El Sur
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South American Politics and Government

Sunday, March 31, 2002
Clarin interviews shoppers, and finds many complaints.

posted by Richard 6:37 AM
. . .
Prices rise, Duhalde worrys:
Clarin headlines "Duhalde, worried, says that prices should fall" ("Duhalde, preocupado, dice que los precios deben bajar"). Instead, they rose 13 per cent in March, despite controls and threats.
"The government is meeting all the time with associations of consumers and with the business leaders in order to continue insisting that prices ought to fall, and we are taking measures that the law permits us in order to stabilize them at reasonable values," explained Duhalde yesterday in his program, "Talking with the President," on Radio National.
"El Gobierno mantiene reuniones permanentes con las asociaciones de consumidores y con la Secretaría de Comercio para ir insistiendo en que los precios deben bajar, y estamos tomando las medidas que la ley nos permite para ir estabilizándolos en valores razonables", explicó ayer Duhalde en su programa "Conversando con el Presidente", por Radio Nacional.

posted by Richard 6:12 AM
. . .
Saturday, March 30, 2002
Cardinal urges resistance to IMF:
The head of the Episcopal Commission for Social Ministry, Cardinal Raúl Primatesta (emeritus, of Córdoba) raised to President Eduardo Duhalde, in a surprise individual initiative, that he not observe the directives of the International Monetary Fund (IMF) and that he produce, instead, "a forceful shock of work and production" in the internal order.
El titular de la Comisión Episcopal de Pastoral Social, cardenal Raúl Primatesta (Emérito de Córdoba), le planteó al presidente Eduardo Duhalde, en una sorpresiva ofensiva individual, que no acate las directivas del Fondo Monetario Internacional (FMI) y produzca, en cambio, "un fuerte shock de trabajo y producción" en el orden interno.
By which the Cardinal means, work and production that depends purely and exclusively on national resources ("trabajo y producción dependiendo, pura y exclusivamente, de las fuerzas nacionales").

The report appears in today's
Clarin. Duhalde was meeting with church leaders, including Primatesta on the phone, when he made his suggestion.

Primatesta undoubtedly envisions some sort of government coordinated mass mobilization that would be fundamentally "cooperative"- rather than "market"-oriented in nature. Of course, it would fail. Even to start, where would the capital to get going come from?

Still, the idea that Argentines should renounce new loans and find a homegrown solution to their problem is welcome. A spreading attitude of "do it yourself" would benefit the country greatly, even the if government does eventually get aid.

posted by Richard 3:55 PM
. . .
Friday, March 29, 2002
Rap: "For Cuba's disillusioned youth, hip-hop offers a way to speak out," reports the
Philadelphia Inquirer.

posted by Richard 11:33 AM
. . .
Project Varela: A success of grass roots campaign seeking a referendum on free speech and other rights, despite repression, is evidence that Cubans are insisting on regime change once long-time dictator Fidel Castro departs the scene, says Vicki Huddleston, the top U.S. diplomat in Cuba. Huddleston's views are reported by
Yahoo! News - AP.
Career diplomat Vicki Huddleston told reporters the movement is changing the political dynamic in Cuba, which has been under one-party rule for decades.
Project Varela, as the campaign is known, attempts to take advantage of a provision of Cuba's constitution that allows a referendum once 10,000 petition signatures have been collected, despite efforts to intimidate collectors and punish signers. The campaign is led by Oswaldo Paya. According to Huddleston, more than 10,000 signatures have already been gathered.
Regardless of the fate of Project Varela, Huddleston said, she believes a transition from the Castro era may have begun June 23 when the Cuban leader fainted during a speech.
Castro recovered quickly but, she said, the government made clear at the time that the Cuban leader's younger brother, Raul, would be the successor..
This, she added, would not satisfy the yearning for change that she believes most Cubans want..
"They want a name change and a generational change," Huddleston said.

posted by Richard 11:00 AM
. . .
Where left and right can meet: Naomi Klein, in a piece in
The Guardian (UK), "Revolt of the Wronged," illustates the kind of human problems Argentina's financial crisis is causing, dismisses as hardhearted answers proposed by the IMF and outside obervers like the MIT economists Rocardo Cabellero and Rudiger Dornbusch, who have suggested external supervision(previously noted in El Sur).

The human crisis Klein points to is real and the IMF's solutions are problematic (see the post just below). Argentina needs to leave the conventional wisdom behind. One solution could be that of Cabellero and Dornbusch, which Klein shouldn't dismiss so cavalierly, but it could also be (or arise from) a homegrown phenomenon that Klein describes with great approval:
In the familiar narrative (Ignore this post-modern, lit crit claptrap and stay with the idea--R.J.) of an impoverished country begging the world for a "bail-out," a crucial development is being obscured: many people here have little interest in the IMF's money, especially when it will clearly cost them so much. Instead, they are busily building new political counter-powers to both their own politicians and the IMF. Tens of thousands of residents have organised themselves into neighbourhood assemblies, networked at the city and national levels. In town squares, parks and on street corners, neighbours discuss ways of making their democracies more accountable and filling in where government has failed. They are talking about creating a "citizen's congress" to demand transparency and accountability from politicians. They are discussing participatory budgets and shorter political terms, while organising communal kitchens for the unemployed. The president, who wasn't even elected, is so scared of this growing political force that he has begun saying the asambleas, as they are called, are anti-democratic.
Note first that the Russians ignored the IMF to their profit in the wake of their currency collapse.

Klein clearly assumes that these assemblies must create a socialist, or at least populist, politics and economics. How could she not; that's the Marxist faith. But it's not necessarily true. The assemblies are likely to be pragmatic; that's how people are, when they're looking out for themselves. If one believes that socialism can't work, and that 50 years of populism is the fundamental reason Argentina is in crisis today, then one can predict that the assemblies are likely to move away from socialist and populist solutions as they try and error their way out of the country's mess. In any case, as long as both left and right outcomes remain possible, Argentina's well-wishers, left and right, will be able to root for the success of the neighborhood assemblies.

posted by Richard 9:06 AM
. . .
Today's (March 29) Wall Street Journal (no link) contains two items, each describing an instance in which the U.S. has created and continues to create untold problems for countries it is pretending to help.

1. A small item in the World Watch column on the International page quotes a spokesman for the IMF, in which the U.S. has great influence, saying:
"Under the present circumstances, the floating rate seems to be serving them well, since the ability to defend a fixed rate would be difficult without the supporting policy measures," IMF spokesman Thomas Dawson said.
Serving them well? Doesn't this guy know what's going on in Argentina? Everyone who had a dollar bank account that was converted to pesos at 1.4 to 1 (and hasn't already got his money out and reconverted it) has lost more than 50 per cent. Creditors (hence credit) have been damaged directly. Retailers and wholesalers find it difficult to profitably sell and restock. Financial agreements between business and customers and business and business have been shredded.

This wholesale destruction is not "serving them well," as the IMF spokesman would undoubtedly know if it half of one of his bank accounts had been stolen. Notably absent from this spokesman's comments is any recognition that the IMF shares the blame When Argentina overloaded itself with debt, who lent them the money? Which international lending institution failed to condition loans on the enactment of fundamental reforms to protect property and prevent legalized theft?

2. In a longer item in the Friday The Americas column, Mary Anastasia O'Grady points out the ways in which U.S. strictures on the the use of aid hobble the fight against the guerillas. As always, O'Grady's column is excellent. Her essential point is that the U.S. systematically helps the guerillas and "human rights organizations" destroy effective anti-guerilla leaders--political, military and civilian. She also points out that it is doubly hypocritical for the U.S., which is the primary consumer of South American cocaine, to insist that the drug war be fought in producing countries, then sabotages the war effort. What the U.S. needs to do, she says, is get behind leaders who want to mobilize the population in its own defense.
For starters, Congress and the White House had better get hip to the propaganda campaign now gearing up against presidential candidate Alvaro Uribe, who not coincidentally, like the generals, takes a hard line against the insurgents. And, they had better come to understand the "human right" of self defense."

O'Grady refers favorably to a monograph,
Colombian Army Adaptation to FARC Insurgency, by Thomas Marks, published by the U.S. Army War College.

posted by Richard 7:30 AM
. . .
Thursday, March 28, 2002
Will he, or won't he? Will Duhalde return to some form of fixed exchange rate and change his economic team? The
Financial Times considers these related questions.

With the dollar hitting 4 pesos--and staying above 3 pesos--and the government desperately trying to keep retailers passing costs along into prices, talk has begun to the effect that President Eduardo Duhalde is considering big changes.

First, is the return to a fixed rate system, similar to the abandoned, decade-old dollar peg. (Deputy Economy Minister Jorge Todesca has denied any such attention.) The government hopes this change should stem the peso's collapse, at least long enough for IMF aid to flow. IMF aid has been Duhalde's only unwaivering policy since he was installed at the beginning of the year. But, unless the government changes its underlying economic policies to protect property, respect contracts and encourage investment, the new peg will be no more successful than the old one, once new foreign loans dry up. The beauty of the Argentine situation is this: to do well, an administration must do the right thing. Until some administration puts in place the necessary conditions for private development, Argentine administrations will prove ephemeral.

