But, if capital flight continues and the economic situation deteriorates further--and what else can happen, while Chávez toys with private property--a coup could quickly become more than talk.
. . .
Monday, February 11, 2002
Free (falling?) peso: Early reports (from Clarin.com and BBC News, for example) of trading on the first day the dollar-peso link was broken show a declining peso. The BBC News and Clarin report an early decline stabilizing at about 2.3 pesos to the dollar, down 12 per cent from 2.05 when trading was halted last week.
" Long lines formed at many banks, as Argentines rushed to convert their devalued pesos into US dollars," reported BBC News.
Three limitations remain on the free float, Clarin noted: 1) the Central Bank will intervene to prevent a steep decline in the peso's value (to the extent it can); 2) banks are not allowed to sell dollars directly to the public, and 3) government permission is required to remit dollars overseas. Finally,
"The other leg to prevent the dollar from soaring is the arrival of help from the exterior. For this reason, tonight (Economic Minister, Jorge) Remes (Lenicov) will go to the United States in order to open talks with the IMF."
"La otra pata para que el dólar no vuele es que llegue ayuda del exterior. Por eso, esta noche Remes irá a los EE.UU. para abrir el juego con el FMI."As always the question arises: Will the IMF (and U.S.) help and under what terms?
. . .
Opposition's military hero: Today is the day Pedro Soto, the military officer who made news calling for President Chávez's resignation at an opposition rally last Thursday, is due to surrender to military authorities. BBC News provides fascinating details of Soto's rise from relative obscurity. Had events stopped with Soto calling for Chávez's resignation
"most Venezuelans would have regarded the moustachioed colonel as just another dissenter in the increasingly long list of Mr Chávez's critics.
But a few hours later the military police tried to arrest Colonel Soto in his car on a busy Caracas highway. The attempt failed after motorists prevented the colonel from being taken away.
Several thousand, mainly middle-class, Venezuelans then spontaneously took to the streets in support of the colonel's stand...Still wearing his blue air force uniform, the colonel led the march of pot-banging protestors to Mr Chávez's residence to demand he step down."The BBC News report also says that Soto continues to maintain that most in the military oppose Chávez and that he was once an aide to former president Carlos Andres Perez, a fierce opponent of Chávez.
. . .
Sunday, February 10, 2002
A good, if conventional, summary of Argentina's recent history appears in the Economist. Note especially the Chart, which displays graphically the country's troubles. It's the GDP graph on top that's the killer.
. . .
Press freedom pressure. Chávez finds himself in a bit of trouble with the international rights police, according to this story from Yahoo! News - Associated Press, entitled "Harassment of Reporters Condemned."
"An official with the Organization of American States on Friday warned that harassment of journalists was endangering press freedoms in Venezuela."
'These aggressions against journalists constitute a threat not only to freedom of expression but to their right to work,' said Santiago Canton, the executive secretary of the OAS Inter-American Commission of Human Rights.
Canton was investigating press freedoms in preparation for a more extensive study in April. The April visit is on the invitation of President Hugo Chavez, who insists there is full freedom of expression in Venezuela.
Journalists accuse Chavez of inciting his supporters to violence against reporters through his verbal attacks against the news media.
Chavez says the news media is biased in favor of the middle class-based opposition. He argues that press freedoms are intact because his government has never closed any media organizations or censored or jailed journalists."
. . .
Chávez discounts coup "From Hugo Chávez Dismisses Rebellion", in Yahoo! News - Associated Press:
"There is no serious opposition" in Venezuela, Chavez told Chilean State Television in an interview broadcast Saturday.
'There is no risk (of a coup),' the former army paratrooper said. 'I know the Venezuelan armed forces. ... I know who is who in the barracks.'"Chávez Doubtless right, for now. But, it's not a good sign for him that he began the week celebrating his own failed coup 10years ago, and ended with the entire country fearing, or hoping for, a coup against him. If conditions continue to deteriorate, if he is excessively vindictive against the Air Force officer who sought his resignation, the rumors of a coup could turn out to be merely premature.
. . .
Saturday, February 09, 2002
The country calms down: After two days of demonstrations in favor and against the Government of Hugo Chávez, the city began to calm itself with the beginning of carnival," reports El Mundo. ("Luego de dos días de manifestaciones a favor y en contra del Gobierno del presidente Hugo Chávez, la ciudad comienza a calmarse con el inicio del asueto de Carnaval.")
Air Force officer update: Meanwhile, according to his attorney, the Air Force officer who demanded Chávez's resignation at a public rally on Thursday, Pedro Soto Fuentes, will not surrender to military forces until Monday, according to El Nacional. The attorney also suggested there are many more with Soto's views in the military.
. . .
Currency Price: Vice Economic Minister Jorge Todesca said the government expects a jump in the value of the dollar against the peso in the first days after the currency markets are opened Monday. But, "The first week of operation is not going to be representative," Todesca told La Nacion. He refused to describe the Central Bank's currency market itervention to support the peso's price.
. . .
Blame and promises: President Eduardo Duhalde used his regular radio show, Conversando con el Presidente, to denounce speculators and promise the government would produce some 20 basic medicines and sell them at controlled prices, repoted La Nacion.
