El Sur
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South American Politics and Government

Sunday, June 30, 2002
Colombian paramilitaries say Venezuelan paramilitaries exist: On Friday,
El Sur noted the release in Colombia of a videotape claiming to be from the Autodefensas Unidas de Venezuela (AUV), counterpart of the Autodefensas Unidas de Colombia (AUC). Many were skeptical. Venezuelan military officials, from President Hugo Chávez down, denied the existence of this heretofore unknown paramilitary group.

Now, reports El Nacional (Caracas), the Colombian self-defense force confirmed the existence of the Venezuelan force by announcing that it is training it.
The Colombian paramilitary chief Carlos Castaño Gil indicated that his organization has furnished instructors and maintains contacts with the so-called Autodefensas Unidas por Venezuela, that announced its appearance four days ago.

"It is in process of gestation," affirmed Castaño in an inteviewthat was published this Sunday in the Bogata daily El Tiempo.

The leader admitted that "we have people giving instruction on Venezuelan territory" and "we maintain communication."
El jefe paramilitar colombiano Carlos Castaño Gil señaló que su organización ha facilitado instructores y mantiene contactos con las llamadas Autodefensas Unidas por Venezuela, que hace cuatro días anunciaron su aparición.

"Es un proceso en gestación", afirmó Castaño en una entrevista que publica este domingo el diario bogotano El Tiempo.

El líder paramilitar admitió que "tenemos gente dictando instrucción en territorio venezolano" y "mantenemos comunicación".
If true, this would be very big news indeed. There have long been reports that the communist guerilla organization, Revolutionary Armed Forces of Colombia (FARC) have spilled over into neighboring countries, including Venezuela. Indeed, Colombia has complained that FARC elements use Venezuela as a sanctuary. Expansion of the Autodefensas--FARC's mortal enemy--into Venezuela would mark a significant expansion of the war. (It would also put the U.S. on the same side as Hugo Chávez.)

Of course, it remains to be seen whether the Venezuelan Audodefensas exists outside of videotape and newspaper interviews. Other possibilities exist. One, the least probable, perhaps, is that the tape and interview were designed to keep Venezuelan politics roiled, which isn't hard to do. If that was the aim it succeeded, since, as noted above, Chávez and his generals were quickly forced to react to the tape, personally. The problem with this motive is that the source of the tape is Colombian, not Venezuelan. A second possibility is more likely. This is that the Autodefensas released the tape as a way of encouraging Chávez to crack down on Colombian FARC units working from Venezuela. The message to Chávez would be: just because paramilitaries don't exist in Venezuela now, doesn't mean they can't. Finally, it is also possible that the tape and interview constitute a response to FARC's high-profile campaign to force local officials to resign by means of threats and intimidation. That is, it could be nothing more than a reminder that the FARC isn't the only illegal army around.

posted by Richard 5:55 PM
. . .
New poll signals left turn: A new Gallup poll, for and published in
La Nacion, indicates that, if elections were held today, the likely winner would be a candidate of the far left.

For the poll, 1251 persons over age 17 were read several names and asked which of them they could vote for. The results were:

First, with 48 per cent saying they could vote for her, was Elisa Carrió. She is leader of the Alternative for a Republic of Equals party (Alternativa para una República de Iguales or ARI). Carrió (see photo) is a member of the National Assembly from the state of Chaco (see map, linked at right). Another 48 per cent said they could never vote for her.

Second, with 44 per cent saying they could vote for him, was Carlos Reutemann. He is the Peronist (Partido Justicialista) governor of the state of Santa Fe (see map, linked at right). Reutemann is a former Formula 1 race car driver. (An account of his racing career is located at 8W, which claims to tell of "The power and the glory of motorsport's history through a postmodern myriad of pictures and short stories.") Fifty-two per cent said they could never vote for him.

Third, with 42 per cent saying they could vote for him, is Adolfo Rodríguez Saá, the former Peronist governor of San Luis (see linked map) and, for about a week last December, the appointed President of Argentina. Fifty-four per cent said they could never vote for him.

Others asked about were Mauricio Macri (with 30 per cent support), Luis Zamora (with 20 per cent), Carlos Menem (the former president, with 20 per cent), Néstor Kirchner (with 19 per cent), José Manuel de la Sota (with 15 per cent), Carlos Ruckauf (with 13 per cent) Patricia Bullrich (with 13 per cent), Ricardo López Murphy (with 12 per cent) and Rodolfo Terragno (with six per cent).

In response to another set of questions, respondents told the Gallup interviewers that they don't feel that their interests are represented by anyone.
Eighty-seven per cent of the respondents affirmed that they do not feel themselves represented by any party or political group and 84 per cent said the same about current politicians. To the question of how they define themselves politically, 52 per cent considered themselves independent.
El 87% de los consultados afirmó que no se siente representado por ningún partido o agrupación política y el 84% dijo lo mismo sobre los políticos actuales. Al preguntárseles cómo se definían políticamente, el 52% se consideró independiente.
Despite this finding, the numbers are not wholly different from Argentina's traditional party scheme. Arguably, the Peronists remain the largest single grouping. Support for Argentina's second big party, the Radicals, seems to have migrated to the left. However, both parties have always contained left and right wings. It is possible this will break down under the extreme pressure of current events, so that Argentina ends up with an ideologically aligned system.

The free-market liberal candidate in this race is Ricardo López Murphy. His CV (in Spanish, but with photo) is available at the site of the business-funded Foundation for Latin American Economic Research (FIEL), where he is a visiting researcher. Murphy was economy minister in the government of Fernando De la Rúa for two weeks in March 2001, resigning when his deficit reduction program was rejected.

In addition to its story on the poll, La Nacion contains a chart of the results.

posted by Richard 1:07 PM
. . .
Miami Herald columnist Andres Oppenheimer finds hope in hopelessness.

Just returned from a visit of Buenos Aires, Oppenheimer says he was struck by the generalized state of hopelessness. The city looks good by day, but at night " thousands of homeless descend on the streets to search the garbage of homes and businesses, looking for food or discarded materials that can be sold to recycling companies." Argentina's percapita income fell from $8,000 to $2,500 last year. Young graduates and mid-career executives alike are looking for work overseas. Why, a complete absence of hope.
''This country is hopelessly divided,'' said Ricardo Torres, a 44-year-old former chief financial officer for one of Argentina's biggest companies, who now runs the Educaria investment banking firm.

He was referring to the split between supporters of the free market and a growing leftist-isolationist movement. ``You can't even get a consensus on what to do among the top five free-market economists.''

There is a general consensus that the U.S.-backed economic reforms of the 1990s failed, but half of the people think it's because they were marred by corruption and the other half think it's because the country made a major mistake in following U.S.-backed recipes.

Amid the ideological confusion, conspiracy theories thrive.

One can hear journalists arguing in all seriousness on television that the International Monetary Fund and the United States are pursuing a deliberate plan to keep Argentina on its knees to make the country easier for them to control.
Why hope? Oppenheimer says Argentines have always seen the future in extremes, pessimism now, euphoria in the early 1990s, when inflation was tamed.

That feels like a very week reed.

posted by Richard 12:55 PM
. . .
Saturday, June 29, 2002
Big pro-Chávez march: More than one million people rallied in Caracas on Saturday in support of President Hugo Chávez, reports
El Nacional, quoting Minister of Interior and Justice Diosdado Cabello. The demonstration was undoubtedly one of, if not the largest in Venezuelan history.
The action achieved several objectives: to compare forces with the opposition, initiate an effort to collect signatures to recall governors, mayors and deputies; and to take advantage of the presence of his followers in order to make a popular approving referendum in support of President Chávez and the Constitution.
El acto se realizó con varios objetivos: medir fuerzas con la oposición, iniciar la recepción de firmas para revocar los mandatos a los gobernadores, alcaldes y diputados; y aprovechar la presencia de sus seguidores para hacer un referéndum popular aprobatorio en apoyo al presidente Chávez y a la Constitución.
The mid-June opposition march was in the 250,000 to 300,000 range. Chávez supporters were bused in from around the country. In fact,
The director of the Metropolitan Police, Henry Vivas, indicated that the presence of buses that moved Chavistas from different regions of the country in order to participate in the event jammed traffic in Caracas.
El director de la Policía Metropolitana, Henry Vivas, señaló que la presencia de autobuses que trasladaron a los simpatizantes chavistas desde distintas regiones del país para participar en el evento colapsó el tráfico en Caracas.

posted by Richard 10:15 PM
. . .
Another way: Mary Anastasia O'Grady, in yesterdays's "Americas" column in The Wall Street Journal (published in the paper only, no link) suggests that Latin American countries made a mistake waiting for the North American Free Trade Agreement to be extended and shouldn't wait anymore.

O'Grady takes note, first, of the Mercosur (Brazil, Argentina, Uruguay) cutsoms union's near death and, second, of the problems President Bush is having getting authority to negotiate Free Trade Area of the Americas agreement that isn't burdened with killer amendments. To O'Grady,
If the road to open markets in Latin America consists on only two paths, Mercosur and an FTAA multilateral deal with the U.S., the near-term outlook for regional economic development looks bad.
Even if negotiating authority is granted, she believes, the negotiations and ratification fight will take time. So no matter what, "Growth will stagnate, the poor will fall behind."