That brings up the second report that persists despite government denials. This is that Duhalde is considering removing Economy Minister Jorge Remes Lenicov, or at least that
"The president has started to look for ideas outside of Remes Lenicov's team," a government official said.
Here too, in the absence of fundamental change, the most Remes Lenicov's firing could accomplish is to buy Duhalde bit more time, until IMF aid arrives (or the new guy fails too).

Beyond these time-buying schemes,
Duhalde has repeatedly warned Argentina could slip into "anarchy" if the IMF did not hurry up and grant the aid. Daily fallout from the recession frustrates almost all Argentines.
Unfortunately for him, it seems nobody's listening. This is because the truly disastrous outcomes that would have been likely in previous generations are now very unlikely. Argentina almost certainly cannot become Cuba, now that there's no Soviet Union. Argentina's generals almost certainly cannot launch a successful coup, having been discredited and downsized after the last military dictatorship and the Falklands disaster. By far the most probably outcome is continued slow decline, until a government appears that implements the credible and sustainable economic policy the IMF continues to call for.

posted by Richard 11:04 AM
. . .
Wednesday, March 27, 2002

1. Colombia wants aid not intervention against the guerillas Colombian army chief General Fernando Tapias told
El Espectador. Said the general:
We don't want solders to come wage a war that we ought to wage ourselves.
No queremos que vengan soldados a librar una guerra que debemos librar nosotros.
2. Papers in Colombia (El Tiempo) and Venezuela (El Nacional) report that Venezuela formally protested a Colombian army report suggesting that the Colombian guerilla group FARC was using Venezuelan territory as a sanctuary. Colombia has made this allegation before. It appears to be fairly widely credited in Venezuela too, though, as here, the Venezuelan government denies it.

3. Moody's reduced its estimate of Colombia from "stable" to "negative," notes El Espectador. The reason was not the war, as one might expect, but the country's budget deficit and reduced growth. Of course the guerilla's strategy of destroying economic infrastructure (see El Sur) can only harm growth.

4. So far, so good, however. Bogata's El Tiempo reports that unemployment, though high at 16.4 per cent, is down almost one per cent from a year ago, and is stable.

posted by Richard 6:30 PM
. . .
Nothing's ever quite up to European standards.
El Espectador notes that the Europeans refuse to participate in Plan Colombia because they don't entirely agree with the anti-drug policies of the use there. Always an excuse.

posted by Richard 6:29 PM
. . .
Chávez and the military: All is not well between Venezuela President and Castro wannabe Hugo Chávez and the country's military, but a coup isn't imminent, according to this article, taken from The New York Times and reprinted in
The Financial Times.
The army has chafed as Mr. Chavez has tried to recast the military's mission from one of security to that of an agency with social functions, like transporting food and running mobile clinics.
But most worrisome to some officers has been Mr. Chávez's alliances with Mr. Castro, his close friend, and with the rebel Revolutionary Armed Forces of Colombia, which the United States considers a terrorist organization.
"The armed forces do not want to gain a place in history with a coup," said one high-ranking military officer, who asked to remain unidentified. "If they want to pass into history, then what they want to do is support civil society in its protests."

As noted before, in the absence of the Soviet Union, which provided cash subsidies and a turnkey apparatus of repression, a successful communist revolution is unlikely. Therefore, a coup is unnecessary. Chávez can be left to discredit himself, instead of being made a martyr like Allende.

posted by Richard 3:47 PM
. . .
Tuesday, March 26, 2002
"The Colombia I Left Behind": Silvana Paternostro, the granddaughter of a self-made Colombian landowner, writes of a visit to the family's ranch, in Sunday's (March 23)
New York Times Magazine. Paternostro describes rural life, past and present, in a part of Colombia contested by the communist guerilla army, FARC, and the rightist militia, AUN. This is a nice peice. It gives a feel for the area, the people and country's problems.

posted by Richard 12:45 PM
. . .
Next case! At the urging of her parents, President Bush raised the issue of the conviction and jailing of the American Tupac Amaru Revolutionary Movement groupie Lori Berenson with Peru's president, while in Peru as part of his Latin American trip. According to
AP via the Las Vegas Sun,
"Toledo replied that 'for us, that issue is totally closed,' (Peruvian Vice President Raul) Diez Canseco told cable news station Channel N."
This woman ran a combination safe house-ammo dump for one of the world's most vicious guerilla groups. If Bush expects other countries to respect the verdicts of American courts in similar cases, such as that of the "20th terrorist," he needs to respect theres, especially when the offense is as well documented as this.

posted by Richard 7:21 AM
. . .
Cost of living: The dollar price is pesos has subsided in Buenos Aires today (Mar. 23) to everyone's relief, especially President Eduardo Duhalde. But, long term prospects remain as dismal with the dollar at three pesos as they were yesterday at four pesos, as this report on the cost of living, from
Clarin reveals.
"Since the devaluation, the cost of living of the goods and services consumed by the middle class has risen 27 per cent. And because in these almost months salaries and incomes have not increased, the middle class has reduced the quantity and the quality of the things it consumes, according to an investigation of SEL Consultores conducted by Ernesto Kritz."
"Desde la devaluación, el costo de vida de los bienes y servicios que consume la clase media subió el 27%. Y como en estos casi tres meses los salarios e ingresos no aumentaron, la clase media redujo tanto la cantidad como la calidad de sus consumos, de acuerdo a una encuesta de SEL Consultores que dirige Ernesto Kritz."

posted by Richard 4:34 AM
. . .
Monday, March 25, 2002
Guerilla strategy: Colombia's FARC guerillas change strategies, attacking economic targets and cities instead of rural police stations, says this
BBC News analysis:
"'Bring them all down: bridges, pylons and the dam, make urban attacks, so that the oligarchy feels the war,' he (Comandante 'Romana,' commander of FARC's 53rd Front) said"
over the radio. Targeted especially have been water systems, the electricity grid and oil facilities. All of these have major secondary financial effects. What's behind these new tactics? Try this:
"The arrests of Niall Connolly, James Monaghan and Martin McCauley in August 2001 in Bogota has provoked concern that international terrorist organisations have links with FARC and have trained them in urban terrorism and the use of explosives.
All three Irishmen have proven links to the Provisional IRA and army chief General Mora said there was no doubt that the guerrilla campaign launched after 20 January 20 bore all the hallmarks of IRA training."
When the Soviet Union died around 1990, support for terrorists and guerillas dried up around the world. That includes money, obviously, but KGB training as well. Some dozen years later, these organizations have regrouped. Increasingly, they are self-financed (drugs in Colombia) and train cooperatively. The guerilla groups
"hope this policy will force the government back to the negotiating table on their terms or provoke the poor masses in the cities to rise up against the 'corrupt, oligarchic regime,'"
the BBC item continues, concluding that:
"While both wishes are unlikely, there is nothing but suffering on the horizon for this battered nation."

posted by Richard 12:27 PM
. . .
More ad hoc governing: With the peso crashing and central bank support proving ineffective (not to mention costly),
Reuters reports that the Duhalde government has come up with new controls on banks.
"Argentina imposed tough new foreign exchange controls Monday to prop up a tumbling peso as hundreds of people, fearing inflation could further ravage the long-troubled economy, formed massive lines at banks to buy safe-haven dollars.
In the wake of the peso's 18 percent fall against the dollar Friday amid a deep four-year recession, the Central Bank shortened exchange houses' hours and virtually forced banks to trade at official buy and sell rates that it will set from time to time, rather than at those set by the market."
"With the peso trading at 3.25 to the dollar, 4.6 percent weaker than Friday and nearly 70 percent lower since January's chaotic devaluation, many waited for hours at downtown banks to snap up what is seen as the only means to protect life savings or guard against inflation: U.S. dollars."
First, this isn't something the IMF is likely to approve. Is it an indication that, despite what he says, Duhalde has given up on getting IMF aid, at least by accommodation? Second, this can't work, because it doesn't respond to Argentina's problems. The article continues:
"Many economists say Argentina's root problem is its refusal to halt decades of overspending, which helped snap a decade-old currency peg that had made one peso equal to one dollar for a decade prior to January."

posted by Richard 11:56 AM
. . .
One affair Castro must regret: Alina Fernández Revuelta, the child of a summer fling between Fidel Castro and a Havana socialite, Natalya Revuelta, has become has become the septuagenerian thug's fiercest critic, according to this item from the
Guardian (UK).
"A savage new voice of opposition to Fidel Castro's regime is being beamed into Havana from a Miami radio station. The owner of that voice is Fidel's daughter.
Over the past month Alina Fernández Revuelta has become the latest talk-show host to hit the cacophonous airwaves in Cuba's fin-de-communist epoch.
'Buenas noches, amigos'--good evening, friends--she kicks off the show, entitled Simplemente Alina--Simply Alina. The programme makes no mention of who she is--'people just know,' she says.
Of all the dissidents hovering over Castro's final years, Fernández may be among the most damaging. 'I do not refer to Mr Castro as my father,' says Fernández. 'I do not love him, I am his exile.'
Why might she be so cool to him?
"In 1997 Fernández published a memoir describing visits by her father engulfed in 'stinking' cigar smoke and his omnipotent presence in her early life. She recalls one box-wrapped gift of a doll for her to play with: of himself, with full beard, military fatigues, red star epaulettes, cap and boots."
Of course it wouldn't be The Guardian without something like the following:
"She has even invited members of the hated right-wing Cuban American National Federation on to her programme."
But, look on the bright side....