. . .
Friday, February 08, 2002
From Yahoo! News - Associated Press "A second military dissident joined the daring protests against the government of President Hugo Chavez on Friday, as government opponents and supporters staged dueling demonstrations in the capital."
. . .
Protests heat up "Venezuelans March Against President" reads the BBC News headline.
"Thousands of people have taken to the streets of the Venezuelan capital to support an air force colonel who has called for the resignation of President Hugo Chávez.
The protesters gathered in Caracas after military police attempted to arrest the officer, Colonel Pedro Soto. The colonel urged the demonstrators to follow him to Mr Chávez's residence to demand that he step down.
It is the second protest this week against President Chávez, who is accused by his opponents of acting like an autocrat."Tensions are rising.
. . .
Prices: In a radio interview described in the paper Clarin (Buenos Aires), Minister of Production Ignacio de Mendiguren hints at retail price increases to come (in addition to those already realized). Blogger treasaigh.com has a brief, pointed comment on the above article.
Recriminations: Clarin also reports on actual and pending detentions of former police and security officials for "political repression," in the riots that preceeded de la Rua's resignation, in which five people were killed ("por la represión policial en Plaza de Mayo el 20 de diciembre cuando murieron cinco personas"). Among those possibly charged, de la Rua himself. Duhalde and his minions ought to be careful about criminalizing law enforcement decisions. They may soon need to control riots themselves. It's one thing to prosecute police misconduct, especially if it leads to death and injury, another to prosecute misjudgements made in good faith that have the same fortunate result. The next test of regime's fidelity to the rule of law may well be whether it can and is willing to make this distinction (that is to decide to prosecute these cases on the merits), or whether it decides to prosecute in an attempt to divert public ire onto scapegoats.
The Court: Along the same lines, La Nacion reports that members of the Supreme Court, under investigation for removal by the federal legislature, refuse to plead guilty and go quietly. In a BBC interview, reported in La Nacion, two justices (one the chief) "...asserted that 'this crisis puts to the test the strength of Argentina's (government) institutions, because they (the government) is trying to displace the Court through violence.'" ("...aseveró que 'esta crisis pone a prueba la fortaleza de las instituciones en Argentina, porque están tratando de desplazar a la Corte a través de la violencia.'")
. . .
Good news: In contrast to continuing problems in Argentina and Venezuela, the Financial Times reports that "The ratings agency Standard & Poor's on Thursday upgraded Mexican sovereign debt to investment grade, delivering a long-awaited and much-needed boost to investor confidence."
. . .
Rumors of a coup: The Financial Times suggests unrest in the Venezuelan military may be near the boiling point.
"An active air force colonel on Thursday publicly called for the removal by constitutional means of President Hugo Chávez in an unprecedented attack from within the Venezuelan armed forces on the country's controversial leader. (See below for a link to El Nacional's report on this incident.)
The intervention came amid continuing rumours of an impending coup (empahsis added), a further deterioration in diplomatic ties with the US and evidence that the country's economic problems are deepening, with currency and bond prices falling sharply.
Claiming to represent the majority of senior and middle-ranking officers, Colonel Pedro Soto said Mr Chávez had 'humiliated' the country when, earlier this week, he celebrated the 10th anniversary of his failed coup attempt at the Caracas military headquarters."
. . .
Hard line, or soft (cont.)? The U.S. seems to be taking a tougher line toward the Duhalde government and its so-called reforms. Or so suggests this article from The Financial Times, reporting that Argentine Economy Minister Jorge Remes Lenicov intends to come to Washington next week to open talks with the IMF. After noting an IMF official's comments, the paper continued:
"Separately, one Bush administration official warned not to assume that IMF lending to Argentina would be restarted, saying the visit was just, 'one step on a very long road.' The official said the talks would be used to tell Remes Lenicov what Argentina must accomplish to lay the groundwork for a new IMF loan package. But he stressed there would be no discussion of the size of any potential loan at this stage.
'They have done a couple of things, but not enough yet to warrant a program,' the Bush official told Reuters. 'They are going to have to do some more things and this is a good opportunity to sit down and talk about these issues.'"U.S. officials believe that the de la Rua administration effectively forced the IMF into granting aid last summer by raising expectations and the market in Argentina to the point where aid could not be denied. Not so this time:
"The Bush administration official warned Remes Lenicov and the Argentine government, 'To raise expectations of a new IMF package at their peril' -- an indication that the negotiations ahead will not be easy."
. . .
As usual, Mary Anastasia O'Grady's "The Americas" column in The Wall Street Journal is an oasis of thoughtful analysis in a desert of cant. The headline sums up the article: "As His Popularity Slumps, Chavez Behaves More Like Fidel."