O'Grady cites economist Sebastian Edwards (author of Crisis and Reform in Latin America), who believes that the promise of a western hemisphere free trade zone actually stifled on-going trade liberalization. Edwards says trade grew throughout the 1980s, as Latin countries freed their markets, until 1994, when President Clinton promised a hemisphere-wide agreement and countries stopped liberalizing and began hording tariffs and trade barriers as chips to be negotiated away. Only, the negotiations never happened. Says O'Grady:
Only Chile has had the smarts to stay the course of trade reform irrespective of U.S. feigning. It might have saved its own tariffs for promised negotiations. But instead it wisely keeps opening. A uniform tariff helps: What domestic producers give up in protection, they gain in competitiveness with better access to imported materials and components. Since 1999--and under democratic not dictatorial government--Chile has been reducing its uniform tariff by one percentage point a year. This process will continue until 2004 when the uniform tariff reaches 6%.

Chile decided a few years ago not to join Mercosur but rather to be an "associate member," allowing it to trade inside the union but to skirt the Mercosur schedule when dealing with other trading partners. No wonder its small economy has weathered Latin American volatility better than any of its neighbors.
O'Grady's conclusion: Latin American should "start working on ways to replicate the Chilean model."

posted by Richard 6:53 PM
. . .
Friday, June 28, 2002
Police arrested in demonstrators' deaths: Two police officers were arrested, dozens were suspended and the Buenos Aires police chief and deputy chief resigned over the deaths of two demonstrators on June 26. The officers were arrested after one of the officers was shown pointing a shotgun at one of the demonstrators and later dumping his body in a picture shown on the front pages of Clarin and La Nacion.

Reuters and the Financial Times have reports. So does the English-language Buenos Aires Herald. From the Herald:
Buenos Aires Peronist Governor Felipe Solá last night ordered the arrest of Police Chief Alfredo Franchiotti and all officers who clashed with pickets in the province of Buenos Aires on Wednesday, saying "everything indicates" that the police is to blame for the two deaths and the over 90 wounded in the riots.

Solá said that some policemen had lied to him about the clashes at Pueyrredón Bridge in the neighbouring Greater Buenos Aires district of Avellaneda, the worst riots since violent protests killed 30 people and toppled two governments last December.
Noteworthy is the following:
However, he stressed that "the police had been attacked in an outrageous way by people on a war footing."
That is, the provocation provoked.

Yesterday, El Sur noted the initial demonstrations, killings and subsequent demonstrations and suggested the possibility of provocation and parallels to the war against urban guerillas in the 1970s. From the Herald today:
Meanwhile, Duhalde's government and pickets and political sectors exchanged harsh charges as to the responsibility for the incidents.

"I believe Mr. (Luis) Zamora is a vile opportunist," he (Cabinet Chief Alfredo Atanasof) said.

Zamora, a populist deputy with a Trotskyist background, showed up at the site of the clashes on Wednesday and accused Atanasof of "preparing the ground" in the days prior to the protest...
The deputy accused Duhalde and Atanasof of heading a mob government and said: "From mobsters I expect anything"...
For his part, deputy Darío Alessandro, the head of the centre-left Frepaso in the Lower House of Congress, blamed (Interior Security Secretary Juan José Alvarez) and Foreign Minister Carlos Ruckauf for Wednesday's violence...
Press reports quoted Ruckauf as boasting of having signed a decree back in 1975 as minister for then president María Estela Martínez de Perón, sending in the security forces to annihilate leftist rebels, adding he "would do it again."

Alessandro said: "Extrapolating that to current times is a serious mistake."
The situation is getting rougher.

posted by Richard 7:51 PM
. . .
Downgraded: The rating agency Fitch has reduced Venezuela's debt rating, reports
El Universal. Because of political uncertainty and the climate of polarization, the agency has the rating of long-term debt issued in foreign money from B+ to B and of long-term debt issued in bolivars from B to B-.

posted by Richard 7:34 PM
. . .
Good news:
Bloomberg.com has identified one group that has actually benefited from Argentina's economic policies. That group is beef exporters.
Argentina's beef industry is back. After a decade of being priced out of many world markets by an overvalued currency, a 70 percent decline in the peso is allowing the industry to reopen shuttered plants and rehire workers. The government is counting on increased beef and other exports to help pull the $113 billion economy out of a four-year recession.

"All of a sudden, we're a very competitive country,'' said Victor Tonelli, executive director of Carne Hereford SA, which owns 250,000 steers.
Also helping Argentine cattle feeders, the government has lifted a year-old ban on fresh beef exports occasioned by an outbreak of hoof-and-mouth disease. Poor financial conditions still take a toll, however.
Ranchers say production would rise faster if they had access to credit. Finance has been virtually unavailable in Argentina since the country defaulted on $95 billion of bonds, devalued the currency and restricted withdrawals from bank accounts.

"There is just no financing for exports and that's what is limiting growth,'' Tonelli said, adding he manages to raise some financing abroad.

posted by Richard 4:37 AM
. . .
New taped threat: About three weeks ago a video appeared showing hooded men in military uniforms, purporting to be junior and mid-level officers (comcates> in the Venezuelan Army, threatening the government of Hugo Chávez. The tape came just prior to the big anti-government demonstrations held to commemorate the passage of two months after the shootings of demonstrators on April 11. The tape added considerably to the coup hysteria that preceeded this June 15 demonstration. (Posts on the "comcates" tape from El Sur can be found
here, here, here and here.)

Now, reports the Bogata paper El Tiempo, a new tape has appeared, this time in Colombia.
In a video, released two days ago by the news channel RCN, the supposed "commandante Antonio" of the until now unknown Autodefensas Unidas de Venezuela (AUV), said that this organization has Chávez in its sights.

Said Antonio, assured that he counts 2,200 Venezuelan men trained to combat Colombian guerillas in the Venezuelan states having frontiers with this country.

The group threatened also the ex minister of the interior and justice, Ramón Rodríguez Chacín, a collaborator of Chávez, and the commandant of the 10th Front of the guerilla Fuerzas Armadas Revolucionarias de Colombia (FARC), Ruben Zamora, who they say is concealed in Venezuela.
En un video, emitido hace dos días por el canal de noticias RCN, el presunto "comandante Antonio" de las hasta ahora desconocidas Autodefensas Unidas de Venezuela (AUV), dijo que esta organización tiene en la mira a Chávez.

Alias Antonio, aseguró contar con 2.200 hombres venezolanos entrenados para combatir guerrillas colombianas en los estados venezolanos fronterizos con ese país.

El grupo amenazó también al ex ministro del Interior y Justicia, Ramón Rodríguez Chacín, colaborador de Chávez, y al comandante del Décimo Frente de la guerrilla Fuerzas Armadas Revolucionarias de Colombia (Farc), Ruben Zamora, quien dicen está escondido en Venezuela.
But for the name of the country, "Autodefensas Unidas de Venezolanas" is an exact copy of "Autodefensas Unidas de Colombia" (AUC), one of three illegal millitary forces in Colombia that are fighting each other and the army. The AUC (the name translates to United Self-Defense Forces of Colombia) is usually labeled "right wing," is widely believed finance itself by drug trafficking and is alleged by some to be cooperating with elements of the military against the other two illegal armies, the FARC and the ELN (National Liberation Army), which the government roundly denies. The appearance of an AUV would be a startling development indeed.

Yesterday Chávez indicated that he doubts the existence of the Autodefensas Venezolanas, reports El Universal (Caracas).
"I am not going to respond to this question," said the leader to the reporters, whom he invited to not "echo rumors."
"No voy a responder a esa pregunta", dijo el mandatario a los periodistas, a quienes invitó a no hacerse "eco de rumores".
Presssed by the press, however, Chávez went on to say:
What I can respond as Commander in Chief of the armed forces is that this frontier is patrolled tree to tree and we have the capacity not only of the armed forces, but of the people and of our institutions in order to prevent the Colombian conflice from coming to Venezuelan territory," indicated Chávez.

The leader argued that Venezuela has "on the frontier 20,000 armed men, not paramilitaries, but of the armed forces, batallions, tanks, infantry, helicopters with night vision, F-16 airplanes that overfly day and night."

Equally, Chávez assured that in Venezuela "there will not be civil war" in spite of the perturbations and problems that it confronts and that the country "will get by in peace and democracy."
"Lo que sí puedo responder como Comandante en jefe de la Fuerza Armada es que en esa frontera estamos patrullando palmo a palmo y tenemos la capacidad no sólo de la Fuerza Armada, sino del pueblo y de nuestras instituciones para impedir que el conflicto colombiano se venga a territorio venezolano", indicó Chávez.

El mandatario agregó que lo que tiene Venezuela "en la frontera son 20.000 hombres armados, no paramilitares, sino de la Fuerza Armada, batallones, tanques, infantería, helicópteros de visión nocturna, aviones F16 que sobrevuelan de día y de noche".