posted by Richard 7:47 AM
. . .
Sunday, March 24, 2002
Given the turmoil in its transandino neighbor, Chile has a right to be proud of its record of economic growth and political stability, which shines through this account in
La Segunda:
"In the global competitiveness ranking of growth, our country appears in 28th place..., a privileged position for the region, but far from countries with which we compete on varous fronts (principally foreign commerce)..."
"En el ránking global de competitividad para el crecimiento, nuestro país aparece en el lugar 28..., una posición privilegiada para la región, pero lejos de países en que competimos en varios frentes (principalmente comercio exterior)..."
"Technology is the black mark and we are located in the middle down the ranking. 'Here definitively the yellow light shines, over all the technology associated with exports,' affirmed the Harvard Economist and one of the editors of the report,...Joaquín Vial.
"Tecnología es el punto negro y nos ubicamos de la mitad para abajo del ránking. "Aquí definitivamente se enciende la luz amarilla, sobre todo en la tecnología asociada a las exportaciones", afirma el economista de Harvard y uno de los editores del informe,... Joaquín Vial."

posted by Richard 7:28 PM
. . .
Poor baby: Fidel Castro is still put out about the Monterrey summit, if continued whining from Havana (as reported by
Reuters ) is any indication.
"Castro abandoned the summit in Mexico's northern city of Monterrey on Thursday, shortly before President Bush arrived. Senior Cuban officials later charged that Castro, Latin America's symbol of rebellion against Washington, was asked by the summit host to make himself scarce."
'The United States put a price on the Monterrey Summit, and the Mexican government accepted the deal. The money of exchange was Fidel,' said a front-page editorial on Sunday in Cuba's state-run Juventud Rebelde newspaper. Local analysts believe Castro writes or reviews all editorials published by Cuba's official media.
Mexican officials 'with great authority, transmitted the message and specifically asked us, given they could not prevent Fidel from coming, that he leave immediately after lunch,' (Cuban National Assembly President Ricardo) Alarcon said."
The Bush administration denied pressuring Mexico about Castro. This contremps was previously noted in El Sur.

posted by Richard 4:38 PM
. . .
Peruvian exile sees parallels: Baruch Ivcher, majority shareholder in Frecuencia Latina-Canal 2, Peru, who had his citizenship and station stripped from him by the (Alberto) Fujimori regime, tells
El Nacional that "Chávez is applying the manual written by (Vladimiro) Montesinos (Fujimori's intelligence chief) when he was in Venezuela" ("Chávez aplica el manual que escribió Montesinos cuando estuvo en Venezuela"). From the interview:
"Chávez is taking the route of Fujimori with the same advisor, with the same ideas of Montesinos. It is a psychological war against the free and independent press. As they demonstrated the persecution that they unleashed against me: they taught him. They began to sell me as a delinquent, as a traitor to the homeland...
Chávez está siguiendo los pasos de Fujimori a través del mismo asesor, a través de la mismas ideas de Montesinos. Es una guerra psicológica contra la prensa libre e independiente. Así lo demuestra la persecución que desataron contra mí: se ensañaron. Empezaron a venderme como un delincuente, como un traidor a la patria...
Chávez began to melt, as a snowball. When he began to assault the media, and to work up the people to get them to attack those he criticizes, he began to prepare his exit. No government supports itself with demagogy and relations with terrorism. What occurred September 11 in New York has produced a clear message to the world's terrorists. Venezuela ought to heed this message.
Chávez empezó a caer, como una bola de nieve. Cuando comenzó a agredir a los medios, y a exaltar a la gente para que ataque a todos aquellos que lo critican, ha comenzado a preparar su salida. Ningún Gobierno se sostiene con demagogia y con relaciones con el terrorismo. Lo que ocurrió el 11 de septiembre en Nueva York ha producido un mensaje claro al mundo contra los terroristas. Venezuela debería atender ese mensaje.
When Fujimori resigned as president of Peru in November 2000, Montesinos fled to Venezuela The Venezuelan government is widely suspected of sheltering him. In June 2001, Montesinos was arrested in Venezuela and returned to Peru, where he will be tried. Sticklers take note: Montesinos did not need to literally teach Chávez while he was in Venezuela for him to have taught Chávez how things can be done.

posted by Richard 1:01 PM
. . .
FARC, Venezuela military contacts?
ElMundo reports charges of new contacts between the Venezuelan army and the Colombian guerillas.
"The mayor of Tibú, in the department of Norte Santander, País del Pilar Ortega, confirmed to Radio Caracol that guerillas of the FARC came out of Venezuelan territory and attacked with cilindros and shells the small populatons of the sector. This story confirms the crirerios summarized in the communication sent by the Commander of the 2nd Division of the Columbian Army to Venezuela. Nevertheless, the Venezuelan Minister of Defense, José Vicente Rangel, dismissed categorically this thesis and assured that the same was demonstrably 'bad information and bad intention.'"
La alcaldesa de Tibú, en el departamento de Norte de Santander, País del Pilar Ortega, ratificó a Radio Caracol que guerrilleros de las Farc salen de territorio venezolano y atacan con cilindros y bombas a las pequeñas poblaciones del sector. Esta versión ratifica los crirerios resumidos en el comunicado enviado por el Comandante de la II División del Ejército colombiano a Venezuela. Sin embargo, el Ministro de la Defensa venezolano, José Vicente Rangel, desmintió categóricamente esta tesis y aseguró que la misma demuestra 'mala información y mala intención.'?

posted by Richard 12:59 PM
. . .

On the scene report from
treasaigh.com (quoted in its entireity):
"I opened this mornings news paper to be greeted by the sub-headline 'El Gobierno apuesta a la retracción de compras' (The government is betting on the decline in sales?). Briefly what the article said was that the government has found that the continued devaluation of the peso (200% since January) is causing upward pressure on prices. Using the devaluation/inflation rule of thumb, that translates to 60-70% annual inflation. With wages effectively frozen the economy cannot digest inflation at that level.
So far inflation has not really hit consumers yet, but that will soon change. Most of the utilities? fees were frozen by government decree. There is, however, increasing pressure being brought to bear on the government by the utility companies to negotiate new rates quickly. As most services and goods (gas, oil, internet, and telephone) are globally traded and therefore denominated in dollars there is very little room for the government to negotiate.
There is a very vicious circle in action here. The economy is moribund, inflation is on the rise, and there is no confidence in the peso or the government. One way to inject cash into the economy would be to liberate the frozen bank accounts. This is being done slowly through court orders. However this is adding to the amount of cash in circulation? around 100 million per day is being liberated through this means. Add to this the government?s deficit spending of 700 million per month and you have approximately 25 billion pesos in circulation. This is about double of what it was under the parity laws. Add to this doubling of the cash base the low, low level of confidence in the peso and it is apparent that the peso?s slide has not yet stopped.
This is a government without good ideas and without palatable options. To think that they have to resort to the contraction of an economy in depression to control inflation is an indicator of how out of control the situation is here.
This is an excellent blog. Blogger tlwilson's daily reports are always to the point.

posted by Richard 12:39 PM
. . .
Excellent advice from the English language
Buenos Aires Herald (emphasis added):
"Aid from the International Monetary Fund (IMF) looks increasingly like being a case of 'too little, too late' if it comes at all but that is mostly because the government?s response to IMF proposals has also been a case of 'too little, too late.' Negotiations with the IMF have continually been approached from the standpoint of obtaining a maximum of money for a minimum of concessions....
But while the government is going about trying to second-guess the reforms requested by the IMF and to pinpoint the precise minimum to qualify for aid by this trial-and-error method (as if overshooting with even one concession too many would be an unforgivable error), precious time is being lost and the country is falling apart.
Instead the government should change its tack and forget about the IMF, pressing ahead with the reforms which would be needed with or without the IMF. These changes are as much qualitative as quantitative, which is one very good reason why they need the approval of Argentines themselves more than an auditing body. Both the IMF and the government need to realize that the crisis has advanced far beyond the austerity agreements of yore. When the issue is whether the cuts should be 10 or 20 percent, such differences are a matter of negotiation but when the percentages reach 60 and 80 percent (as they did over provincial deficits), the time has come to tear it down and start again because nothing is worth preserving... And such overall reconstruction affecting the very core of the nation and the content of institutions can only be resolved by the Argentines themselves without reference to the IMF.
Yet paradoxically, if the government were to stop running behind the IMF with reluctant, insincere and belated concessions but simply did what needs doing, it would probably find IMF assistance arriving a lot faster in a resurgence of confidence."

posted by Richard 8:09 AM
. . .
Saturday, March 23, 2002

More judicial jeopardy: Former Economic Minister Domingo Cavallo isn't the only one in trouble as judges investigate (or seek scapegoats for) the country's financial collapse. Friday's Wall Street Journal (International section, no link) contains a lengthy report on an investigation into money transfers ahead and in the early days of the December 2001 bank account freeze.