O'Grady cites disquieting evidence about Chávez's intentions, including:
* the creation of "Bolivarian circles" reminiscent of Castro's Committees to Defend the Revolution;
* suspicious contact between Venezuelan military personnel and FARC guerillas from Colombia (caught on video);
* persistent "rumors that the Cuban dictator has lent security and intelligence forces to Mr. Chávez..." and,
* the conclusion of a former CIA officer and now Hudson Institute scholar, who believes that Castro is attempting to recruit allies among Latin American military officers to "keep the U.S. from helping democratic governments and political movements from defending themselves until it was too late."But the phrase "until it was too late" points to what is just the problem for Castro and would-be emulators like Hugo Chávez (if that is indeed his ambition). In the absence of Soviet Union, which provided Castro with subsidies, the repressive resources of the KGB, and the possibility of strategic cover, it is hard to see how it can ever really be "too late." Doubtless a Venezuelan Castro would give Venezuelans difficult moments, but it is difficult to see how Chávez could install such a regime over the opposition of Venezuelan society, much less maintain such a regime for his lifetime, and still much launch it into perpetuity. Who, afterall, believes Castro's regime will long survive him?
Anyone wanting to set himself up as dictator needs a monopoly on force. But, opposition to Chávez has already manifested itself publicly in the military. It is widely suspected that the video that appears to reveal cooperation between elements of the Venezuelan military and FARC guerillas was leaked by someonw in the Venezuelan military. More recently, reports El Nacional:
"An Air Force colonel named Pedro Soto unexpectedly participated in the Voices for Democracy forum, convincingly expressing his rejection of official policy and threats against freedom of expression. In his speach, he asked President Hugo Chávez to resign. Soto arriced at the avent accompanied by Retired Colonel (Air Force) Silvino Bustillos and other retired military."
"El coronel de la aviación Pedro Soto intervino de manera imprevista en el foro Voces por la Democracia para expresar contundentemente su rechazo a la política oficialista y a las amenazas contra la libertad de expresión. En su discurso emplazó al presidente Hugo Chávez a que renuncie. Soto llegó al evento acompañado del coronel retirado (Av.) Silvino Bustillos y de otro militar también retirado."
It is easy to make too much of one airman, who may have his own agenda, or may not. Nevertheless, it is apparent that O'Grady is correct in saying that the vast majority of Venezuelans now oppose Chávez designs. It is also apparent that O'Grady is correct in her advice to the U.S: "If the U.S. wants to lead the region toward stability, it must advance true reform. Opening trade would be a good start."
. . .
Thursday, February 07, 2002
Vapor politics: Referring to Duhalde's promise of elections and campaign finance "reform" treasaigh.com notes that, "According to the President the changes are profound and will serve to found a 'Second Republic,'" and calls it "vapor-politics." A nice characterization of the cascade of announcements that's come from government, without result.
. . .
The unkindest cut of all: The Financial Times compares Venezuela to Argentina:
"Central bank reserves have dropped by $3.2bn, or 23 per cent, in the past two months to $10.5bn, as a result of political tensions and fears among banks and the public that the government is considering exchange controls or a devaluation of the local currency, the bolivar....
Venezuelan debt was on Wednesday trading at a spread of 1,278 basis points over US Treasuries, its highest level since Mr Chávez took office three years ago and the highest level of perceived risk in Latin America with the exception of Argentina."
. . .
Credit rating cut: Fitch rebaja calificación de deuda de Venezuela.
"The rating agency Fitch said on Wednesday that it trimmed its assessment of the sovereign debt of Venezuela, saying that the Latin American country has not taken forceful measures to stop the flight of capital from the country."
"La agencia calificadora Fitch informó el miércoles que recortó las calificaciones para la deuda soberana de Venezuela, diciendo que la nación latinoamericana no ha tomado medidas contundentes para detener la fuga de capitales del país."
. . .
Soft line, or hard II? The Financial Times reports that Argentina's leaders are becoming aggressive panhandlers.
"The Argentine government chided the IMF on Wednesday for not voicing support for its recovery plans, aimed at averting economic meltdown and calming public anger, saying it was in a 'chicken and egg' dilemma with multilateral lenders.
There should have been a stronger reply" from the International Monetary Fund, Economy Minister Jorge Remes Lenicov told reporters, complaining of a situation where lenders demand a solid plan before sending aid, but the plan itself depends upon aid guarantees."So, is aid coming? Maybe yes, maybe no. Meanwhile, despite the government's efforts to control everything with instrucciónes, business proves a hardy weed.
"On the street, marketeers known as 'arbolitos,' or 'little trees' because they sprout green dollar bills, are selling safe-haven dollars despite foreign exchange markets being closed."
. . .
Hostile environment: Standard & Poor's (link under "Latin America" near bottom of page) looks at the impact of the Duhalde government's measures on the financial system and sees little to like. This short analysis summarizes the government's "disjointed strategy." Although S&P understands the regime's difficulties, the rating company "views the measures (the government has taken) as harmful for both the devalued credit culture of Argentine debtors and the battered confidence of depositors." In addition,
"Standard & Poor's calculates that the initial impact of these measures implies a cost arising from the adjustment of deposits to be borne by the financial system on the order of ArP16.1 billion, roughly the system's entire equity (emphasis added)."S&P concludes:
"Despite the expectation of significant regulatory forbearance from the Argentine authorities—meaning that the ailing institutions will remain open even when technically insolvent—Standard & Poor's believes that the environment for banks in Argentina will be either hostile or, under the best-case scenario, unprofitable in the short-to-medium-term."
. . .