De igual manera, Chávez aseguró que en Venezuela "no habrá guerra civil" a pesar de las perturbaciones y problemas que se confrontan y que el país "saldrá adelante en paz y democracia".
One interesting possibility here is that someone (or ones) in Venezuela is conducting a kind of psy-war campaign against Chávez, first with the officers' tape and not with a tape announcing the existence of a Venezuelan paramilitary group. If so, the first tape was the better of the two--a junior officers conspiracy is more believable than a paramilitary organization springing up whole out of nowhere. Unless it is springing out of Colombia. But then, why announce it on tape? In any case, the real test of whether or not the Autodefensas Unidas de Venezuela (AUV) exists is whether the tape is followed by action on the ground. That, time will tell.

posted by Richard 4:28 AM
. . .
Thursday, June 27, 2002
Socialism forever! As expected, Cuba's National Assembly unanimously voted for three constitutional amendments that are intended to make socialism permanent. Since the third of these amendments makes it impossible to amend the first two, Castro can now declare the changes sought by the Varela Project petitions moot. Very clever. Except that socialism is no more likely to be permanent today than it was before Castro perpetrated this travesty.

For the gory details, see the
Financial Times. The Varela Project has been previously noted in El Sur (with links to items farther back).

posted by Richard 4:09 PM
. . .
Violent protest: Protests in Argentina have turned violent for the first time since last December, when 27 were killed and the government of Fernando de la Rúa was forced to resign. A report in
La Nacion indicates that two were killed yesterday. A report in the Financial Times report indicates that 90 demonstrators were injured and 170 arrested in clashes between demonstrators and police. Eight protesters and one police were treated for gunshot wounds. Buses and cars were set on fire and shops were broken into. The protesters were attempting to cut the Pueyrredón Bridge (Puente Pueyrredón).

The Financial Times's report seems to attribute the rioting to the public's reaction to the country's dire and declining economic situation:
With the economy in freefall, the interim government fears a renewed descent into violence that could end its own spell in office. The economy contracted by 16.4 per cent year-on-year in the first quarter after the government defaulted on the national debt and devalued the currency. The peso has lost 75 per cent of its value since January.
Reinforcing the notion, the article concludes with several paragraphs describing worsening economic statistics and the state of negotiations for new financial aid between the government and IMF. The rioting becomes, in effect, an argument for aid.

In fact, however, two sentences in the story suggest that something very different is going on. First:
Many protesters had arrived with their faces covered and armed with sticks and petrol bombs.
And, second:
Police checked the headquarters of leftwing political groups where, they said, rioters had taken refuge.
It appears, that is, that these demonstrations are far from spontaneous but are the beginning of a militant left wing campaign to bring down the government and install a radical one. This is also the government's view, as described in La Nacion:
The minister of the interior Jorge Matzkin, affirmed that "the lamentable events that occurred yesterday, with the tragic end of the two deaths, does not constitute an isolated incident and the government has elements that permit it to presuppose that we are facing concerted actions.

Matzkin affirmed that the said actions "constitute a plan of organized and systematic struggle, that could reach the point of threatening and replacing the consensus formula that the majority of Argentines have chosen because there are other that prefer the language of violence.
El ministro del Interior, Jorge Matzkin, afirmó que "los lamentables acontecimientos ocurridos ayer, con el trágico saldo de dos muertes, no constituyen un hecho aislado y el gobierno tiene elementos que permiten presuponer que estamos frente a acciones concertadas".

Matzkin afirmó que dichas acciones "constituyen un plan de lucha organizado y sistemático, que puede llegar a amenazar y reemplazar la fórmula de consenso que la mayoría de los argentinos hemos elegido porque hay otros que prefieren el lenguaje de la violencia".
Also suggestive or organization and pre-planning, is the rapidity with which demonstrators appeared in the Plaza de Mayo, in front of the government buildings, "to repudiate the police repression of yesterday" ("repudiar la represión policial de ayer"), according to another article in La Nacion. A substantial security presence kept this protest peaceful. As described in Clarin:
As a matter of fact, the arrival of the first columns at the Plaza de Mayo, coincided with the disturbing message from Matzkin, who alerted about the acts of violence planned by organized groups and called on the people to maintain the peace.

In parallel, the Buenos Aires and federal police, with support of the Prefectura and Gendarmeria, deployed a massive control operation at the city's access points, that included frisking of demonstrators and the inspection of vehicles.

As a consequence of these operations, 33 demonstrators who carried clubs, stones and Molotov cocktails were detained in Liniers and other objects were confiscated.
De hecho, la llegada de las primeras columnas a la Plaza de Mayo, coincidió con el inquietante mensaje de Matzkin, quien alertó sobre hechos de violencia planificados por grupos organizados y llamó a la población a mantener la paz.

En paralelo, las policías bonaerense y Federal, con apoyo de la Prefectura y la Gendarmería, desplegaron un masivo operativo de control en los puntos de acceso a la ciudad, que incluyeron el cacheo de manifestantes y la inspección de vehículos.

Como consecuencia de esos operativos, 33 manifestantes que portaban palos, piedras y bombas molotov fueron detenidos en Liniers y otros objetos fueron secuestrados en Constitución.
Among leaders of the left in attendance were Luis Zamora, of Self-determination and Freedom (Autoderteminación y Libertad), Vilma Ripoll of United Left (Izquierda Unida, and the Front for Change National Assembly deputies Alicia Castro and Alfredo Villalba--all names to watch.

If these events follow the usual script, the next step will be demands that the police be disciplined. Already, Pagina/12 is on the streets calling the deaths at the Pueyrredón Bridge an "assassination."

Argentina has had experience--in the lifetimes of many still living--with what may be beginning here. During the late 1960s and much of the 1970s, under governments led by generals and the second administration of Juan Domingo Peron, urban guerillas fought the army and police in the streets. The authorities won that "dirty war." It's not certain they would win the next one, or that they would be willing to fight it.

posted by Richard 4:08 PM
. . .
The dead hand statism is impeding badly needed economic development in Mexico. President Vicente Fox's effort to increase electricity production by opening the field to private producers is stuck in the national legislature. As a result, companies shut down during peak hours and actual outages are projected for 2004. The problem is nostalgists from the Institutional Revolutionary Party (PRI), which nationalized energy production in the 1930s, and leftists from the PRI-breakaway Democratic Revolutionary Party (PRD), who hate private property above all.

According to a report on the problem in
A boom in industrial output since 1995 has stretched the nation's electricity capacity to its limits. Courts and Congress are blocking President Vicente Fox's effort to increase private involvement in the industry, a change he says is essential to lower prices and prevent power shortages from crimping economic expansion...
Mexico's energy ministry says the electricity industry needs a $6 billion investment in each of the next five years to keep up with the rise in demand.

The state-owned electricity monopoly, known as the CFE, has a power reserve of less than 5 percent during peak hours, even after companies shut off power...
Earlier that month, the Supreme Court overturned an order by Fox to allow companies that generate electricity for their own use to sell more power to the CFE than the 20-megawatt limit now allowed. The court said Fox was acting beyond the power he has as president; others oppose his initiatives because they don't want to see Mexican electricity in private hands.

The ruling led several foreign companies to put power projects on hold.
The fundamental problem is politics and ideology.
The president, who took office in December 2000, faces increasing opposition to many of his initiatives. His electricity bill and other proposals will likely get bogged down in the run-up to 2003 midterm congressional elections.

Many congressmen "have an opinion without much knowledge of the subject,'' said Andres Carballo, a member of the lower house's energy commission. "They simply hold onto the historical party line'' of government control of services.

Maria del Rosario Tapia, another member of the energy commission, said her colleagues from the minority Democratic Revolution Party would never approve more private involvement in the electricity industry.

"Energy is a public service, not a product that should be sold for profit,'' she said.
And that is a perfect example of dated, sensless, counterproductive statist ideology.

posted by Richard 7:46 AM
. . .
Wednesday, June 26, 2002
Hostile takeover II: Reporter Martha Rojas Sánchez explains the FARC's plans in
El Espectador.
Beyond the threats of the FARC about the mayors, councilors and governors, the guerilla group seeks to replace the local governments that have a popular mandate and to cut the political errosion generated by their inclusion in the list of terrorist groups by the European Union, advised a document from the security police.

The report "Political Violence against the Regional Administrations," prepared by the police and delivered yesterday to President Andres Pastrana, (is) proof that in order to strengthen its "local control," the FARC seeks the resignation of the leaders in order to replace this official person and enter into power in the regions where traditionally it has a presence.

The guerillas seek "to replace the actual state representative with a popular mandate with Communal Action Assemblies and the insurgent organization in order to consolidate the clandestine movement," indicated the report.

The police analysis adds that the pressure campaign for access to local power was initiated in Caquetá by order of the secretariat of the organization that commissioned Fabián Ramírez to threaten the Colombian democratic system.

"This inserts us directly in the administration of the nation, in issues of public concern. We have territorial control and we ought to also have dominion over public matters," says a communication of the guerilla leader intercepted by security organizations and bases for the analysis of the document delivered to the president.

The guerilla plan, says the 23-page report, is not new but stays within the lineaments of co-government that the armed group intends for the consolidation of its clandestine movement and as a strategy to destabilize the country during the transition of government (from Pastrana to President-elect Álvaro Uribe Vélez).

The police advised the President that the intimidation by the FARC of the local governments has created a political crisis that, at this time, leaves spaces so that the subversives can implement local committees created in the Bolivarian Movement (of Venezuela's Hugo Chávez).