Under investigation is Banco General de Negocios, an "exclusive" bank catering to wealthy Argentines, owned by Credit Suisse, Dresdener Bank and J.P. Morgan Chase. The bank was run by two brothers, Carlos and Jose Rohm, one of whom has been detained in Argentina while the other is in the U.S.
"The most controversial charge against Carlos was 'economic subversion,' a rarely used legal mechanism that harks back to Argentina's past of military dictatorships. Carlos is accused of heading a complex organization that helped clients ferry funds out of Argentina and into Uruguay, even after capital controls were imposed...
The application of the economic subversion law has recently sparked consternation among bankers, who say the statute is being used by judges to make them a scapegoat for the country's economic collapse.
The case also raises the question of judicial security for foreign an ddomestic businesses that has become an issue in Argentina's talks with the International Monetary Fund.
President Duhalde said on Tuesday that he intended to propose changes to the 1974 economic subversion law, which he described as 'so broad it generates judicial insecurity.'"
It is important to note that there have been separate allegations that Carlos Rohm diverted $250 million from the bank's Uruguayan unit to cover losses in other institutions, allegations noted in
El Sur at the time.

The Rohms deny all allegations:
"In written statements submitted to the judge, (Carlos) says BGN's small market share in Argenting--it represents less than 1% of total deposits in the banking system--mean its actions could hardly wreak sector-wide damage let alone undermine the entire economy. Carlos says the growth in deposits at BGN's Uruguayan division was minor compared with the huge capital outflows from Argentina last year, and says no transfers were made after December....Deposits in Argentina's banking system plunged 20% to $67 billion during 2001 amid the mounting financial crisis.
Top Argentine bankers, who fear they too may be detained at any moment, dismiss the Rohm case as an abuse of power."
Whether anyone here is guilty of doing something contrary to statute, two things should be clear: First, it makes no economic sense to create a general offense like "economic subversion" that criminalizes otherwise legal actions, like transferring money oversees, even (especially) when the transfer is intended to avoid losses due to the entirely predictable results of stupid government policy. A county that seeks to prosecute people for such an offense is unlikely to see much development. Second, the simple act of removing one's assets from the grasp of incompetent and self-seeking public officials is never immoral and should never be illegal (though otherwise illegal acts taken to advance this end should be prosecuted).

posted by Richard 6:25 AM
. . .

More judidial jeopardy: Former Economic Minister Domingo Cavallo isn't the only one in trouble as judges investigate (or seek scapegoats for) the country's financial collapse. Friday's Wall Street Journal (International section, no link) contains a lengthy report on an investigation into money transfers ahead and in the early days of the Decembe 2001 bank account freeze.

Under investigation is Banco General de Negocios, an "exclusive" bank catering to wealthy Argentines, owned by Credit Suisse, Dresdener Bank and J.P. Morgan Chase. The bank was run by two brothers, Carlos and Jose Rohm, one of whom has been detained in Argentina while the other is in the U.S.
"The most controversial charge against Carlos was 'economic subversion,' a rarely used legal mechanism that harks back to Argentina's past of military dictatorships. Carlos is accused of heading a complex organization that helped clients ferry funds out of Argentina and into Uruguay, even after capital controls were imposed..."
"The application of the economic subversion law has recently sparked consternation among bankers, who say the statute is being used by judges to make them a scapegoat for the country's economic collapse."
"The case also raises the question of judicial security for foreign an ddomestic businesses that has become an issue in Argentina's talks with the International Monetary Fund."
"President Duhalde said on Tuesday that he intended to propose changes to the 1974 economic subversion law, which he described as 'so broad it generates judicial insecurity.'"

It is important to note that there have been separate allegations that Carlos Rohm diverted $250 million fromt the bank's Uruguayan unit to cover losses in other institutions, noted in
El Sur at the time.

Make economic subersion crime and seek to prosecute people for it cannot succeed. Simple act of removing one's assets from grasping or stupic government should never be illegal (otherwise illegal acts to this end need not be excused.

posted by Richard 6:25 AM
. . .

More judidial jeopardy: Former Economic Minister Domingo Cavallo isn't the only one in trouble as judges investigate (or seek scapegoats for) the country's financial collapse. Friday's Wall Street Journal (International section, no link) contains a lengthy report on an investigation into money transfers ahead and in the early days of the Decembe 2001 bank account freeze.

Under investigation is Banco General de Negocios, an "exclusive" bank catering to wealthy Argentines, owned by Credit Suisse, Dresdener Bank and J.P. Morgan Chase. The bank was run by two brothers, Carlos and Jose Rohm, one of whom has been detained in Argentina while the other is in the U.S.
"The most controversial charge against Carlos was 'economic subversion,' a rarely used legal mechanism that harks back to Argentina's past of military dictatorships. Carlos is accused of heading a complex organization that helped clients ferry funds out of Argentina and into Uruguay, even after capital controls were imposed..."
"The application of the economic subversion law has recently sparked consternation among bankers, who say the statute is being used by judges to make them a scapegoat for the country's economic collapse."
"The case also raises the question of judicial security for foreign an ddomestic businesses that has become an issue in Argentina's talks with the International Monetary Fund."
"President Duhalde said on Tuesday that he intended to propose changes to the 1974 economic subversion law, which he described as 'so broad it generates judicial insecurity.'"

It is important to note that there have been separate allegations that Carlos Rohm diverted $250 million fromt the bank's Uruguayan unit to cover losses in other institutions, noted in
El Sur at the time.

Make economic subersion crime and seek to prosecute people for it cannot succeed. Simple act of removing one's assets from grasping or stupic government should never be illegal (otherwise illegal acts to this end need not be excused.

posted by Richard 6:25 AM
. . .

More judidial jeopardy: Former Economic Minister Domingo Cavallo isn't the only one in trouble as judges investigate (or seek scapegoats for) the country's financial collapse. Friday's Wall Street Journal (International section, no link) contains a lengthy report on an investigation into money transfers ahead and in the early days of the Decembe 2001 bank account freeze.

Under investigation is Banco General de Negocios, an "exclusive" bank catering to wealthy Argentines, owned by Credit Suisse, Dresdener Bank and J.P. Morgan Chase. The bank was run by two brothers, Carlos and Jose Rohm, one of whom has been detained in Argentina while the other is in the U.S.
"The most controversial charge against Carlos was 'economic subversion,' a rarely used legal mechanism that harks back to Argentina's past of military dictatorships. Carlos is accused of heading a complex organization that helped clients ferry funds out of Argentina and into Uruguay, even after capital controls were imposed..."
"The application of the economic subversion law has recently sparked consternation among bankers, who say the statute is being used by judges to make them a scapegoat for the country's economic collapse."
"The case also raises the question of judicial security for foreign an ddomestic businesses that has become an issue in Argentina's talks with the International Monetary Fund."
"President Duhalde said on Tuesday that he intended to propose changes to the 1974 economic subversion law, which he described as 'so broad it generates judicial insecurity.'"

It is important to note that there have been separate allegations that Carlos Rohm diverted $250 million fromt the bank's Uruguayan unit to cover losses in other institutions, noted in
El Sur at the time.

Make economic subersion crime and seek to prosecute people for it cannot succeed. Simple act of removing one's assets from grasping or stupic government should never be illegal (otherwise illegal acts to this end need not be excused.

posted by Richard 6:24 AM
. . .
Friday, March 22, 2002
Economists assess government's economic policy for
Clarin and find it wanting. In the paper's summary:
"They consider that the climb of the dollar is due to the ineffectiveness of the economic measures."
"Consideran que la suba del dólar se debe a la falta de efectividad de las medidas económicas."
"We are at a moment in which the government is going to have to take decisions. The culture of dollarization, installed among the population, is a consequence of the lack of confidence of the people in the ability of the political and economic leadership class to maintain a stable Argentine money."
"Llegamos a un momento en el que el gobierno va a tener que tomar decisiones. La cultura de la dolarización, instalada en la población, es consecuencia de la desconfianza de la gente en que la clase dirigentes política y económica logre mantener estable la moneda argentina."
HECTOR VALLE, FIDE (business oriented think tank):
"There is an initial problem: it is difficult to sustain a scheme of flotation without a reliable banking system and with the account freeze. There are no alternatives for the savers, the people find refuge in the dollar."
"Hay un problema de inicio: es difícil sostener un esquema de flotación sin un sistema bancario confiable y con el corralito. Al no haber alternativas para sus ahorros, la gente se refugia en el dólar."
CLAUDIO LOZANO, CTA (trade union):
"The government equivocated in adopting the foreign exchange flotation. It is absurd to apply this system in the current context with low reserve levels, a foreign trade deficit and without external financing"
"El Gobierno se equivocó en adoptar un régimen de libre flotación cambiaria. Es absurdo aplicar este sistema en el actual contexto con bajos niveles de reservas, déficit de balanza comercial y sin financiamiento externo."

posted by Richard 5:24 PM
. . .
A busy day

1. Peso falls, dollar rises: From
During the entire day the quote was rising with strong demand. It (the peso) closed at 2.85 pesos to buy and 3.10 to sess, which implies a devaluation of almost 20 per cent with respect to the night before. Bank (central bank) officials sold at 2.35, but did not succeed in braking the ascent.
Durante todo el día cotizó en alza y con una fuerte demanda. Terminó cerrando a 2,85 pesos para la compra y 3,10 para la venta, lo que implica una devaluación de casi el 20% con respecto a la víspera. Los bancos oficiales vendieron a 2,35, pero no lograron frenar la suba.