Human rights hypocrisy:
"International human rights groups have urged the United States to withhold aid to Colombia saying the country has failed to address the worsening human rights situation there," reports BBC News.
"'The facts are clear. Colombia has not met the conditions for human rights set by Congress, and instead there is evidence of backsliding,' Amnesty International official Alexandra Arriaga said."No mention anywhere of any reference by these "human rights organizations" to the record of the FARC and ELN guerillas, whose usual and customary practices include kidnapping, murder and drug trafficking.
. . .
The front page of The Wall Street Journal (no link) carries a long story about ELN and FARC guerilla attacks on Occidental Petroleum's pipeline from the Cano Limon oil field, near the Venezuelan border, to the Carribbean. Rebels bombed the line 170 times last year. The Bush administration proposes, in its 2003 budget, to allocate $98 million in U.S. funds to train the Colombian army to protect the pipeline.
The article notes that Occidental employs mostly Colombians, though not from the immediate vicinity of the facilities, since they are too susceptible to pressure from the guerillas. Here's a bit of what life is like for them:
"A worker in the legal department drives his unmarked sport-utility vehicle outside the camp almost every day to deliver documents to farmers and ranchers. Several years ago he was kidnapped by rebels and held at gunpoint until the military staged a dramatic rescue. For months, he says, he had nightmares in which he was unable to run from his captors. But he explains that he has no intention of quitting because his paycheck helps support his son, who is in graduate school in the U.S. (emphasis added). Occidental, he says, pays him twice what he'd earn working for Ecopetrol, the state oil company." This is not the point of the article, but N.B.--Immigration to the U.S. will remain unstoppable as long as conditions like these prevail in important South American countries like Colombia.
Notable also, though mentioned in passing: the environmental damage done when the pipeline is cut; pressure from "human rights activists" on the government (pressure from them on the guerillas is non-existant, of course).
. . .
"Historic" political reform and a deal with the provinces: Clarin says that
"President Eduardo Duhalde affirmed that the political reform, that will be announced tomorrow, is 'historic' and that it will serve "to found' the 'second republic,' and he asked for the 'support of the people' to realize the project."
"El presidente Eduardo Duhalde aseguró que la reforma política, que será anunciada mañana, es 'histórica' y que servirá para 'fundar' a la 'segunda república,' y pidió el 'apoyo de la gente' para concretar el proyecto."No doubt this is rhetorical overreach. However, Duhalde also announced that an agreement
"... reached yesterday with the governors to move forward with a political reform that forsees a 'reduction of more than 1 billion' pesos whose details will be formally announced tomorrow.
"En el habitual diálogo que mantiene los martes, jueves y sábados con el secretario de Cultura, Rubén Stella, por Radio Nacional, Duhalde calificó de "histórico" al acuerdo alcanzado ayer con los gobernadores para avanzar en una reforma política que contempla una 'reducción de más de 1.000 millones' de pesos y cuyos detalles anunciará formalmente mañana"That's a fairly substantial amount of money for the government. Of course, making such an agreement actually carrying it out (once the IMF restores aid) are two different things. Skepticism seems warranted, given the promises made and not kept (several regarding release of funds from the corralito alone) so far in this regime's short life.
. . .
Wednesday, February 06, 2002
ELN guerillas deprive 20,000 of water. From El Tiempo (Bogata):
"Sin servicio de agua se quedaron 20 mil pobladores de Pailitas (Cesar), donde la guerrilla destruyó el acueducto, en una violación de las normas del Derecho Internacional Humanitario (DIH)."Nuff said. Even en español.
. . .
Soft line, or hard? It's not easy to tell whether the U.S. government's "credible and sustainable plan" mantra disguises an underlying intention to loan more money once a few superficial changes have been made or an intention to keep the government from settling in with half measures and its own resources. The Congressional testimony of John Taylor, a Treasury under secretary for international affairs, didn't do much to clear things up. Consider this report from Yahoo! News - Associated Press.
"Duhalde's government is 'taking substantive steps to address its economic problems,' Taylor said." This supports the first.
"But he added it must quickly move to put in place even more changes, including development of a growth-oriented tax system and 'a lasting budget arrangement with the provinces that is based on realistic assumptions.'"This supports the second. Duhalde's annouced approach to taxes is a crackdown.
Taylor said Argentina's central bank also needed to follow monetary policies that would keep inflation under control and not return South America's second-largest economy to the hyperinflation troubles of the 1980s.
This is obvious. The U.S. government's intentions still aren't.
. . .
An item from El Tiempo lays out the FARC guerillas' demand for a cease fire:
The Armed Revolutionary forces of Colombia (FARC) delivered today to the government negotiators its truce proposal, that includes the departure of U.S. military advisers, and end to the Plan Colombia and nationalization of businesses."
Las Fuerzas Armadas Revolucionarias de Colombia (Farc) entregaron hoy a los negociadores del Gobierno su propuesta de tregua, que incluye la salida de asesores militares estadounidenses, fin del Plan Colombia y nacionalización de empresas. "These may seem to be large demands, equivalent to surrender for the elected government. But, then, as the FARC notes:
"'It is possible to arrive at a political solution if the other party wants to make large and fundamental changes,' he (a FARC spokesman) added."