The document also alerts that if strong security and control measures are not taken in the 1,192 municipalities, the development of the political strategy of the FARC will be favored that they seek to reduce the fraying that their naming as a terrorist groups has generated.

The security report that was delivered to the president by the director of the police, General Luis Ernesto Gilibert, insists that the regions where the FARC increased its "local control" most strongly and threatens democracy include Caquetá, Huila, Putumayo, Arauca y Cauca.

The police diagnosis assures that the threats seek, moreover, to influence the decisions at the regional level in order to open spaces in search of the establishment of regional dialogs (replacing the national one).

"Every mayor, every assembly, every councilor that does not coordinate with the FARC and that does not accept the direction, is going or is dead. This is the instruction at the national level, not only for Caquetá," repeated Fabián Ramírez in the threat that was analyzed by the security organizations.
Más allá de las amenazas de las Farc sobre los alcaldes, concejales y gobernadores, el grupo guerrillero busca reemplazar los gobiernos locales por un mandato popular y mermar el desgaste político que les generó la inclusión en la lista de grupos terroristas por parte de la Unión Europea, advierte un documento de seguridad policial.

El informe "Violencia política contra las administraciones regionales", preparado por la Policía y que ayer fue entregado al presidente Andrés Pastrana, evidencia que dentro del fortalecimiento de los planes de "control local", las Farc buscan la renuncia de los mandatarios para reemplazar esa figura estatal y acceder al poder en las regiones donde tradicionalmente ha hecho presencia.

Los guerrilleros pretenden "reemplazar la actual figura estatal por un mandato popular liderado por las Juntas de Acción Comunal y la organización insurgente para consolidar el movimiento clandestino", asegura el informe.

El análisis de la Policía añade que la campaña para presionar el acceso al poder local se inició en Caquetá por orden del secretariado de la organización que comisionó a Fabián Ramírez para amenazar el sistema democrático colombiano.

"Es meternos directamente en la administración de la Nación, en la cuestión de la cosa pública. Tenemos el control territorial y debemos tener también el dominio de la cosa pública", dice una comunicación interceptada al jefe guerrillero por los organismos de seguridad y materia de análisis del documento entregado a Presidencia.

El plan guerrillero, dice el informe de 23 páginas, no es nuevo sino que se da dentro de los lineamientos de coogobierno que pretende el grupo armado para la consolidación de su movimiento clandestino y como estrategia para desestabilizar el país durante la transición de Gobierno.

La Policía le advierte al Ejecutivo que la intimidación de las Farc sobre los gobiernos locales ha generado una crisis política que, a su vez, deja los espacios para que los subversivos implementen las juntas locales planteadas en el Movimiento Bolivariano.

Alerta también el documento que si no se toman medidas extremas de control y seguridad en cada uno de los 1.192 municipios, se favorecerá el desarrollo de la estrategia política de las Farc que buscan mermar el desgaste que les ha generado el señalamiento como grupos terroristas.

El informe de seguridad que fue entregado al Presidente por el director de la Policía, general Luis Ernesto Gilibert, insiste en que las regiones donde las Farc incrementó con más fuerza su "control local" y de amenaza contra la democracia incluye a Caquetá, Huila, Putumayo, Arauca y Cauca.

El diagnóstico policial asegura que las amenazas buscan, además, influir en las decisiones seccionales para abrir espacios en busca del establecimiento de diálogos regionales.

"Todo alcalde, toda Asamblea, todo Concejo que no coordine con las Farc y que no acepte la fiscalización, se va o se muere. Esa es la instrucción a nivel nacional no sólo para Caquetá", reitera Fabián Ramírez en la amenaza que fue analizada por los organismos de seguridad.
Caquetá, Huila, Putumayo, and Cauca are in southcentral and southwestern Colombia. The zone ceded to the guerillas' control during the peace talks before they were cancelled in January was located in this area. Arauca is in eastern Colombia and has a long border with Colombia. For exact locations, see the map, linked at right.

posted by Richard 6:47 PM
. . .
Hostile takeover: The guerillas of the FARC (Fuerzas Armadas Revolucionarias de Colombia) have ordered every mayor and governor in the country to resign or face kidnapping, reports
In an interview atop a mountain outside the capital, Bogota, late on Tuesday, a Revolutionary Armed Forces of Colombia commander told Reuters the rebels aimed to destroy the state from the bottom up. He said the elimination of mayors and all municipal authorities was the first step...
"A new, grass-roots power must be built by the people. ... The birth of this new power will not recognize old institutions," he added, clad in camouflage and toting an Israeli-made Galil assault rifle...
The FARC previously threatened about 120 mayors, but the newest threat extended to officials in all 1,097 municipalities of the war-torn nation.
More than 30 mayors have already quit. The government has responded to this threat by promising greater protection and urging the leaders of municipalities without police to move to larger, safer places.
Byron (the alias of the guerilla fighter making the threat) said the FARC's fighters were scattered throughout the Andean nation and could easily make good on threats even if mayors moved to military bases in provincial capitals.

"If the mayors move to the capitals to operate out of there, well, we will also be there to stop them," he said.
Reuters notes that FARC's campaign against elected officials could "further alienate it from the world community." And indeed, El Tiempo reports that the Organization of American States has condemned the threats.
The secretary general (of the OAS, César Gaviria) made a special point in that "all the peoples of America look with respect and admiration to those who, risking their lives, have shown themselves firm and decisive in defenting the popular will and the democratic institutions of Colombia."
El secretario general hizo hincapié en que "todos los pueblos de América miran con respeto y admiración a quienes, arriesgando sus vidas, se han mostrado firmes y decididos a defender la voluntad popular y las instituciones democráticas de Colombia".
Fine words, but will the municipal councilors, mayors and governors be impressed? Will the FARC? An editorial in El Tiempo shows the paper isn't impressed with foreign expressions of sympathy or the government's response and wants stronger measures.
The offensive of the FARC against the mayors and councilors is surpassing itself. Meanwhile every day the number of municipalities governed at a distance increases, the threats already are extended to departmental capitals. And however, the formulas announced by the government yesterday--the creation of a committee that will evaluate the threats and the convocation of national and international solidarity--are characterized by ambiguity, vacillation and a worrying lack of proportion to the enormity of the problem. What is certain is that without firm and clear measures, the FARC will advance in its aim to dismiss the local authorities.
La ofensiva de las Farc contra los alcaldes y concejales se está desbordando. Mientras cada día aumenta el número de municipios gobernados a distancia, las amenazas ya se extienden a capitales de departamento. Y en cambio, las fórmulas anunciadas por el Gobierno ayer--la creación de un comité que evaluará las amenazas y la convocatoria de la solidaridad nacional e internacional--se caracterizan por su ambigüedad, vacilación y un preocupante desequilibrio de magnitudes frente al enorme problema. Lo cierto es que sin medidas firmes y claras, las Farc avanzarán en su propósito de desterrar a las autoridades locales.
The FARC's challenge is fundamental. The guerilla army is attempting to effectively replace elected local administrations with FARC-controlled administrations through terror.
"This about the birth of a new state, a new power. It has nothing to do with terrorist arguments," Byron said.
Not that Reuters would ever call someone who is trying to remove a country's entire elected leadership through threats of death and kidnapping a "terrorist."

posted by Richard 10:27 AM
. . .
Reformed and bankable? Economy Minister Roberto Lavagna is in Washington seeking aid. In addition to calling on the U.S. government and multilateral lenders, Lavagna will be meeting with four banks that are large lenders to Argentina (collectively losing $6.7 billion, so far). They are: Citigroup, Inc., FleetBoston Financial Corp., Banco Santander Central Hispano SA and Banco Bilbao Vizcaya Argentaria SA.
"They are looking for a mutually beneficial agreement whereby Argentina plays by the rules of capitalism in return for actions by the banks that will help financial stability,'' said Michael Mayo, financial services analyst at Prudential Securities, who has "hold'' recommendations on Citigroup and Fleet.
"Hold," in Wall Street parlance, means something between "don't buy" and "sell."

Except as otherwise noted, quotations are from a report from
Argentina needs to persuade lenders to stay in the country after the government defaulted on $95 billion of bonds and devalued the peso, prompting three international banks, including France's Credit Agricole SA, to abandon their investment.

Fleet and Santander have said they stopped funding their Argentine units this year, while Citigroup has pledged to stay and BBVA has added new funds to its operations in South America's second-largest economy.
What Lavagna wants from the meeting is what Argentines seem always to want--new loans. For him the issues are: Will I get them? And, if so, under what conditions? For the banks the issues are: What reason do we have to think this deadbeat country will pay us back? Then, if the answer is "maybe not": Is there any other reason for us to put money into Argentina. The answers, which probably will not emerge for several weeks--unless its absolutely "No" to new funds--will give strong indications about Argentina's near term future: Is Duhalde's Argentina "bankable"?; Is Duhalde likely to survive to planned 2003 elections? Will Argentina's economy improve sooner or later (or, practically, never)? The main positive sign would be evidence that these banks are willing to commit new--emphasis on new--money to Argentina. A secondary indicator would be the terms of any loans talked about, particularly the extent to which the terms show that the discussed loans are likely to materialize or are just lip-service.