2. Blame the judges, a government spokesman tells La Nacion:
"Spokesmen for the Economic Ministry judged today that the strong increase of the dollar must have been due, in great measure, to the quantity of cases that were resolved in favor of savers, which forced this of change. 'We are trying to convince the judges that as they make good the losses of particular interests they affect the general interest of the economy,' they indicated."
"Voceros del Ministerio de Economía evaluaron hoy que el fuerte incremento del dólar tuvo que ver, en gran medida, a la cantidad de recursos de amparos que se resolvieron en favor de los ahorristas, lo cual presionó al tipo de cambio. 'Nosotros estamos tratando de convencer a los jueces que si bien los fallos atienden intereses particulares afectan al interés general de la economía,' indicaron."
Blame Domingo Cavallo another judge tell the nation. Former Economic Minister Domingo Cavallo was denied permission to leave the country for a by a judge, Julio Speroni, who is investigating illegal arms trading with Croatia and Ecuador that occurred while Cavallo was in government, reports La Nacion. (Cavallo denies the allegation. While it's impossible to know the truth at this stage, skepticism is warranted. The Argentine judiciary tends to protect public officials while in office, then to persecute them after they fall from power.)

posted by Richard 5:23 PM
. . .
U.S. protectionism: The Wall Street Journal's Brink Lindsey, in "The Americas" column (no link), assesses the damage done by President Bush to free trade in Latin America generally and to upcoming negotiations for the Free Trade Area of the Americas specifically, when he put new tariffs and quotas on steel imports.
"Steel, antidumping, agriculture and textiles--in all of these areas the Bush administration has sided with protection-seeking U.S. industries in violation of its free-trade principles. The perennial excuse is 'political reality'--the need to appease powerful interests in order to win congressional support for trade-opening deals.
While some amount of compromise is unavoidable, this administration has offered nothing but."
Trade is only one of the areas in which the Bush administration is doing everything possible to avoide domestic political conflict. The attempt, obviously, is to give Bush's political opposition a very small target. The question is whether there will be anything left of the administration's principles when administration get through shrinking them.

posted by Richard 12:10 PM
. . .
Castro given the bums rush? President Bush went to Monterrey to promote a plan to increase aid to poor countries, replace loans with grants, and require performance from grantee nations. All good, forward-looking ideas. Before Latin America's living fossil delivered a tirade and scooted. Before he arrived, however, Latin America's living fossil delivered a tirade and scooted. The question is why? Did he run, or was he chased?
Reuters reports:
"Castro, in fiery remarks, ridiculed rich nations as masters of a 'genocidal' economic system that condemns billions of people to poverty, and then mysteriously explained that a 'special situation created by my participation in this summit' obliged him to return to Cuba right away.
Senior Cuban officials, without elaborating, later accused Bush of playing a role in the communist leader's sudden departure, triggering speculation he had been pressured to leave before Bush arrived or that he was to be excluded from any events that Bush planned to attend."

posted by Richard 4:36 AM
. . .
Uribe campaign kick-off: Frontrunning Alvaro Uribe has launched his campaign for president of Colombia, reports
Reuters. Polls show his support at about 60 percent, more than twice the support of his closest opponent. If this holds up, Uribe would win election in the first round of voting, May 26.
"Speaking to an elite crowd of supporters, and under heavy guard, the Oxford- and Harvard-educated economist also called upon common Colombians to retake a country in the throes of a 38-year-old guerrilla war.
'We have the right to live in peace and the obligation to help attain it,' Uribe said, pledging to turn civilians into highway patrollers to make the lawless countryside safe.
'I propose massive cooperation by citizens with state forces,' he said."
Note: Reuters, which refuses to call terrorists "terrorists," has no problem describing Uribe's audience as an "elite crowd." That's media bias.

posted by Richard 4:34 AM
. . .
Thursday, March 21, 2002
Trip oveview: The
Latin Business Chronicle says U.S. President Bush's "trip comes as a welcome signal to the private sector in Latin America, which is eager for a more active U.S. role in the region."

Bush first visits Monterrey, Mexico, to attend a UN International Conference on Finance for Development.

He next visits Lima, Peru, where he will meet the presidents of the four Andean Trade Preference Act (ATPA) countries, Bolivia, Colombia, Ecuador and Peru. The ATPA expired in December. While the U.S. House of Representatives voted to extend the act in November. The Senate didn't vote on it before it expired, but is expected to approve the extension soon. Colombia's internal war will be a major topic of the meeting.
"Venezuela is not an ATPA member and despite several attempts by the country's president, Hugo Chávez, he was unable to get an invitation."
Chávez is a big U.S. critic and is close to Fidel Castro.

Finally, Bush is scheduled to meet the presidents of Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua in San Salvador, E.S. The five countries are in negotiations with the United States to form a Central American Free Trade Agreement (CAFTA), which the U.S. hopes to fold into the Free Trade Area of the Americas (FTAA), still in negotiations and scheduled for implementation in 2005.

One continuing problem the article emphasizes is U.S. protectionism, the most recent example being the tariffs the Bush administration placed on imported steel, outraging the Brazilian government in particular.

Still, the Bush administration seems to have a clear understanding of importance of Latin America to the United States, which is this: either Latin America becomes first world, or the United States becomes third world.

posted by Richard 12:11 PM
. . .
Argentina aid prospects:

Yahoo! News - Reuters reviews prospects for aid and the situation in Argentina, as President Eduardo Duhalde travels to Monterrey, Mexico (where there's a UN conference) seeking IMF aid. The situation in Argentina isn't good; neither are the prospects for aid.

2) A similar assessment appears in this Financial Times report.
"The International Monetary Fund and its largest shareholder, the US, on Wednesday issued a stern warning to Argentina not to expect any further aid unless it first carries out a sweeping programme of structural reforms.
The co-ordinated statements by President George W. Bush, US president, Colin Powell, US secretary of state, and Anne Krueger, the number two at the IMF, came as Eduardo Duhalde, the Argentine president, travelled to a United Nations conference in Monterrey in Mexico on finance for poor countries, where he is seeking to convince world leaders to restart lending to the crisis-hit country."
The piece suggests that Duhalde faces two choices, he can "undertake a politically-explosive programme of reforms with only a hint of future support from the IMF, or try to navigate the country's spiralling crisis alone."

Conditions on the ground:

1) Argentina is running a 780 million peso deficit in the first two months of the year, reports Yahoo! News- AP:
"The government has predicted a target deficit of no more than 3 billion pesos (dlrs 1.2 billion) for all of 2002, a figure that would be easily surpassed if the current rate of deficit spending continues."
That is, with one-sixth of the year over, the government has already reached two-thirds of its projected deficit. Treasury Secretary Oscar Lamberto tried to minimize this news, saying
"'This excess is almost normal because the deficit in the first three months, is always higher,' he told a news conference at the Economy Ministry, adding that 'we are going to fulfill the budget targets.'"
2) Now that private banks have sold down their dollar accumulations to the government mandated level, the peso is falling again, reports Bloomberg.com:
"Argentina's peso fell to a record low after a top International Monetary Fund official said Argentina would not get new loans without provincial and other spending reductions.
The peso fell as much as 12 centavos to 2.60 per dollar at private exchange houses as Argentines lined up by the hundreds to convert their cash savings into dollars. The currency has lost 62 percent of its value since Argentina in January scrapped its 12-year fixed exchange rate with the U.S. dollar."

posted by Richard 10:15 AM
. . .
Bush's instincts good, says
Orlando Sentinel columnist Myriam Marquez. But:
"Americans suffer from a myopic view of the world. We really don't care about Peru's problems or Mexico's or El Salvador's -- all countries that Bush will visit. Yet we continue to rail against illegal immigration coming from our southern neighbors."
Marquez wants Americans gto get with the program because "It's in our own selfish interest to do so."

posted by Richard 8:38 AM
. . .
Sanctions: Jeff Jacoby in the
Boston Globe Online states the case for sanctions.

posted by Richard 8:30 AM
. . .
Wednesday, March 20, 2002
Extradition? According to
Yahoo! News - AP, Colombians are ready to think the unthinkable.
"More than ever, Colombia's race for the presidency reflects growing anger at the Revolutionary Armed Forces of Colombia, or FARC, after President Andres Pastrana's peace process with the group collapsed on Feb. 20 and the guerrillas began attacking the country's infrastructure. Pastrana is barred from running for a second term in the May 26 election."
So far, so good. Then this stunner:
"In the debate, four candidates said they would agree to the extradition of FARC founder and leader Manuel 'Sureshot' Marulanda if the United States sought it."
Of course, democratic publics are often enthusiastic at the beginning of conflicts, then lose their enthusiasm as the difficulty of the contest becomes clear. Already more than 40 years old, FARC unfortunately will not fade. Still, Colombian determination is good news.

posted by Richard 1:47 PM
. . .
Aid downside? It's a bit difficult to figure out exactly what Gabriel Rubenstein is getting at in his
Latin Business Chronicle piece, "We're Ready." But he seems put forward the intriguing idea "that the most likely scenario for IMF aid will result in high inflation (hyper-inflation can't be ruled out), and a very high degree of social conflict (increase in violence, etc)." Rubenstein apparently thinks that IMF aid, over and above amounts needed to refinance old debt, will be just enough to set off inflation, without doing much good.

