In this issue:

Mexican Labor Supports LaRouche's Battle vs. Bush's Privatization of Social Security

Former BNDES Chief: Brazil Must Change Economic Policy

Argentine President Sticks It to the Vulture Funds

China Economic Ties with Ibero-America Expand

China Signs Preliminary Oil Accord with Bolivia

IMF: Bolivian Gov't Must Commit Suicide, One Way or Another

Pinochet and Crew Pocketed $1 Billion on Privatizations

Ibero-American News Digest

Mexican Labor Supports LaRouche's Battle vs. Bush's Privatization of Social Security

The following statement in support of Lyndon LaRouche's battle against the Bush scheme to steal Social Security, was released Feb. 2 in Mexico, as LaRouche associate Will Wertz toured the country, organizing against privatizing Social Security in either Mexico or the United States.

"We, the undersigned, representatives of labor organizations and citizens of the state of Queretaro, Mexico ... hereby make public our support for the fight and proposals of Lyndon LaRouche to avoid the privatization of social security, which they are trying to implement in the U.S., Mexico, and many other nations." Thus began the statement issued at the conclusion of the conference on "Fascism and the Privatization of Social Security, the Cases of the United States and Chile," held in Queretaro, Mexico on Feb. 2 and addressed by Wertz.

Addressed to the LaRouche Political Action Committee in Washington, D.C., the statement continued:

"That privatization, as well as the so-called 'structural reforms,' should be overwhelmingly rejected for being inspired by the economic policies of dictatorial and fascist regimes, such as that of Pinochet. What we need today is to rescue the dignity of individuals and of the peoples of the world, which has been violated by criminal austerity policies, and instead, achieve the implementation of the policies of a New Bretton Woods, for the benefit of the nations of the world, as Mr. LaRouche has proposed."

The statement was signed by members of the State Teachers Union as well as several members of the Workers' Party and the National Pedagogical University, and reflected the reaction of the hundreds of labor organizers with whom Wertz met over the course of his trip.

Former BNDES Chief: Brazil Must Change Economic Policy

In a variety of interviews following his ouster in November 2004 as head of the Brazilian National Development Bank (BNDES), Carlos Lessa warned that if Brazilians do not rally to change the IMF conditionalities which are blocking development of the Brazilian economy, Brazil, too, will become "an Argentina." The IMF says you cross the desert, and, finally, you reach the Promised Land, but "Argentina crossed the whole desert, and remained in the desert," Lessa told a reporter from "Planetaportoalegre.net" on Dec. 22, 2004. To survive, Brazil must invest in infrastructure and reduce its interest rates. "Colossal pressure, including international pressure," forced President Lula da Silva to fire me, he said, "but I don't think the battle is lost."

Lessa has been organizing since his ouster, and he told Folha de Sao Paulo on Feb. 6, that he is writing a book, From Dreams to Nightmare, on what Brazil needs for its development—and who and what interests drove him out of BNDES to stop this from occurring. Implying that some should be nervous over what is coming, Lessa assured Folha that he would include in his book only things for which he has evidence which could stand up in court.

Lessa was ousted on Nov. 18, after he gave an interview attacking Central Bank chief Henrique Meirelles. "I gave the interview knowing I might lose my job, after Meirelles proposed that the system of development banks in the country be destroyed," he told Folha. That could not be permitted to stand. The financial system has long sought to privatize these banks, recognizing that they are a breach in the privatization from which could come "the reconstruction of the Brazilian developmentalist state, which is, for the neoliberals, a nightmare."

Lessa has not ruled out running for office, and in January, he drew up a memo at the request of the Governor of the state of Parana, Roberto Requiao of the PMDB party, calling for a great public debate over the future of the country. Thus, 2005 will be a decisive year, because either President Lula rethinks his alliances and neoliberal policies, or he will lose his social base and the 2006 elections, and create a "historical disaster," Lessa argued. International finance must be confronted, for Brazil to develop.

Argentine President Sticks It to the Vulture Funds

For months the vulture funds and their frontmen have worked to ensure the failure of the Argentine government's debt-restructuring proposal, assuming they could force President Nestor Kirchner to start the process all over again and make a better offer—i.e., pay more. But on Feb. 2, Argentine Finance Minister Roberto Lavagna sent legislation to the Congress which would prohibit the Executive branch from doing anything to improve the debt-restructuring offer, even if it fails. The bill was immediately passed in the Senate, and within a week, by the lower house, also. As Kirchner told an audience in Neuquen on Feb. 4, "This is the last offer that Argentina will make. We shall not take one step back, nor will we pay one peso more than we can pay." To bondholders, Kirchner said, "take it or leave it."

The legislation also allows the government to remove from world markets those bonds that are not swapped. So those who decide not to participate, will be left holding worthless pieces of paper.

This was not much to the liking of the IMF, which has been bludgeoning Argentina for months about paying more money to the vulture funds—what it called "good faith" negotiations. In retaliation, IMF Managing Director Rodrigo Rato warned Kirchner Feb. 4 that the Fund had no intention of signing a new agreement that didn't include "structural reforms" as conditionalities, contrary to what Kirchner has been seeking. Speaking at a London press conference on the eve of the Group of Seven meeting, Rato said the Fund had respected Argentina's desire to wait until the debt restructuring were completed before starting new negotiations. "We are more than happy to continue conversations, but structural reforms will, of course, be part of the program," Rato warned.