Pre-meeting, Citigroup seems chastened and cautious:
Citigroup Chairman Sanford Weill has said the bank might have been better prepared to limit losses in Argentina.

"Something of that magnitude has never occurred in any of the emerging markets that we have operated in,'' Weill said in announcing the Argentine losses in April. "We could have been faster and earlier and tougher as to how we evaluated sovereign risk in Argentina.''
Note: Banco Santander is being sued in Spain by Argentine depositors, who want it to "refinance" its Argentine subsidiaries--i.e. give them money; Banco Bilbao is under investigation in Spain for, among other things, a $1.5 million illegal campaign contribution to Venezuela's President Hugo Chávez.

posted by Richard 6:41 AM
. . .
Tuesday, June 25, 2002
Judge declares pesification unconstitutional:
La Nacion reports that a judge, Liliana Heiland, has declared the government decree that forcibly converted dollar deposits to peso deposits at the rate of 1-1.4 was unconstitutional. It is too soon to say if this will stand and, if it does, what the consequences will be. Whatever happens, this judgement, like earlier ones affecting the freeze, demonstrate the difficulty of making impositions stick in the 21st Century, even in countries with a history of governmental arbitrariness and authoritarianism. Peron wouldn't have had this problem.

posted by Richard 7:10 PM
. . .
Prospects worsen: Central Bank President Mario Blejer resigned at the end of last week, an event that was catalyst for another decline in the peso, now hovering around four to the dollar. Since the one-to-one peso-dollar link was cut and the peso was price at 1.4 to the dollar in January, the pattern has been a few weeks of stability, an event, a fall in value and then new stability for a few weeks. Cumulatively, the currency has fallen 75 per cent since January.

Not surprisingly,
La Nacion reports today that economic activity continues to decline, quoting figures from the Instituto Nacional de Estadística y Censos (Indec).
The sales in supermarkets descended 27.7 per cent and in the shoping centers 11.7%, while construction went down 35.9%; the prices increased 52.7 per cent with respect to the same month one year ago.
Las ventas en supermercados descendieron un 27,7 por ciento y en los shoppings un 11,7 %, mientras que la construcción bajó un 35,9 %; los precios aumentaron un 52,7 % respecto a igual mes del año último.
An article published by Reuters suggests that perhaps things are coming to a head this time. The piece reports that says an IMF team has just left Buenos Aires without an agreement, an agreement merely to roll over existing loans from multi-lateral lenders, in any case. It goes on to add that failure to obtain these loans could spell the end of Eduardo Duhalde's presidency.
Duhalde -- whose popularity rating has dived to around 8 percent since he was appointed by Congress in January according to a new poll -- has confessed he has slight doubts about whether Argentina would clinch a deal with the fund, while the World Bank said no such agreement was likely soon.

"A new collapse in Argentina seems like a question of time now and the peso is falling as people brace for it," said Mario Zawadzki, vice president of local Schweber y Cia brokerage.
The underlying problem is that the Duhalde government has pursued a bad strategy from the beginning--to promise whatever had to be promised to get aid, then to keep the promises or not, as would be convenient. Proded by the U.S., the IMF has consistently demanded a credible and sustainable plan, which Argentina has yet to produce.

All this appears to be wearing Argentines down, if American blogger and Argentine resident T.L. Wilson (traisaigh.com) is any indication:
Personally, this is getting tiring... I'm running out of things to write... everything is a variation on a theme... "The country is rich in natural resources." "Its population is capable ." "Almost all of the country's problems can be traced to its political class." "Because all of the rules, regulations and laws are written by the political class, there is no way, short of a French style revolution, of getting rid of them." "The country is in deep doo-doo."

So where is that one person that can lead this country into a better future?

posted by Richard 6:18 PM
. . .

El Universal has a report on a poll on the concerns of Caracas residents. According to the poll, caraqueños biggest major worry is crime (56 per cent of respondents). Another 15 per cent worry most about unemployment or their own personal economic security. In a second story, El Universal reports that the poll shows caraqueños polarized between Chávez's Fifth Republic Movement (MVR) and First Justice (Primero Justicia). A more complete review of the political elements of the poll was published in Ultimas Noticias earlier in the month and noted in El Sur on June 18. The poll was done by Consultores 21 in May.

2. Charges against President Hugo Chávez were presented to the Supreme Court today, reports El Nacional. Attorney Tulio Álvarez accused the president of receiving an illegal campaign contribution of $1.5 million from the Banco Bilbao Vizcaya Argentaria. Last week, the court decided that the Attorney General--a Chávez ally--wasn't the only one who could bring such charges. El Sur previously noted this legal action, here, here and here.

3. Jennifer MacCoy, a representative of the Carter Center met with Venezuelan Vice President José Vicente Rangel today, reports El Nacional. The purpose of the meeting was to determine whether former President Jimmy Carter could usefully participate in the "diálogo nacional" that was triggered by the temporary ouster of Hugo Chávez in April. So far it has been a dialog of the deaf.

4. The Miami Herald reports on ''extrajudicial killings'' by police, other security personnel and civilians. In some cases, the killers leave notes signed "The Anonymous Avenger."

posted by Richard 7:36 AM
. . .
Bond sale blues: Venezuela is having trouble selling government paper, reports
Yahoo! en Espanol. Friday, the government was able to place only five-million bolivars, about 10 per cent of the 49.5 million bolivars offered. These were all short term notes. Longer term paper found no buyers. The government is attempting to refinance maturing debt to avoid a cash crunch. Another attempt will be made today. Most interesting, in this story, is the following comment at the end:
Certain observers have indicated that if the banks refuse to refinance the bonds, it is possible that the government will oblige them to do so, in a measure that will bring to memory the Argentine collapse of the past year, when the government of that country obliged the banks to acquire public debt in order to financially rescue the treasury.
Ciertos observadores han señalado que si los bancos se niegan a refinanciar los bonos, es posible que el gobierno los obligue a hacerlo, en una medida que traerá a la memoria el colapso argentino del año pasado, cuando el gobierno de ese país obligó a la banca a adquirir deuda pública a fin de rescatar financieramente su tesorería.
Needless to say, Argentina's treasury wasn't rescued. Instead, the government took the banking system down with them.

posted by Richard 7:07 AM
. . .
Socialism forever: Cuba's national assembly has begun "debating" a proposal to enshrine socialism in the "constitution" forever, reports
Yahoo! News - AP. The proposal was submitted to the national assembly after the signatures of some eight million "voters" were gathered in just a few days, in an obviously spontaneous demonstration of Cubans' love for Castro and happiness with life in their workers' paradise. Places of "employment" are closed througout Cuba so Cubans can watch the "deliberations" on TV. Analysts expect the measure to be approved, because Cuban's don't want to lose their wealth and freedom by returning to the dark days before the revolution, or so the president of the national assembly, Ricardo Alarcon, said:
"Does Mr. Bush really think that he will return to sink us in this hell of injustice?" Alarcon asked.

"Does he imagine for a moment that we are going to turn over to that corrupt and criminal mafia our lands, our homes, our factories, our schools and hospitals, our research and cultural centers, our child care centers, our retirement homes?" Alarcon said.

"Does he perhaps suppose that Cubans will renounce the work they have realized, that they will turn over their sovereignty, betray their history and their nation?" Alarcon said.
This charade of democracy is a response to the Varela Project, a genuine petition campaign for human rights and democracy. Instead of putting the Varela proposition to a referendum, Castro cooked up this fraud, which he won't even put to a popular vote. As always, nobody's really fooded, but that's not what's really intended. That is a demonstration of continuing power and control, achieved by forcing people to publicly pretend to believe things that they and everybody else know are false.

El Sur has been following this for some time. The most recent link (with links to items further back) is in Sunday's post in El Sur.

posted by Richard 6:46 AM
. . .
Monday, June 24, 2002
Recall: President Hugo Chávez again raised the possibility of a recall referendum next year, reports
El Universal. He made the comments Sunday on his weekly program "Aló Presidente."

Lest this be considered a concession, however, Chávez pointedly indicated that he will not be the only elected official put to the test.
The chief of state asked the "people...to go gathering signatures in order to submit governors and mayors to a recall referendum, and the deputies of the National Assembly that jumped the wall and have no embarrassment and founded some groups and go about attacking" his government.

Chávez questioned the attitude of those who "were elected hanging off the sleve of Hugo Chávez, some strangers" that were in the electoral aircraft carrier of his campaign and that "a little time afterward afterward Chávez began to jumpt the fence."
El jefe de Estado, pidió al ''pueblo (...) ir recogiendo firmas para someter a gobernadores y alcaldes a referendo revocatorio, y a los diputados de la Asamblea Nacional que brincaron la talanquera y no tienen ninguna vergüenza y fundaron unos grupos y andan atacando'' su gobierno.
Chávez cuestionó la actitud de quienes ''fueron elegidos colgados algunos de la manga de Hugo Chávez, algunos desconocidos'' que fueron en el portaaviones electoral de su campaña y que ''después a los pocos meses empezaron a saltar talanquera''.
It seems as if Chávez might be unhappy with some allies.