posted by Richard 1:42 PM
. . .
Tuesday, March 19, 2002
Press policy denounced: S&P isn't the only organization to give Hugo Chávez's management of Venezuela a thumbs-down this week.
"In a report presented at the conclusion of its biannual meeting, which was held in the Dominican Republic, the Interamerican Press Society denounced the increasingly noticeable tendency of political and social leaders to initiate smear campaigns against reporters in the region and emphasized that in Venezuela President Hugo Chávez has gone beyond verbal attacks and incitation against the media, to physical agresson against photographers and reporters."
"En el informe presentado al concluir su reunión semestral, que se realiza en República Dominicana, la Sociedad Interamericana de Prensa denuncia que se acentúa la tendencia de dirigentes políticos y sociales de iniciar campañas de desprestigio contra periodistas de la región y destaca que en Venezuela el presidente Hugo Chávez ha ido más allá de ataques verbales e incitaciones contra los medios de comunicación, pasando ahora a agresiones físicas contra camarógrafos y reporteros."
The paper
El Nacional, from which the above is quoted, was besieged in its offices by a mob of Chávez supporters just a few weks ago.
"The organization maintained that 'little by little the apparently modern surfaces of the regime are falling away and it is increasing its identification with the fascism of the 1930s.
"La organización sostiene que 'poco a poco caen los aparentes matices modernistas del régimen y crece su identificación con el fascismo de los años 30.'"
Very tough words.

posted by Richard 6:38 PM
. . .
Credit rating cut Venezuelan continues to suffer economic damage from mismanagement and political uncertainty. The result,
Bloomberg reports, is:
"Venezuela's long-term credit rating outlook was cut by Standard and Poor's to negative from stable due to a widening budget deficit and increased conflict between President Hugo Chavez and the opposition...
'The country is immersed in a confidence crisis that has led to large capital flight,' S&P said in a statement."

posted by Richard 5:40 PM
. . .
Quoted in full from
treasaigh.com, the Blog of an American in Argentina:
Loyalty and Patriotism

"I just saw 'Blackhawk Down'... a local radio station reviewed it saying basically that it was a great film and that they were surprised at the lack of patriotism in the film. Their confusion is understandable, but they miss the point. It isn´t the 'America Right or Wrong,' flag-waving, Rambo patriotism that makes America great. If that were a mark of greatness then the Soviets should have had us beat long ago and the Nazis should have won WWII. The patriotism that gives America it's edge occurs on a lower level... it is not to be found in national anthems that pledge one to die in glory, it is not found in military parades, it is not found in the ubiquitous portraits of politicians, both past and present, in public schools. It is the loyalty that one American feels to another that gives American patriotism the advantage. It is the faith we put in each other... the respect we pay each other... and, the confidence we have that each person will pull his or her weight that give Americans the confidence to face adversity, regardless of its nature, head on and overcome it.

It is these basic element which are missing in Argentina... it is the lack of these elements which condems Argentina to mediocrity.."

posted by Richard 5:29 PM
. . .
Price controls Even as the govenment agrees to repeal laws against "economic subversion." it subverts the economy by
La Razón

posted by Richard 10:16 AM
. . .
Economic Subversion: Argentine President Eduardo Duhalde called for repeal of the law against "economic subversion,"
Clarin reports. Repeal, or substantial modification of the law, which is being used to investigate capital flight in the period prior to the freeze on bank accounts, was a demand made by IMF representative Anoop Singh, who was in Buenos Aires last week. The reason:
"'It has such breadth that it generates judicial uncertainty,' asserted the leader (Duhalde)...."
"'Tiene tal amplitud (esta norma) que genera inseguridad jurídica,' aseveró el mandatario (Duhalde)..."
Concepts like "economic subversion" are antithetical to market economics. Elimination of such ideas from the law is a precondition for prosperity.

posted by Richard 9:15 AM
. . .
Monday, March 18, 2002
Unintended consequences: Government meddlers in the markets always seem to believe they can just order just one change and only that one change will occur. In fact, changes cascade from the original change. The simple fact that the government is willing and able to make changes causes others to take precautions. The government finds it necessary to make additional adjustments. Very quickly the unintended consequences overwhelm and negate the intended ones. The following two items from La Razón show the phenomenon:

La Razón reports, certain mortgages are indexed to inflation. This was not a problem until the government cut the link to the dollar. Now it is. What to do? Change the inflation index, of course.

Second, just a couple weeks after the government decided to let people withdraw money from frozen bank accounts to buy cars, in hopes of stimulating the economy, La Razón reports, there are no longer any cars to buy.

posted by Richard 4:26 PM
. . .
Energy rationing in OPEC country: How can this be?
Yahoo! - Reuters reports:
"Venezuela could see itself obliged to ration electricity to the consumer in order to confront a severe energy deficit caused by drought and the lack of investments, authorities said Thursday."
"Venezuela podría verse obligada a racionar el consumo de la electricidad para enfrentar un severo déficit energético causado por sequías y la falta de inversiones, dijeron el jueves autoridades.
Drought is natural. But a lack of investment can only be caused by government stupidity.

Last October, by the way, the UK's leftwing Guardian said that Hugo Chavez, described as "a charismatic and popular radical and a close friend of Fidel Castro,"..."has been the chief architect of the revival of Opec's fortunes." It appears that he's also the chief architect of the reversal in Venezuela's fortunes.

posted by Richard 1:23 PM
. . .
Diviing divisa: Desperate to keep the peso afloat, the Duhalde government has come up with a new trick, reports
Clarin. First, the government ordered banks to reduce their dollar holdings (see El Sur). The forced sales supported the peso. Now the government has ordered 27 banks not to engage in foreign exchange trading until they prove compliance with the earlier directive. This tends support the peso. It also constitutes an unmistakable threat.

posted by Richard 12:56 PM
. . .
Sunday, March 17, 2002
Still clear-eyed: In part II of his report on a visit to Castro's Carribbean paradise in the
Boston Globe, Jeff Jacoby reports on independent libraries in Cuba. These are personal libraries whose owners lend out books that the govenment libraries won't stock. The most popular titles in Gisela Delgado's library in Havana: Animal Farm and 1984.

posted by Richard 12:18 PM
. . .
Plan B:
Pagina12/WEB reports that early elections are the Duhalde government's "Plan B." This is a strange item. It's hard to tell whether "Plan B" is intended as threat, a promise or a bailout. Its existence does suggest pessimism over aid.

posted by Richard 6:25 AM
. . .
Saturday, March 16, 2002
Upbeat military assessment: The
Financial Times contains an unusually upbeat assessment of the Colombian military's chances against the FARC guerillas.
"If confidence were enough to win a war, Colombia's rebels would be finished. The efficient operation to retake a former rebel zone at the end of February after peace talks collapsed reflects the armed forces' new-found sense of belief in themselves.
'We're back home,' said one lieutenant from the Hunters battalion, cleaning up the unit's former barracks in the zone, 'and this time we're not leaving.'"
Reasons for optimism include successful military reform and increased U.S. aid. Problems remain, the article notes, not least the fact that Colombia's army is small for the task and underfunded. FARC is in large part funded by the drug trade. Concludes the paper:
"Analysts say the next few months will be crucial in determining whether the armed forces have improved sufficiently during three years of peace talks to play a role in settling the 38-year civil war."

posted by Richard 3:09 PM
. . .
Price controls under consideration says
La Nacion
"The chief of the cabinet, Jorge Capitanich, affirmed today that the government is studying the application of controls to insure that prices don't increase more than they have in the first months since convertability ended, and with the objective of lowering the prices of the most essential products in the family shopping basket."
"El jefe de Gabinete, Jorge Capitanich, afirmó hoy que el Gobierno estudia la aplicación de instrumentos para controlar que los precios no suban más de lo que lo hicieron en los primeros meses posteriores a la salida de la convertibilidad, y con el objetivo de abaratar los productos más esenciales de la canasta familiar."
It seems likely that this is purely for domestic consumption; the imposition of price controls would likely delay IMF aid, and IMFaid has been the hold grail of Duhalde's policy since he took over last January.

posted by Richard 2:26 PM
. . .
Cooling: With the Castro regime working overtime to charm willing dupes (see just below), reality intrudes, cooling the atmosphere, according to a report from
Yahoo! News - Reuters'.
"In a fast-escalating war of words between the White House's new Latin America policy chief and President Fidel Castro government, Havana on Thursday called Otto Reich a 'terrorist' with a 'sick' hatred of the Cuban Revolution.
Cuba's withering comments on Assistant Secretary of State Reich came two days after he labeled the Castro government 'a failed, corrupt, dictatorial, murderous regime' in probably the strongest words to date by the Bush administration on Cuba.
The exchange further puts paid to speculation of a U.S.-Cuba rapprochement..."
As Reuters itself helpfully pointed out last fall, one man's "terrorist" is another man's "freedom fighter."