China Economic Ties with Ibero-America Expand

Chinese-Ibero-American trade and investment got another boost with the visit of Chinese Vice President Zeng Qinghong to Mexico, Peru, and Venezuela Jan. 24-30. He was accompanied by 130 Chinese businessmen involved in the petrochemical, hydrocarbon, and food-processing industries, maritime transport, port and highway construction, engineering, banking, tourism, etc. The trip follows President Hu Jintao's two-week trip in November 2004 to Brazil, Argentina, and Chile.

Mexico is now China's second trading partner globally, although this does not reflect the real economic relations between the two countries, as Mexico is, in large part, merely serving as an export platform for China into the U.S., under NAFTA. Trade between the two countries grew by an astounding 44% between 2003 and 2004, largely reflecting a huge jump of Chinese exports into Mexico (i.e., NAFTA), which Mexican officials complain must be matched by an opening of the Chinese market to Mexican goods. An agreement to establish reciprocal credit lines for binational construction contracts and energy exploration, as well as trade, was signed during the Vice President's visit.

While in Peru—which hopes to become the primary entry point for Chinese exports into South America—Zeng Qinghong met with Peruvian President Alejandro Toledo and his officials, and also with the Foreign Ministers (or his representative, in one case) of the Andean Pact nations (Venezuela, Colombia, Bolivia, and Ecuador), who travelled to Lima to meet him. Chinese-Peruvian trade had already grown by 51% in 2004 (China represents 16% of all Peru's foreign trade now). Eight bilateral accords were signed during the visit, ranging from investment promotion, to cooperation in oil and gas exploration, and tourism. Toledo announced he will visit China in May.

At the conclusion of Zeng's three-day visit to Venezuela, agreements were signed for the China National Petroleum Corporation to develop oil and gas reserves in Venezuela, as well as for increased sales of Venezuelan oil and gas to China. Venezuela is reported to be exploring the possibility of building a pipeline across Panama, in order to ship its oil to Asia more cheaply. Since President Hugo Chavez's trip to China in December, Venezuela is reported to have sold two 3-million-barrel oil shipments to China, according to the Financial Times (which has been huffing and puffing over the recently increased China-Venezuela ties). Venezuela is also interested in purchasing agricultural equipment from China.

China Signs Preliminary Oil Accord with Bolivia

On Feb. 3, representatives of China's state oil company, Shengli International, and Bolivia's newly reconstituted state oil company, YPFB, announced that they would be drafting a preliminary accord for $1.5 billion in Chinese investments in Bolivia. Under the accord, Shengli is to begin work with YPFB on various projects to permit Bolivians to use their vast natural gas reserves domestically (converting cars to natural gas fuels, installing gas distribution for homes, etc.), pending passage of a new law regulating the hydrocarbons industry, which has been battled over for months. Once that law passes, Shengli would begin explorations in a new area along the Brazilian-Peruvian border with Bolivia.

While other oil and gas multinationals are threatening to pull out of Bolivia if the government's proposal to raise royalties to 50% goes through (currently, the companies pay only a laughable 18%), Shengli's representatives agreed to a risk-contract with Bolivia's state company, in which they would take 49% of any oil found, and YPFB would keep 51%.

IMF: Bolivian Gov't Must Commit Suicide, One Way or Another

It was the IMF's conditionality that Bolivia raise fuel prices, which provided the Santa Cruz separatists the pretext they had been seeking to make their illegal move for autonomy in January (see "Separatism Unleashed Against Bolivia and Its Neighbors," Indepth, last issue). To cool out that insurgency, the Mesa government agreed to lower the fuel price increase. The IMF ordered the government to cut something else. So, on Feb. 1, the government announced that public salaries would be frozen, with no public-sector worker receiving the usual yearly COL increase. That IMF-ordered decision has set off a whole new round of national protests by teachers, health workers, miners, etc., against the government, which is already fighting for its existence.

Pinochet and Crew Pocketed $1 Billion on Privatizations

It is conservatively estimated that Augusto Pinochet and his "Chicago Boys" pals stole $1 billion in the process of privatizing a large number of Chile's state-sector companies during the 1970s and 1980s. The Congressional Committee investigating the privatizations hasn't yet arrived at an exact figure of the theft involved, when hundreds of profitable companies were sold off at absurd prices to friends of the Chicago Boys who were running the economy, and stole the country's pension funds.

Congressman Eduardo Saffirio, a member of the committee, also points out that the six committee members belonging to the Pinochet-linked right-wing parties, the UDI and RN, have almost never showed up for any of the meetings or participated in the investigation of the privatizations. Saffirio explains that this is because the right-wing Congressmen are very close to those who benefitted from the privatizations, and may be implicated in financial wrongdoing when the investigation's conclusions are made known. He points out, for example, that one of the figures who helped oversee the privatization process, Cristian Larroulet, is currently an adviser to Joaquin Lavin, a radical ideologue of the free market and the Chicago School, now Mayor of Santiago—and who hopes to become Chile's next President. It wouldn't look good for Lavin if dirt came out on Larroulet's role in stealing funds from the Chilean state.