In any case, Chávez's offering of a vote is less generous than it first appears, since such a referendum is already available to them under Venezuela's constitution. The obvious advantage for Chávez of indicating support for a referendum one year out is that it tends to buy him time now. He looks moderate and conciliatory--or would if he didn't say everything in a threatening manner--without paying an immediate price. This tactic is not without risk however. By accepting a timetable--even tentatively--Chávez narrows his room to maneuver. In particular, the political and economic situation he will be facing when it's time to make good on this promised will almost certainly will be worse than today.

It is worth noting that Argentina's President Eduardo Duhalde is doing much the same thing--talking alot today about scheduling elections next year. Duhalde is actually in the better situation, however. Argentina's economy, unlike Venezuela's, has fallen about as low as it can. And Duhalde, unlike Chávez, can't be blamed for the decline (except as a member of the political class), which began well before he put on the presidential sash.

posted by Richard 7:21 AM
. . .
Post-Communist lessons from Eastern Europe: The experience of Eastern Europe after the fall of the Soviet Union provides examples for Cuban, exiles, and would-be foreign investors alike, argue Anders Åslund and John Hewko in
Christian Science Monitor.
Yet, even as communism lay in ruins, politics and people were real. Émigrés and foreign advisers arriving with a can-do swagger and the confidence that they "know it all" often failed to understand how society functioned. Under communism people may have forgotten how to work and never learned to use a credit card, but they were bright and had pride. The combination of local pride and émigré arrogance excluded all but a handful of émigrés from prominent government positions. Without genuine humility, returning émigrés are not likely to succeed.

An awareness of these problems helps to harness them. Cubans must be mobilized and empowered. It is not enough to preach the principles of capitalism. Early democratic party elections to a new parliament are vital to put into place a functioning legislature that can adopt the hundreds of new laws a market economy requires. A popularly elected president cannot do it alone, as President Boris Yeltsin experienced in Russia.

posted by Richard 6:15 AM
. . .
Review and analysis: The
Financial Times reviews and analyzes the situation in Brazil in a national election year.

posted by Richard 6:11 AM
. . .
Sunday, June 23, 2002
The conflict moves to court: Not content to march,
El Nacional reports, opponents of President Hugo Chávez have started,
a rain of accusations against the president of the republic that will fall over the Supreme Court of Justice--whose decision past Thursday opened the judicial dike allowing to flow in the accusations of those who feel themselves agrieved, affected or victims--the plenary session designated the first litigants in a case against the chief executive of state, according to Enrique Ochoa Antich.
una lluvia de acusaciones contra el presidente de la República que caerá sobre el Tribunal Supremo de Justicia -cuya decisión del pasado jueves abrió el dique jurídico para que fluyan las denuncias de quienes se sientan agredidos, afectados o víctimas- la sala plena designó los primeros ponentes en un juicio contra el jefe del Estado, según informó Enrique Ochoa Antich.
Enrique Ochoa Antich, director of Encuentro Ciudadano, will present a case alleging misuse of public funds "presumably oriented to the financing of the Bolivarian Circles" ("presumiblemente orientados al financiamiento de los círculos bolivarianos"). A second case alleges misuse of money from the Investment and Macroeconomic Stabilization Fund (Fondo de Inversión y Estabilización Macroeconómica, or FIEM). Finding that government funds went into the Bolivarian Circles--politely, neighborhood-based, pro-Chávez political groups--would be very big news. Next week, Alejandro Terán, representing the Association of Trial Lawyers of Venezuela (Asociación de Abogados Litigantes de Venezuela) will bring another case, alleging that Chávez administration's sales of oil to Cuba on concessionary terms are illegal.

Chávez's response to all of this impending legal action is very interesting. From Reuters.com:
"If they want to invent some crime to force me out with an indictment, they'll have to explain it to the people and to the armed forces," Chavez said during his weekly television and radio program.

"If they want to try another coup that way, they'll finish the same way as they did last time," the president said.
The interesting thing is that he included "the armed forces" as one of the two groups in front of whom his opponents will have some explaining to do. Apparently, just two months after a significant part of the officer corps rebelled against him, Chávez now feels certain of their loyalty--or, he's bluffing and bullying. By "the people" he means the Bolivarian Circles and the rioters who will follow their lead, of course.

posted by Richard 6:05 PM
. . .
"Oops" says Oppenheimer:
Miami Herald columnist Andres Oppenheimer says Cuban dicatator Fidel Castro may have just made the mistake of a lifetime. How?
By imposing an amendment that would prohibit any future changes in Cuba's Socialist Constitution, he may guarantee that it will be scrapped altogether, and that nothing of his 4-decade-old regime will survive.
The amendment is Castro's response to the Varela Project petition campaign, which sought democracy and human rights. Varela petitioners submitted 11,000 signatures, just above the constitutional requirement. Castro resonded by having his neighborhood committees circulate petitions; they gather signatures from more than 99 per cent of the population in less than a week. Problem is, says Oppenheimer:
The history of Latin America is replete with presidents-for-life who issued hundreds of constitutions, each announced as the definitive one, only to be discarded altogether once the political winds changed.

''Paradoxically, by trying to mummify the Cuban Constitution, the government may actually be declaring it irrelevant,'' says Robert Pastor, a former Carter administration official who visited Cuba last month with the former U.S. president.
Even more important, Oppenheimer says that for the first time in many years Castro is on the defensive.
In any case, an increasingly fearless opposition is becoming a key player in Cuba's political life, which is great news.

This subject has been noted several times, most recently here, in El Sur.

posted by Richard 5:35 PM
. . .
Bank closed: Banco de Montevideo SA failed and was taken over by the central bank, reports
Bloomberg.com. Banco de Montevideo is the country's fourth largest bank. The bank ran short of cash, in part due to withdrawls stimulated by fears that Uruguay will freeze accounts as did Argentina and the fact that the bank weakened its cash position by acquiring another bank last year.

posted by Richard 5:22 PM
. . .
Isolation: Is Argentina an example of globalization in reverse? So asks the
Financial Times.
International airlines have scrapped direct flights to the US and Europe or drastically cut their frequency. The only new route planned by a main airline is to Washington, home to the many multilateral institutions negotiating aid for Argentina.
Phoning is no better: the country's telecommunications network is decaying as foreign-owned phone operators, such as Spain's Telefónica, halt investment. International phone calls take longer to be connected and will soon be priced out of reach of most Argentines if, as planned, they are charged in dollars.

Even the internet, which was supposed to make the distance between nations irrelevant, is deteriorating. Users say connections are slower and less reliable and
operators say they cannot import parts to maintain the networks.
Argentines who used to be versed in world affairs find there is a growing gulf between them and their foreign friends.

Carolina Barros, a public relations executive, said she has had to abandon subscriptions to The Economist and Wallpaper magazines since their price in pesos soared. "Wallpaper is more expensive than an Argentine coffee table book. I feel like I'm being isolated from the world.

"We Argentines always felt we were a touch above other Latin Americans," said Ms Barros. "Now we find we're at the bottom of the pile. I e-mail a Brazilian friend and I feel like we're from a different continent. They'll say they're installing hardware on their computer that we can no longer buy. In less than a year we've managed to erase the progress of an entire decade."

posted by Richard 3:45 PM
. . .
Coup would fail: Venezuelan President Hugo Chávez told the foreign press that a second coup would fail, reports
"You can surprise me once, but not now,'' Chavez told reporters at a news conference.
Among other measures, Chávez said, the military has installed anti-aircraft systems around Miraflores Palace.

posted by Richard 3:38 PM
. . .
Saturday, June 22, 2002
Bank to return funds: Banco Ciudad de Buenos Aires plans to return frozen funds to small savers, reports
La Nacion. Control of accounts containing $5,000, before conversion to pesos, indexation, and interest, will be returned to savers in the next week or so. The bank has about 4,000 such accounts. The outflow, if everyone withdrew their funds, would be about $11 million.

One might think that this would please the government; nothing has so angered the public as having their funds tied up on bank accounts they can't get at. But, no.
Sources from the BCRA (central bank), in all, avoided pronouncing themselves about the position that would be taken by the monetary entity over the announcem of Ciudad. Although in an earlier talk with La Nacion a high source defined it as "at least, a prank."
Fuentes del BCRA, en tanto, evitaron pronunciarse sobre la posición que podría tomar el ente monetario tras el anuncio del Ciudad. Aunque ante una consulta de LA NACION una alta fuente lo definió como "al menos, una picardía".
Why the reserve? From the beginning of the bank freeze (corralito), the government has encouraged the public to blame the banks, though it was the government that ordered them to cut off access to the accounts. As a result, evidence that banks look forward to freed funds is less than welcome.

posted by Richard 3:14 PM
. . .
A high official in Spain's bank said that two Spanish banks with large Latin American investments should not support their subsidiaries with infusions of new cash, reports the paper
Cinco Dias (Spain).
The deputy governor of the Bank of Spain affirmed yesterday that neither (Banco) Santander Hispano nor (Banco Bilbao Vizcaya Argentaria) BBVA should contribute more funds to their Latin American affiliates, especially those in Argentina. According to Gil's statement, "every affiliate of a Spanish bank group ought to be independent of the parent and of other entities of the group and each should be capable of obtaining its finances and liquidity with complete autonomy.
El subgobernador del Banco de España, Gonzalo Gil, afirmó ayer que ni Santander Central Hispano ni BBVA tienen que aportar más fondos a sus filiales latinoamericanas, en especial las argentinas. Según señaló Gil, 'cada filial de un grupo bancario español debe ser independiente de la matriz y de otras entidades del grupo y, por tanto, ser capaz de obtener su financiación y liquidez con plena autonomía'.
Speaking at a journalism conference on the subject "Spanish Investments in Latin America: the Argentina Crisis" ("Inversiones españolas en Latinoamérica: la crisis argentina"), Gil stated that "the parent does not have to pay for the problems of the subsidiaries nor is it obligated to insert more money." ("la matriz no tiene por qué pagar los problemas de las filiales ni está obligada a meter más dinero").