More seriously, Reich is a Cuban refugee. During the Reagan administration, he was involved in the administration's efforts to create a viable military and political opposition in Nicaragua. This earned him the opposition of the American left, including the Connecticut Sandinista Sen. Christopher Dodd. When President George W. Bush nominated Reich to his current post, Senate confirmation was blocked by Dodd. Bush then gave Reich a recess appointment (not needing Senate confirmation and good until this Senate session is over). Attacking Reich, Castro clearly is trying to cozy up to Dodd and others in the U.S. left, in and outside the government.

posted by Richard 6:27 AM
. . .
"Over into the future and it works": Nearly 15 years after the fall of the Soviet Union and the exposure of its supposed successes as propaganda, the dupes still to come to Stalinist Cuba to be dazzled. From a report on one such trip of fools (among whom were the authors, Larry Fish, Michael Yogman, Lou Casagrande) in the
Boston Globe
"But during the trip, we spent several days visiting schools, preschools, community centers, and museums where kids were studying music, art, theater, and dance. We saw kids at day care centers and after-school programs. We visited a health care clinic where we learned about the neighborhood health system where each doctor in Cuba is responsible for approximately 100 households or roughly 700 patients.
We learned of a rationing system where there can be shortages of food and water, but children up to age 7 get first dibs on milk and pregnant mothers get to cut to the front of long lines for ice cream. We learned of year-long maternity leaves at 60 percent pay, universal preschool and day care that starts at age 1 for any family that wants it (and most do), universal access to free pediatric care, and after-school ''interest circles'' for school age kids that provide year-long workshops in art, music, environmental education, dance, sports, cultural patrimony, and historic renovation at local cultural institutions."
Amidst the gush, the authors do admit:
"...that being in a communist country, we were only allowed to visit those schools and facilities that the government had given us approval to visit through our tour guide. We have no way of knowing for sure whether all such programs in Cuba are as good as those we saw. We also ran into occasional begging on the street by children and even some youthful pickpockets at the baseball stadium in Havana."
For which one perhaps should be grateful. The trip, incidentally, was sponsored by the Children's Museum of Boston.

A more skeptical view of Castro's island prison appears in from the OpinionJournal. This trip was sponsored by the Museum of American Folk Art.

Equally clear-eyed was Jeff Jacoby in the Boston Globe.
"Talk to Cuban officials, and they will rhapsodize about Cuba's ''socialist equality,'' in which everyone is treated alike and there are no egregious disparities in wealth. But move around Havana with your eyes open and you see the reality. For Communist Party big shots there are beautiful neighborhoods like Miramar, with its elegant mansions and gorgeous gardens. For ordinary Cubans there are the crowded, crumbling apartments of Centro Habana, where families live in squalor it would be hard to find in an American slum."
"On my last day, I visited 19-year-old Lazaro, who lives with his mother and three siblings in an oceanfront apartment. It is a single room, grimy and desperately in need of paint, furnished with a stained divan, a small metal table, and a battered old refrigerator. There were no lamps, no rugs, no beds, no oven. The family sleeps on a few mattresses in a dark, airless loft. Out of his mother's hearing, Lazaro asked if I could help her out. ''My little brother needs milk,' he said, 'but my mother has no dollars.'"
Was Jacoby on the same trip as the ones who found a children's paradise?

posted by Richard 6:21 AM
. . .
More government theft: Fiat currency falling. Central bank dollar reserves falling. What's a government that refuses to face facts do? They order (just like that order) the country's banks to reduce their dollar holdings.
"Argentina's 'central bank didn't have to sell dollars today basically because banks had to do it themselves,'' said Pablo Buraschi, a trader at Del Sur Brokers SA,"
according to
Bloomberg.com . For all that, the Argentine peso only rose 3 per cent to 2.30 to the dollar. The peso has fallen 56 per cent since it first appeared in January.

posted by Richard 6:05 AM
. . .
Friday, March 15, 2002
Chavez support falls further: "The number of Venezuelans supporting an early exit for President Hugo Chavez rose to 65 percent last month, up from 59 percent in January," reports
Bloomberg.com citing a Datanalysis poll reported in El Nacional.

posted by Richard 10:09 AM
. . .
Major party supports "hard-line" independent Uribe:
"Juan Camilo Restrepo, presidential candidate for Colombia's ruling Conservative Party, resigned his candidacy, paving the way for the party to back independent Alvaro Uribe,"
"His withdrawal paves the way for the party to back Uribe, whose tough line against rebels and fiscal austerity is supported by most Conservatives."
Uribe's support has soared to about 60 per cent in recent polling, in the wake of a wave of bombings, kidnappings and murders commonly attributed to the FARC, a communist guerilla army.

posted by Richard 10:08 AM
. . .
Reality acknowledged: With IMF money not coming soon, the Duhalde government has begun to take steps on its own, reports
Yahoo! - Reuters. The government is considering revisions to the national budget, just passed. The government has also revised projections for economic growth from negative 4.9 per cent to negative 8.9 per cent.

The article also notes the continuing decline in the value of the peso against the dollar--la fiebre verde.

Reality denied: The government's response to the decline in the peso has been intervention. Reports Yahoo! - Reuters:
"The Argentine President Educado Duhalde said on Tuesday that he believed that the Central Bank ought to intervene in the currency exchange market in order to keep the peson in 'appropriate margins,' since in two months the money has lost more than 50 per cent of its value."
El presidente argentino Eduardo Duhalde dijo el martes que cree que el Banco Central debería intervenir en el mercado de cambio para mantener el peso en 'margenes adecuados,' ya que en dos meses la moneda ha perdido más del 50 por ciento de su valor."
Better heeled countries than Argentina is today have wasted billions in reserves trying to prevent currency declines, only to find it impossible.

posted by Richard 10:06 AM
. . .
Duhalde comes up empty reports the
Financial Times: From the beginning, Eduardo Duhalde's strategy has been to quickly meet the IMF's minimum demands, qualify for aid, and proclaim himself Argentina's saviour. As noted yesterday in El Sur, Duhalde had reason to believe this would work--the fix was in. Now, it seems, it no longer is.

After meetings in Buenos Aires this week, "The IMF appeared no nearer to providing new funds or even restarting aid under existing agreements, which was cut off in December after Argentina missed agreed economic targets," reports The Financial Times. The IMF acknowledges reform has occurred, the paper says, but maintains that more is needed, including more realistic economic assumptions in the national budget, a revenue distribution pact with provinces that's more than a stop-gap, greater respect for private property, and controls on the proliferation provincial quasi-currencies. And the United States wants fundamental structural reform.

The Duhalde government's response is to threaten political turmoil, in the form of an early election, in which the left would triumph and reverse whatever remains of the economic reform of the 1980s and 1990s. Well, bring it on. Soviet satellite status is no longer available. Marxist economic nostrums won't work any better than have Duhalde's populist ones. This means a leftist government can't succeed either. Argentina needs to keep trying. Eventually, when worst comes to worst, and there are no more "free-lunch" systems on offer, they'll try free market capitalism, the protection of private property and the rule of law. That will work, and that will be that.

posted by Richard 10:04 AM
. . .
Latin Business Chronicle: Fewer billionaires

posted by Richard 9:56 AM
. . .
Latin Business Chronicle: FDI Declines

posted by Richard 9:53 AM
. . .
Latin Business Chronicle: Steve Hanke - Argentina: The U.S. Role

posted by Richard 9:50 AM
. . .
Thursday, March 14, 2002
Globalization: The Chilean paper
La Segunda publishes an interview from Brazil, with a Uruguayan economist, working for a Netherlands (headquartered) bank about the big mistake Argentina made devaluing, instead of dollarizing.

The economist, Arturo Porzecanski said:
"'Our impression is that the country still is in the eye of a storm...The devaluation is going to have extended consequences.'"
"'Nuestra impresión es que el país todavía está en el ojo de la tormenta (...) La devaluación va a tener largas consecuencias.'"
"However, for its advocates, dollarization provides a reassurance against sudden devaluations that can provoke hyperinflation that, given the already high level of conflict in Argentina, could indicate major political instability."
"En cambio, para sus impulsores, la dolarización significa un reaseguro contra bruscas devaluaciones que pueden provocar una hiperinflación que, con la actual alta conflictividad en Argentina, significaría mayor inestabilidad política."
Already, Porzecanski noted, inflation in January and February has been 15 per cent. In addition, Porzecanski's bank ABN-AMRO estimates that inflation will reach 40 per cent for the year and that the economy will contract by eight percent, as opposed to the 4.9 per cent contraction expected by the government.

Fix no longer in: Meanwhile, an item in Pagina12 shows why the Duhalde government is no longer confident of IMF aid--and why it originally was.

Simply, the Argentine economic minister, Remes Lenicov, had a preliminary agreement (preacuerdo) with Tomás Raichman, the IMF's original agent in Argentina, to turn on the aid spigot if the Argentine government floated the currency, arrived at an agreement with the provinces cutting federal aid, and obtained approval of a 2002 budget. All were acomplished, more or less, certainly to the satisfaction of a well-disposed overseer like Raichman.

Instead, Pagina 12 says, Washington scotched the deal and the IMF replaced Raichman with Anoop Singh, an Indian. It now seems likely, after a recent meeting between Singh and Duhalde, that the soonest aid could be authorized is June. Said Pagina 12:
"Singh stated very clearly: The Government ought to arm itself with patience and hope."
"Singh lo dijo bien claro: el Gobierno debe armarse de paciencia y esperar."