"'Llegar a una solución política es posible si la otra parte quiere hacer grandes y profundos cambios,' agregó."Indeed, it has always been possible to deal amicably with Communist revolutionaries if one is prepared to surrender.
. . .
No surprise: According to this Associated Press report, Colombia's FARC guerillas are condemning new U.S. aid, much of which will be used to help protect oil facilities that the guerillas have previously attacked.
. . .
The VERY loyal opposition: According to El Pais (Uruguay),
"The Radical Civic Union of the City of Buenos Aires approved requesting party leaders to expel the ex-President of Argentina Fernando de la Rúa, a deputy (legislator) from this political party said yesterday."
"La Unión Cívica Radical (UCR) de la ciudad de Buenos Aires aprobó solicitar a las autoridades partidarias la expulsión del ex presidente argentino Fernando de la Rúa, dijo ayer un diputado de esa fuerza política"If any country needs a fighting opposition, it's Argentina. And this is what it gets.
. . .
Surprise, surprise: According to El Pais (Uruguay),
"Argentina confronts an acute shortage of imports due to the failure to pay its providers, which could paralize its industries if the Central Bank does not normalize payment of drafts outside the country, controlled since December, business sources said yesterday."
"Argentina enfrenta una aguda escasez de insumos importados por la falta de pago a sus proveedores, lo que podría paralizar a sus industrias si el Banco Central no normaliza el giro de divisas al exterior, controlado desde diciembre, dijeron ayer fuentes empresariales."The likely result:
"According to data from la Cámara de Importadores (an importers organization) Argentine purchases in the exterior could be reduced in 2002 to between $12 billion and $15 billion in contrast with some $21 billion registered in 2001."
Según datos de la Cámara de Importadores, las compras argentinas en el exterior se reducirían en el 2002 a entre 12.000 millones de dólares y 15.000 millones frente a unos 21.000 millones registrados en el 2001."Uruguayan and Chilean papers seem often to give a better picture of the Argentine situation than the home town press.
. . .
Economist Steve Hanke says Don't Give 'em a Cent, and he's right. What Duhalde is doing is worse than a crime, it's a blunder (as someone once said). Toward the end of his piece, Hanke quantifies the cost of the Duhalde government's errors, so far.
Government seizures of private wealth since the Jan. 6 law of public emergency:(To give credit where credit is due, this item was pointed out by the treasaigh.com site noted just below.)
* Confiscation of foreign reserves: $17.8 billion
* Devaluation of the peso: $9 billion or more
* Losses to banks from "pesofication" of dollar loans: $18-54 billion
* Losses to depositors from "pesofication" of dollar deposits: $9 billion or more
* Losses to companies from exchange controls, suspension of contracts, and other measures: unknown, but billions more.
Note: Argentina's GDP was $271-billion and shrinking, even before the devaluation of the peso.
. . .
Here is a site focused specifically on Argentina: treasaigh.com.
. . .
Next to emigrate, the rule of law: "Turmoil grows as Argentine Fiscal Crisis Deepens," reads the headline in The New York Times. The real crisis though is a crisis of the law. Fact is, there isn't any in Argentina anymore. Here are the first two paragraphs of the story:
"The Argentine government ordered the country's banks to stop dealing in foreign currency today and to hand over all the dollars they had to the central bank. The moves extended the steps the government took on Sunday to convert all dollar-denominated debts and deposits in the country to pesos at rates far below those offered on the open market.
To forestall resistance to its emergency economic plan, the government imposed a six-month ban on legal challenges, specifically to its refusal to lift a two-month-old freeze on bank accounts that the Supreme Court has declared unconstitutional."Not only the Peronist Duhalde grabbing every single dollar in any bank in the country--by decree, no less--but he's just decreed that it's illegal to challenge this or any other action the government has taken, is taking, or might take with regard to the country's economic, financial and business systems. It is doubtful there has ever been so massive, blatant and extra-legal a confiscation of wealth in any country since the last satellite joined the Soviet empire almost a half century ago.
Then there's this:
"Government officials estimate that the conversion to pesos will inflict losses of as much as $14 billion on banks here."But nevermind that, since
"...Eduardo Amadeo, press spokesman for President Eduardo Duhalde, said the government was operating on the assumption that no large foreign bank would close its operations here as a result of the move.
'There was talk at the beginning' of the crisis that such a thing might happen, he acknowledged, but most banks 'have a high level of reserves, so they can withstand' the situation. 'Citibank and Bank of Boston have been in Argentina since the 1920's, so just imagine the number of crises they have been through,' he added."Translated from the French that's "They say they have no bread, then let them eat cake."
. . .
Secretary of State Colin Powell faulted Venezuela's leftist leader, Hugo Chavez, in testimony before the U.S. Senate Foreign Relations Committee, The New York Times reports today.
"We have been concerned with some of the actions of Venezuelan President Chávez and his understanding of what a democratic system is all about," Secretary Powell said.
"Since winning election in 1998, Mr. Chávez has introduced what he calls revolutionary policies to help the poor, including redistribution of land."The real story here is that The Times calls Chavez a "leftist."
. . .