Gil's statement is a direct response to lawsuits demanding that Spanish banks refinance their Argentine subsidiaries. The suits have been filed in Spain by attorneys representing the customers of Argentine subsidiaries of Spanish banks. A Spanish court has given somewhat sympathetic consideration to one such a case. (For a report, with links, see El Sur from June 11.)

Gil clearly lays blame for Argentina's troubles and the Spanish banks' losses on the government of Argentina. From Cinco Dias:
With this affirmation, Gil recommends in addition, to the two the Spanish entities that they not accept the burden of possible demands in Spanish courts with which the Argentine clients of their respective affiliates would be able to attempt to recover their frozen deposits.
Con esta afirmación, Gil recomienda además a las dos entidades españolas que no se hagan cargo de posibles demandas en juzgados españoles con la que los clientes argentinos de las respectivas filiales podrían pretender rescatar los depósitos cautivos en el corralito (restricción en la retirada de efectivo).
The obvious conclusion is that Argentine bank account holders ought take whatever recourse they can at home. Gil's statements are almost certainly intended as a direct message from the Spanish governent and central bank to the country's more entrepreneureal judges.

Banco Santander owns Banco Rio de la Plata SA, Argentina's fourth-largest bank; Banco Bilbao owns Banco Frances SA, Argentina's fifth-largest bank. Bloomberg.com has a brief report in English.

posted by Richard 5:25 AM
. . .
Friday, June 21, 2002
Retired military march: Retired military officers marched against the government of Hugo Chávez yesterday.
El Universal has a report. The Metropolitan Police stopped the march short of its announced goal, the Miraflores Palace, in order to prevent confrontations. The purpose of the march was to show support for merit in promotions in the military. Annual promotions are due in early July. There is concern that Chávez intends to promote loyalists, without regard to merit. This is the same claim made by managers of the state oil company, Petróleos de Venezuela (PDVSA), who were active in the anti-Chávez agitation that preceeded his temporary removal in April (not that any such result is likely here).

Prior to the march, the government had announced that any retired officer who demonstrated in uniform would be arrested, which led to cases of retired military or their relatives carrying their uniforms. Also prior to the march, the government strongly discouraged participation by active duty officers.

Yahoo! News - AP also has a story.

posted by Richard 8:41 AM
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State of siege: Colombia's president-elect, Álvaro Uribe, is contemplating a "state of siege" reports
El Tiempo.
The measure envisions limiting the exercise of individual rights in order "to guarantee security."
La medida supondría la limitación en el ejercicio de los derechos individuales para "garantizar la seguridad".
A brief item in English is available at Bloomberg.com.

Visiting Washington yesterday, Uribe met with President Bush and other U.S. officials, seeking additional aid to fight drugs and guerillas. Yahoo! News - AP has a report.

posted by Richard 8:34 AM
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Thursday, June 20, 2002

1. Argentina has raised its projection of 2002 inflation, reports
Bloomberg.com. The number forcast when the budget was adopted in February: 15%. The most recent projection before this: 40%. The newest projection, reported by Bloomberg: 80%. Consumer prices have already increased 25.1% this year.

2. Argentina's gross domestic product (producto interno bruto, or PIB) registered its largest fall in history in the first quarter, reports Pagina/12. This fall is from an already recessionary level in 2001. Worse, if IMF projections are fulfilled, Argentina's PIB for the full year could fall more than 15 per cent.
Taking the levels prior to the recession, the fall of product (at market prices) between the first quarter of 1998 and the same period this year was 20.1 per cent.
Tomando los niveles previos a la recesión, la caída del producto (a precios de mercado) entre el primer trimestre de 1998 y el mismo período de este año fue del 20,1 por ciento.
3. Bloomberg.com also reports that President Edurado Duhalde has vetoed a law that would continue to permit the prosecution of bankers for supposedly contributing to Argentina's economic problems. When the Senate repealed the economic subversion law as a condition of International Monetary Fund aid, it simultaneously re-enacted portioins of the law elsewhere in the penal code. The IMF said this was unacceptible. This is not particularly popular with a population still looking for scapegoates. That Duhalde is willing to take on the political burden of a veto shows how focused he is on obtaining IMF aid.

posted by Richard 8:01 AM
. . .
Legal trouble II?
Bloomberg.com briefly reports (in English) on the Venezuelan Supreme Court's decision to require Attorney General Isaias Rodriguez to explain why he should not be removed from an investigation of President Hugo Chávez for corruption. Chávez has been accused of secretly receiving $1.5 million for his campaign from Banco Bilbao Vizcaya Argentaria (BBVA) de España.

Today, El Universal reports that Hugo Chávez is one of two men listed as responsible for his presidential campaign account, according a document filed with the Campaign Finance Office of the National Electora Council (Oficina de Financiamiento de Campañas del Consejo Nacional Electoral), or CNE. The other man is Luis Miquilena. Chávez allies are attempting to lay the blame for campaign irregularities off on Miquilena.

Incidentally, this and other matters relating to BBVA are being investigated in Spain by Judge Baltazar Garzon. This is the same Garzon who attempted to get Chilean General Pinochet extradited from England and who has been encouraged to investigate Spanish banks over their role in Argentina by attorneys suing these banks on behalf of the holders of accounts in their Argentine subsidiaries. For Chávez, Garzon's involvement means the case is unlikely to just disappear, no matter how the Venezuelan legal system treats it.

El Sur noted the case yesterday.

posted by Richard 6:39 AM
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Wednesday, June 19, 2002
Varela organizer responds to Castro: The Varela Project's democracy and human rights petition campaign will not be pushed aside, the campaign's organizer, Oswaldo Paya, said in a statement released to the international press yesterday, according
Yahoo! News - AP. Paya was responding to dictator Fidel Castro's own petition campaign last weekend, in which Cubans were told to declare socialism "untouchable." Castro's campaign was run by government-controlled "mass organizations" (unions, professional organizations and the like) and the block committees, the network of political commissars through which the government watches and doles out or withholds rewards, depending on fealty to the regime. No surprise, the government campaign signed up almost 99 per cent of the population in just a few days.
"No Cuban should feel paralyzed or hopeless for having signed against their will," Paya wrote in the communique sent to international news organizations. "These impositions by the regime cannot nullify people's dignity, cannot rip away their liberty as children of God."
In addition to Varela, Castro's effort is believed directed at the Bush administration, which has supported Varela and vows not to relax the U.S. trade embargo against Cuba until there are democratic reforms.
It's Castro's "way of saying: 'You want to change our system, but the Cuban people don't,'" Cuba specialist Wayne Smith said from Washington. "I don't think it will have much effect on future developments."

"As time moves on, Cuba will have to change," Smith said. "When they reach a given point, this can easily be moved aside," he said of the constitutional change.

Wednesday's Financial Times has a report on the Castro campaign.

Previous posts in El Sur on this subject are here, here, here, here, here, and here (most recent to earliest).

posted by Richard 7:32 PM
. . .
Legal trouble? Tulio Álvarez, an attorney, has accused President Hugo Chávez of illegally receiving money to finance his 1999 campaign, reports
El Nacional. Álvarez charges that Chávez received $1.5 million from the Banco Bilbao Vizcaya Argentaria (BBVA) de España, in two installments to fund his 1999 campaign. Yesterday, a BBVA official, José Ignacio Goirigolzarri, admitted knowledge of the payments to the Chávez campaign in a letter sent to a court in Spain investigating the BBVA there. Álvarez says that the payments violated the Law of Political Parties (Ley de Partidos Políticos) and the Organic Voting Law (Ley Orgánica del Sufragio), both of which permit "private accusation by a citizen" in addition to investigation by state law enforcement officials. Álvarez presented his case to Fiscalía General (Attorney General) Isaías Rodríguez on April 26. The Fiscalía General, a Chávez associate, has done nothing. Now, Álvarez has asked Venezuela's high court to order the Fiscalía General to recuse himself from the case.

The court is likely to require the Fiscalía General to step aside, according to a second report in El Nacional.

Finally, an opposition deputy has charged, in El Nacional that officials in Chávez's Fifth Republic Movement (MVR) are trying to lay the blame for the alleged illegal fundraising on a party official,Luis Miquilena.

posted by Richard 10:27 AM
. . .
Castro's first dupe: Yesterday, El Sur noted that Fidel Castro had quickly reached his goal of getting near unanimous support for his socialism-forever petition campaign, which he launched in response to the Varela Project petition campaign for democracy and human rights. In the post, El Sur pointed out that "only the terminally niave and willing dupes" would agree that the number of signers then reported--7.4 million or 90 per cent of the voting age populaiton--"reflects the true state of public opinion in Cuba."