The beginning of wisdom: In an item titled "Once-Haughty Nation's Swagger Loses Its Currency," Wednesday's Washington Post looks at Argentina's flagging self-confidence. The nugget of hope:
"President Eduardo Duhalde, meanwhile, has switched from a diet of hearty Argentine steak to humble pie. To the shock of many, he recently said Argentina should 'be more like Chile,' with which his nation almost went to war in the 1970s but is now considered the economic success story of South America."

posted by Richard 1:07 PM
. . .
Monday, March 11, 2002
Hard line supported: As previously noted in
El Sur, Alvaro Uribe, the Presidential candidate urging the strongest measures against the FARC communist guerilla army, has moved up sharply in the polls, as the guerillas have stepped up their campaign of terror. Now comes the news, via Las Vegas Sun, that Uribe-suppoted candidates were swept into office in legislative elections held March 10.
"Dozens of candidates endorsed by Alvaro Uribe - the independent, anti-rebel candidate leading polls ahead of May's presidential election - were elected to the congress on Sunday. Now, they are expected to help get out the vote for Uribe.

posted by Richard 6:34 PM
. . .
Friday, March 08, 2002
As if any additional evidence was needed that Argentina needs adult supervision, Duhalde provides it in this item in
Clarin. After telling the crowd at a march sponsored by a rural workers union that the country's four-year recession will be over in July, Duhalde
"...with resources provided in part by the retentions applied to hydrocarbon and agricultural exports, 'a fund' will be created that will make it possible that 'there will not remain a family in Argentina without a minimum subsistance income.'"
"En ese marco, el presidente Duhalde adelantó que con recursos provenientes en parte por las retenciones aplicadas a las exportaciones de hidrocarburos y agropecuarias, se creará 'un fondo' que posibilitará que 'no quede una familia en la Argentina sin tener un ingreso mínimo para que pueda subsistir.'"
On the surface this is a generous gesture. But in fact it is more of the populist pandering that has brought Argentina to its current low estate. The recession isn't going to be over in July (unless the IMF floods the country with money, and then only temporarily) and things like the export retenciones will only delay it.

posted by Richard 12:50 PM
. . .
Charm offensive: Why has Fidel Castro begun making friendly gestures toward the U.S.? Well, his health has deteriorated recently and there's a question how long he can survive. So,
"Castro and the governing elite reckon that the only way to keep the dictatorship alive, without making amendments that would endanger the authority of Fidel's successors, is to begin economic reconciliation with Washington while the old man lives."
That that's the basic idea of Carlos Alberto Montaner's The Americas column in today's Wall Street Journal (no link). Montaner says
"U.S. policy toward Cuba is a matter of patience. Acting rashly now could unnecessarily prolong the agony of the cuban people and give new life to an enemy of the U.S. that is close to its natural demise."
Sounds like good advice.

posted by Richard 12:17 PM
. . .
Does Argentina need oversight? Economists Ricardo Caballero and Rudiger Dornbusch say yes in the
Financial Times. (Dornbusch's comments on this subject to Clarín were previously noted, and are cited here: El Sur.

Caballero and Dornbusch believe Argentina's problems are fundamental and systemic. They believe they cannot be cured by the sort of minor adjustments Duhalde has made so far, and foreign loans.
"The truth is that Argentina is bankrupt - economically, politically and socially. Its institutions are dysfunctional, its government disreputable, its social cohesion unstuck."
"A wasteful distributional battle is taking place, a battle between workers and the wealthy; between those who are trapped by the bank closure and those who have their money in Miami; between the provinces and Buenos Aires; between unions and businesses; between foreign investors or creditors and a nation that wants to shed obligations in a vain effort to maintain some degree of normality."
"At the heart of Argentina's problems is a crisis of trust as a society and confidence in the future of the economy. No one group is willing to concede the power to resolve the claims and fix the country to any other local group. Somebody has to run the country with a tight grip; dictatorship is neither likely nor desirable. But since everybody thinks--often correctly--that everybody else is selfish and corrupt, no social pact can be reached. Without such a social pact, day-to-day cannibalisation of social and economic capital will continue. Ever more gruesome results seem inevitable."
The alternative Caballero and Dornbusch propose is strict foreign oversight, like that mandated by the League of Nations on Austria as a condition of aid in the 1920s. The foreign commissioners charged with running Argentina should come from
"distant, disinterested small countries (Finland, the Netherlands, Ireland, for example) where people have understood that economic institutions safeguard stability and are the foundation of prosperity."
Their assignment would be to impose major economic and financial reforms. Then:
"With the commitment to a clear and radical plan, Argentina would offer a fresh and encouraging outlook. As the foreign monetary board is set up, Argentina should move quickly to a new temporary convertibility plan, say two pesos to the US dollar. It is also to release the frozen bank deposits and let the IMF and other international financial institutions decide which banks to support--it is their money, after all. Foreign capital is quick to change its mind but there has to be fundamental change, not more broken promises."

posted by Richard 10:44 AM
. . .
Thursday, March 07, 2002
Waiting for Change is the headline. One sentence sums up the forecast given in this long analytical item from
Latin Business Chronicle:
"'I personally would invest in the construction of an assisted living facility in downtown Kabul before I would put one nickel in Venezuela,' says Jerry Haar, director of the Inter-American Business and Labor Program at the North-South Center and a senior research associate at the Wharton School of the University of Pennsylvania."
The article points to several problems:

* Populist legislation giving government greater say over almost every aspect private property and business;

* Slowing economic growth;

* A devaluation that advocates say is too late and opponents believe was unnecessary;

* Rising interest rates, and

* Recent appointments of Chávez associates considered hostile to business.
"'These recent efforts are akin to rearranging the deck chairs on the Titanic,' says Haar. 'Venezuela remains an Opera Buffa state with pro-Chávez politicians and government ministers who individually and collectively lack the competence, vision, talent, skill, savvy and the proper political and economic orientation to produce the necessary changes to move the country forward.'"
All of this has called Chávez's future into question, with some saying he will not serve out his term.
"'It comes down to an assessment of his character,' (Janet) Kelly (professor at the Instituto de Estudios Superiores de Administración [IESA]) says. 'Is he more interested in survival or more interested in his messianic objectives? Chávez has shown both that he desires to survive and he is willing to take risks that lead him to the brink.'"

posted by Richard 6:28 PM
. . .
War News:
FARC violence escalates, reports
La Libertad (Barranquilla):
"La guerrilla de las Farc secuestraron a nueve personas, destruyó seis torres de energía en el norte de Colombia, quemó varios vehículos y bloqueó tres vías estratégicas, en tanto que ocho guerrilleros y un militar murieron en combates, en una nueva jornada de violencia este miércoles, según fuentes policiales, militares y testigos."
Venezuela reinforces the border, reports El Tiempo (Bogata):
"El comandante general del Ejército, Efraín Vásquez Velasco, afirmó que Venezuela mantiene un estado de alerta en la extensa frontera con Colombia, que fue reforzada con 2.000 hombres y otros equipos militares.
Try peaceful means to rescue Betancourt, says the attorney general, according to El Tiempo:
"El procurador general de la Nación, Edgardo Maya, recomendó ayer al Gobierno agotar todas las instancias políticas y humanitarias para facilitar la liberación de la candidata presidencial Íngrid Betancourt, secuestrada por las Fuerzas Armadas Revolucionarias de Colombia (Farc), antes de emprender una operación militar de rescate."
Talks resume with Colombia's second guerilla army, ELN (Ejército de Liberación Nacional) in Cuba, reports El Colombiano (Medellín):
"A esta hora se inicia aquí un nuevo encuentro entre delegados del Gobierno colombiano y voceros del Ejército de Liberación Nacional (Eln), en el que el tema de la tregua es el eje central de las discusiones."
Just another day...

posted by Richard 12:30 PM
. . .
Bread and Circuses...well circuses, anyway: The country's a mess. The government's digging itself into a deeper hole every day. So what to do? Why, round up the last government and put it on trial of course.

That's seems to be the plan in Argentina, where the ex-Secretary of Internal Security, Enrique Mathov, is being held and former President Fernando de la Rúa is being cited, both for police action against rioters before government buildings on the Plaza de Mayo, just before de la Rúa resigned, in which five were killed.

The Buenos Aires paper
Clarin appears not to notice that the underlying idea here might be to distract from the current government's incapacity. But the judge has noticed a bit of a backlash. Speaking to the press jueza federal
"(María) Servini de Cubría returned to denounce a 'press operation by people from the police,' in opposition to her... 'One of the causes is that there are people who don't accept that the chief of police is detained because this discredits the police in the eyes of the people...'"
"Servini de Cubría volvió a denunciar una 'operación de prensa de gente de la policía' en su contra... 'Una de las causas es porque hay gente que no acepta que un jefe de la policía esté detenido porque es un desprestigio muy grande para la población...'"
Certainly, if police officials are guilty, they should be punished. But there's more than a whif politics in this prosecution, as in the detention of bankers and search of banks, supposedly to find evidence of illegal capital flight.

posted by Richard 11:05 AM
. . .

. . .