Tuesday, February 05, 2002
Good sense from the English language Buenos Aires Herald.
"While the Supreme Court While the Supreme Court's abrupt U-turn on bank deposit freezes last Friday certainly bemused President Eduardo Duhalde, it will also have confused the court's many critics. The Supreme Court was only doing its job in standing up for the property rights enshrined in the Constitution...but...self-preservation seemed its chief motive, choosing attack as the best means of defence against assaults ostensibly stemming from Congress and public opinion but whose real origin is the Duhalde government. Hardly an attitude commanding respect but in a head-on clash between Duhalde and the Court, where should sympathies lie? The main need in any institutional change is that it should follow institutional lines--the highest court of the land cannot succumb to mob rule or be redefined by a new Peronist-Radical pact. The court is not immune from change...Impeachment hearings must follow due procedure in Congress nor can the Supreme Court be subjected to any mass ouster-- its individual members must be tried one by one on specific charges. There is certainly no lack of the latter...The correct handling of the Supreme Court is as complex an issue as its approach to dollar deposits. Its political origins in the Menem years and its chronic lack of any independence from the government make its reform a must but changing the court under mob pressure or as the result of the pursuit of political grudges will only deepen the institutional damage. Changing the court in isolation is probably no more likely to solve the country's malaise than restricting blame to the politicians and sparing other élites--a Supreme Court worthy of the name can only be part of a general constitutional reform dedicated to modern institution-building, a task probably far beyond a caretaker government."
. . .
Better late than never: "After lengthy talks Sunday with Castro, in power since 1959, (Mexican President Vicente) Fox met briefly with seven of the Cuban leader's most prominent opponents shortly before the end of his first visit to the communist island since taking office 14 months ago," reports Yahoo! News - Associated Press.
. . .
Top U.S. Officials Visit Colombia: If Colombia agrees, the United State plans to take a wider role in that country's guerilla war, according to this article from Yahoo! News-Associated Press.
"Until now, U.S. military aid to Colombia has been limited mostly to attempts to wipe out cocaine- and heroin-producing crops which finance leftist rebels and their right-wing paramilitary foes.
But with Colombia's 38-year-old conflict killing about 3,500 people every year and stunting the potential of this resource-rich, strategically located country, the officials say Washington needs to do more."The U.S. plan includes funds to train the Colombian military to protect fixed facilities and to fight narcotrafficers. Needless to say, the usual suspects are in opposition.
"In Washington on Tuesday, three respected human rights groups charged that Pastrana's government has failed to meet human rights conditions for continued U.S. military aid. Human Rights Watch, Amnesty International and the Washington Office on Latin America accused Colombian government forces of extensive collaboration with an illegal right-wing paramilitary group that has been massacring suspected rebel collaborators."Respected, or pro-guerilla?
. . .
Itzpapalotl reprints a monologue (already some years old) describing Argentina's problems. In Spanish...
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Citizens of Argentina may be pleased to learn that in at least one respect their political system will be more "progressive" that that of the United States. According to Clarin.com, Eduardo Duhalde "(e)n su habitual monólogo por Radio Nacional," intends to ban paid political commericals in the country's next presidential election.
"(A)firmó que para la próxima campaña electoral se prohibirá a los partidos políticos hacer gastos publicitarios en radio y televisión."
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Country divided; Talk of coup: The phrase "golpe de Estado" (coup d' etat) was on President Hugo Chavez's lips yesterday, according to this report in El Nacional.
"In a press conference in the afternoon hours in Fuerte Tiuma, the first official raised hypothetically the subject of a forceful end to the political crisis: 'There are those who dream that Chavez is going to give a coup d' etat. This is impossible in Venezuela.'"
En una rueda de prensa que se realizó en horas de la tarde en Fuerte Tiuna, el primer mandatario abordó el tema sobre un hipotética salida de fuerza a la actual crisis política: “Hay quienes sueñan que a Chávez le van a dar un golpe de Estado. Eso es imposible en Venezuela”.Those who thought otherwise, he said, "were off their rocker" ( “perdieron la chaveta").
"'Coup d' etat? The military does these, and the Venezuelan military is here,' he affirmed."
"'¿Golpe de Estado?, esos los dan los militares, y los militares venezolanos están aquí,' aseguró."It isn't surprising that the idea of coup was much in Chavez's mind yesterday. February 4 was the 10th anniversary of the failed coup Chavez led as an army officer, against the elected (but already largely discredited) Venezuelan government.
Nevertheless, it is probable more current events were also on his mind, these briefly summarized in a story in The Wall Street Journal today (International section, no link). The Journal notes that while Chavez claimed that "brave people and brave soldiers...are more united than ever," he faces a growing opposition, made up of most of the middle and upper classes, the church, labor unions and the press. A January 23 anti-Chavez rally in Caracas attracted 200,000 people, while a pro-Chavez counterdemonstration drew about 40,000, the paper noted. More ominously,
"... last week, the president was caught off guard by a series of apparent leaks from the armed forces (emphasis added) alleging that Mr. Chavez's administration has provided aid and moral support to leftist guerillas in neighboring Colombia."So,
"Political intrigue is rampant and talk of a possible military coup to oust Mr. Chavez has replaced winter league baseball as a favorite topic of conversation."No doubt this talk is premature.