Reuters has turned up the first willing dupe, a "European diplomat" the news service quotes as follows:
"No doubt people support the regime. You can't force nine million people to sign. We have to accept that," he said.
No diplomat could be so niave, which is why he--presumably he--must be a willing dupe, a pinstriped Sandalista. Unless of course he thinks Cubans are free, not the subjects of totalitarian regime, because totalitarian means total, which means 100 per cent and, as Reuters reports, only 98.97 per cent of the voting age population has signed.

posted by Richard 9:08 AM
. . .
Tuesday, June 18, 2002
Poll: The Caracas paper,
Últimas Noticias, published a poll Tuesday indicating that the city's voters would like to have a referendum to recall certain of the metropolitan area's elected officials. The poll, by Consultores 21, S.A., was completed in May. The complete results are available at the Primero Justicia (First Justice) party's website--not surprising since the party does very well in the poll (and may have paid for it, though this is nowhere stated).

In any case, the results are of interest.

Faring worst in the poll were Alfredo Peña (whom 69% wanted recalled) and Freddy Bernal (whom 57% wanted recalled). The two are visible, vocal partisans of Venezuela's contending sides. Bernal is a Chavista and mayor of Libertador, a poor municipality in metro Caracas; Peña is the metropolitan district mayor and an anti-Chavista. The anti-Chávez mayor of Sucre, José Vicente Rangel Ávalos, would also face a recall vote, if the majority of the poll's respondents had their way.

Less controversial figures fared better in the poll, which shouldn't be a surprise. Adding the other side's partisans to the timorous middle often results in majorities against strong, polarizing political leaders of whatever stripe--"Exhibit A" being Hugo Chávez.

Asked about President Hugo Chávez, only 38 per cent of respondents thought he was doing a good job.

The poll also looked at party support:
Another aspect the study picks up is the partisan affinity of the respondents. In this sense is observed that there exists a polarization between the Fifth Republic Movement (31%) and First Justice (28%).
Otro aspecto que recoge el estudio se refiere a la afinidad partidista de los encuestados. En este sentido se observa que existe una polarización entre el Movimiento V República (31%) y Primero Justicia (28%). Movimiento V República (31%) y Primero Justicia (28%).
Other parties are far behind, including Venezuela's traditional parties, Democratic Action (7%) and the Christian Democrats or COPEI (3%). Twenty-four per cent of respondents claimed affiliation with no party.
In case of a new election in the municipal sphere, 54% affirmed that they would support the projects and candidates of First Justice, while 40% those of the MVR.
En el caso de que se realizara una nueva elección en el ámbito municipal, 54% afirma que respaldarían los proyectos de los candidatos de Primero Justicia, mientras que 40% a los del MVR.

posted by Richard 6:57 PM
. . .

1. Today was the first day of the government's plan to free savings from frozen accounts. Alternatives include long term bonds in dollars (if the account was originally in dollars), one- to three-year accounts in pesos (also for dollar accounts), a five year bond (for peso accounts) and immediate withdrawls in restricted amounts for certain purposes deemed beneficial to the economy. According to
La Nacion "in the bank branches questions about the use and the possibilities the new instruments gave them (savers) predominated over exchange operations." ("en las sucursales de los bancos predominaron las preguntas sobre el uso y las posibilidades que les dan (a ahorristas) los nuevos instrumentos por sobre las operaciones de canje.") Argentines seem increasingly enervated by their economic and political situation. Six months after Fernando de la Rúa was forced out by protests, Argentines seem not to believe that demonstrations will either move this government or eliminate it.

2. La Nacion also reports that industrial production fell 13 per cent in May in comparison with last year. For the January-May period production fell 15.8 per cent. One possible, small bright spot: industrial production increased from April by .6 per cent.

3. Rafael Delpech, Argentina's secretary of agriculture, attended the world food summit of the U.N.'s Food and Agriculture Organization.
Argentina arrived at the meeting reflecting a discordant paradox: while it is one of the main food suppliers to the world, the amount of Argentines facing malnutrition grows every day,
reports e-campo.com.
Delpech assured listeners that the hope for exiting the current drastic reality is in the exportation of food products, as he considered, "It's the main industry of the country and the leading source of revenue." Numbers demonstrate why: Argentina is the fifth food exporter in the world thanks to occupying the first place in vegetable oil, soybean and sunflower pellets, lemons, honey, pears and apples.
Delpech identified protectionism in the U.S. and Europe as the biggest single impediment to successful farming Argentina.
"It is absolutely contradictory that the European Union and developed countries promulgate and support free market ideals, while at the same time they subsidize their agricultural production with numbers close to $1 billion a day. The sanction of the new agricultural law in the U.S. is another contradiction, considering it provides its producers with nearly $180 billion over the next ten years," pointed out Delpech while he asked--once again--for the elimination of subsidies that distort commercial relationships in international markets.
Greenpeace attended too. In their view the problem is "transgenics."
"The production of transgenics in Argentina has caused a massive expansion of the agricultural frontier, especially in the crop of soybean. Also, lands are concentrated in few hands, marking another paradoxical record: there is more production, but over 60,000 small and medium agricultural establishments have disappeared during the last decade, causing a great exodus of inhabitants."
Not so, concludes e-campo.com:
The truth is that the crisis suffered by Argentina is not a consequence of only one element; it is more the result of a brutal combination of external and internal factors that were never regulated by the country's leaders. The protection of personal and corporate interests clouded the vision of an irresponsible State that must now convince the world to buy its agricultural food products, while the numbers of citizens that live below the line of poverty multiply.
4. The dollar has remained relatively stable this month, at about 3.5 pesos. However, the Central Bank continues to use reserves supporting the local currency, as a table from Bloomberg.com shows. To help replenish the Central Bank's dollar supply, Bloomberg.com also reports, the government has just ordered exporters to sell to the Central Bank dollars earned in excess of $500,000 per transaction, down from $1 million before.

posted by Richard 5:19 PM
. . .
War comes to town: Colombia's guerilla war is moving from the countryside into the cities, reports
The Miami Herald.
Colombia's two main guerrilla movements, the Revolutionary Armed Forces of Colombia, or FARC, and the smaller National Liberation Army, or ELN, have traditionally maintained small forces in Colombia's main cities, including the capital.

But until now they served mostly as logistics units, supplying food and medicine to the rural fronts and occasionally organizing random terrorist attacks.

That changed in July 2000, when the peasant-based FARC announced a new strategy of taking the war to the cities. At the same time, the paramilitary force known as AUC, for United Self-Defense Forces of Colombia, began bringing fighters to the city, provoking street-by-street battles for control of the neighborhoods.
Police and military have reacted forcefully to the incursions, creating non-combatant casualties. So far the worst hit major city is Medellin (see map, linked at right).
''Constant violence has become part of the city's being,'' said Gonzalo Medina Pérez, a political analyst at the Universidad de Antioquia.

Observers trace the violence to the 1980s, when Pablo Escobar's powerful drug cartel outsourced murder to hordes of impoverished youths from squatter settlements surrounding the city...

Today, rebels and paramilitaries have co-opted many of the independent gangs that arose after the death of Escobar, killing off those who will not cooperate.

posted by Richard 12:52 PM
. . .
Surprise, surprise: Last Friday, Cuban dictator Fidel Castro announced a campaign to gather signatures on a petition declaring Cuba's socialist system "untouchable" (see
El Sur for a report and links).

Now, after just four days, reports Bloomberg.com, official Cuban sources are reporting that more than 90 per cent of Cuba's "voters" have signed his petition. Cuba's official newspaper Granma says that some 7.4 million people signed.

This petition campaign is in response to another petition campaign, the Varela Project, which gathered and submitted more than 11,000 signatures requesting a referendum on political reform and human rights.

The difference in numbers is large, as Castro intended. But only the terminally niave and willing dupes are going to accept what Castro intends everyone to believe, that the disparity in numbers reflects the true state of public opinion in Cuba. Instead, all these Soviet-election-like numbers show is the enduring power of fear. The CPSU and its satellite-affiliate communist parties always generated similar near-100 per cent support, even up through the last election before the system collapsed and people felt free to vote as they really thought. Since then, not one communist party--in the former USSR or any satellite--has come close to winning power in free elections. The minute there's the least idea a communist party is gaining ground, people turn out in droves to defeat it. No communist party in a formerly soviet state has more than 20 per cent support. And this support comes disproportionately from pensioners, who were young when people still believed and refuse to admit that their lives were wasted, and the system's minority of beneficiaries who want their privileges back--the aparatchiks or nomenclatura.

If Castro really believes his 7.4-million-signatures-in-four-days campaign actually reflects the state of Cuban opinion, he will allow both it and the Varela petition to be accepted and put to competing votes in a referendum. Of course he won't really, because he doesn't really. He, like everyone else who maintains a passing acquaintance with reality, understands that communism can't win a free vote anywhere in the world. Especially Cuba.

posted by Richard 9:58 AM
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