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Monday, February 04, 2002
This Associated Press story about Venezuela's President Hugo Chavez, a populist whose populist policies have been in effect a bit longer than Duhalde's, reveals Duhalde's future. In this item, Chavez proposes to make February 4, 1992 a national holiday. It's the day he led an abortive coup against Venezuela's elected government, a coup that put him in jail and eventually on his way to election as president in 1998. Today, his welcome has worn thin:
"A growing opposition urged citizens to wear black Monday to mourn the deaths of some 30 soldiers, police and civilians in the uprising and reject Chavez's efforts to make Feb. 4 a holiday in a nation boasting 44 years of democratic rule. Motorists planned to stop their cars and bang pots and pans in protest.
'He wants to have a party and we don't agree. We agree that he should leave,' housekeeper Myriam Ripol said at a candlelight vigil for the 1992 dead. 'I am not an oligarch. I clean houses.'
Prominent retired military officers celebrated a Mass for the dead as Chavez supporters protested nearby. A weekend communique published by a group claiming to represent 3,400 active soldiers lambasted the president's relations with Cuba and Colombian rebels. The government dismissed it as a hoax."
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The New York Times' take on Argentina's new economic measures: Argentina Offers Economic Plan, Hoping to Sidestep Court.
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Argentina's Economic Crisis May Affect Migration Trends says a brief item from the Population Reference Bureau. Once Argentina (with Venezuela) was a leading South American destination for immigrants, from the continent and elsewhere. Now that's being reversed.
"'The desire to immigrate to Spain and Italy has become a veritable phenomenon in Argentina, as hundreds of people queue up every day at the Spanish and Italian consular offices,'" says a 2001 edition of the U.S.-based Migration News. The paper has also pointed out that the Italian embassy in Buenos Aires granted more than 12,000 passports to Argentines of proven Italian origin in 2000"
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Argentina's Radicals aren't the only ones in the tank. Mexican President Vicente Fox is deep in with Cuban dictator Fidel Castro, according to a Yahoo! News - Associated Press article entitled "Mexico Seeks Better Cuba Relations."
"Mexico will not support an upcoming U.N. vote on whether to condemn Cuba for its human rights record, officials with the administration of President Vicente Fox said during a visit to the island.
With cries of 'Viva Fidel!' and 'Viva Fox!' shouted from balconies above, Castro escorted Fox along Old Havana's cobblestone streets.
Castro said the visit was going 'well, very well' as he accompanied Fox and his wife, Martha Sahagun, past centuries-old buildings. Earlier, Fox and Castro met privately and shared lunch at the Palace of the Revolution. Fox said relations between the two countries 'are warming up' and 'growing deeper.'"
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Today's Wall Street Journal (International section, no link) reviews the government's economic measures. What's unusual is that the piece hints at political trouble for Duhalde.
"The government has flip-flopped almost daily on the proposed exchange-rate measures, as powerful lobbies pressure officials to shift the financial burden of the devaluation.... But beyond the economic plan lies the broader question of Mr. Duhalde's ability to govern long enough to pull Argentina out of a nearly four-year long recession. Squeezed between demands of foreign investors and the Argentine public, he has lost credibility with both because of policy reversals."Several factors weigh In Duhalde's favor. 1) The opposition Radicals, the party of the last elected President, de la Rua, has been in the tank with the Peronists since he resigned. 2) Though protests continue, they seem to lack the force--the edge of violence--the ( mostly Peronist) unions provided. 3) Duhalde has shown a kind of rough blue-collar bully-boy strength that his precedesors did not have.
However, strength is not wisdom or good sense, and these Duhalde has not shown. As The Wall Street Journal article here cited points out, he has not been consistent. Worse, he has not advanced a policy that can work in the real world. Absent such a policy, continuing bailouts will be necessary if Duhalde is to survive to the end of de la Rua's term in 2003. Unfortunately for Duhalde, the US and "multilateral" lending agencies don't have to do this, now that the Cold War is over and their is no Soviet alternative.
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Sunday, February 03, 2002
The new economic plan is out and summarized in La Nacion. It involves:
1. No payment of the external debt at this time.
2. Full "pesafication" of the economy; conversion of debts at one-to-one; conversion of deposits at 1.4 to one.
3. The peso will float against the dollar. Argentina has $14 billion in reserves to support the peso.
4. The central bank will issue 3.5 billion pesos this year; one billion will be advanced to the treasury.
5. The government will take steps to fight tax evasion. "Se va a castigar a los grandes evasores," was how Economic Minister Remes Lenicov put it.
6. Transactional deposits, such as deposited salaries, will be freed; savings accounts will only be released after a fixed period.
As expected. Lenders take a hit. The government takes over control of the money supply. It was the government's inability to control the money supply in the 80s that led to dollarization in 1989. Will this government be better?
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El Espectador reports:
"Simultaneously with the investigations of this magazine, the periodical El Universal de Caracas briefly stated, last Wednesday, that in the jungle of the forest reserve Ticoporo they found more than 500 Colombian guerillas.'"
"Simultáneamente con las averiguaciones de este semanario, el periódico El Universal de Caracas informó brevemente, el miércoles pasado, que '...en la selva de la reserva forestal de Ticoporo se encuentran más de 500 guerrilleros colombianos.'" El Espectador suggests that this reserve is under the control of the Venezuelan army and that the guerillas are there with Venezuelan connivance.
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Almost certainly in reponse to the supreme court, the Duhalde government proposes to lift restrictions on salaries deposted in bank accounts, according to the Argenting daily Clarin.
The presidential spokesman, Eduardo Amadeo, confirmed today that among the economic measures that will be announced this afternoon by the minister Jorge Remes Lenicov will figure the the liberalization of restrictions that froze salary accounts, and pointed out that 'if the economy continues falling, return of the deposits will always be a fantasy.
"El vocero presidencial, Eduardo Amadeo, confirmó hoy que entre las medidas económicas que anunciará esta tarde el ministro Jorge Remes Lenicov figura la liberación de las restricciones que fijó el corralito financiero para las cuentas sueldo, y alertó que 'si la economía se sigue cayendo, devolver los depósitos será para siempre una fantasía.'"
"'All the restrictions on salary accounts will be absolutely liberalized,'" said the official spokesman in declarations to Radio 10. In this way, the clients of the banks will be able to withdraw at one time the total of their salaries deposited in savings accounts."
"'Se liberan absolutamente todas las restricciones para las cuentas salario,' ratificó el portavoz oficial en declaraciones a Radio Diez. De esta manera, los clientes de los bancos podrán extraer de una sola vez la totalidad de sus sueldos depositados en las cajas de ahorro."
The government hopes to stimulate the economy in this way, Clarin suggests. No word on other kinds of accounts.
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A short summary of the state of play from the English language Buenos Aires Herald.
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Roused by Economic Crisis, Argentina's Middle Class Finally 'Gets Involved' says The New York Times. The article describes neighrobhood-level activism in the country's middle class, a new phenomenon that The Wall Street Journal also noted earlier in the week.
Ideologically, the groups are all over the place.
"The prescriptions for what ails Argentina, however, seem to differ from one assembly to the next, making it difficult for the movement to articulate common positions. Many groups have been demanding that the Supreme Court resign, others want to repudiate the foreign debt, while some are calling for Mr. Duhalde and all other elected officials to step down so that elections can be held. A nationwide outdoor assembly of the groups in Parque del Centenario in the capital a week ago did not result in any broad agreement," The Times reports.
And so far, at least, they lack introspection.
"The once-silent middle-class majority 'has not engaged in any sort of self-criticism and is desperately seeking its scapegoats,' she (Sylvina Walger, a sociologist and the author) wrote in an essay in La Nación, a daily, last week. 'The corrupt were born of families that integrate this society,' but Argentines have ignored 'that we freely elected them and bought their lies because we cannot tolerate that anyone would place in doubt the idea that this is the richest and greatest country in the world.'"But on the whole this activism is all to the good. In the absence of Soviet Union, always looking for new satellites and always able to provide the secret police apparatus to make them permanent, or a military with political ambitions, it's hard to see how these can evolve in irreversably damaging ways. Absent force, this kind of popular movement should be self correcting. And it's not as if these groups are going to wreck a prosperous country with soak-the-rich populism. Fifty-plus years of that is what bought Argentina to its current low estate. Any change has to be away from populism, otherwise it's not change.
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After a day of delay due the supreme court's declaring illegal the freeze on bank accounts, the government appears ready to announce an economic plan. The government appears to be undeterred by the court's decision, which President Duhalde previously referred to as "blackmail." La Nacion has a full report on what the plan is expected to contain.
Lowlights include: pesification of debts at one-to-one (though the peso is officially at 1.4-to-one and unofficially at about two-to-one) and only partial return of frozen funds. The bank holiday, previously announced for Monday and Tuesday remains. A 2002 budget is promised soon.
"In tune with this, the government hopes that the International Fund will accelerate the approval of more than $15 billion."
En esta sintonía, el Gobierno espera que el Fondo Monetario Internacional (FMI) acelere la aprobación de un nuevo programa para asistir al país por un monto de más de 15.000 millones de dólares. Sadly, international agencies might actually reward this travesty.
"IMF official Horst Kohler, gave important bakcing to the government in its battle with the court. The German official said at the World Economic Forum that 'the President (Eduardo) Duhalde is correct in considering the gradual relese of funds. 'The decision of the court complicated tremendously everything, but even it was thinking that it is correct to lift gradually the limitations on the deposits,' Kohler indicated."
El titular del FMI, Horst Köhler, dio un importante respaldo al Gobierno en su batalla frente a la Corte. El funcionario alemán dijo desde el Foro Económico Mundial que "el presidente (Eduardo) Duhalde está haciendo lo correcto al pensar en el levantamiento gradual de fondos. 'La decisión de la Corte complica todo de forma tremenda, pero aún sigo pensando que es lo correcto levantar gradualmente las limitaciones a los depósitos', indicó Köhler."Meanwhile, the legislature intends to press ahead with efforts to impeach the court. Has there ever been a government so dedicated to de-development?
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