Ibero-American News Digest

Brazil Heads Toward Institutional Breakdown

A dramatic statement issued jointly over the weekend of July 23-24 by the presidents of the retired officer clubs of Brazil's Armed forces—the Army, Navy, and Air Force—warned that the government's decision to reverse its promised 23% pay hike for military members could lead to open unrest in the military, "with serious risk to the hierarchy and discipline of the Armed Forces."

Instead, Wall Street's errand boy, Finance Minister Antonio Palocci, has provocatively offered a ridiculous 3% in September, and maybe another 5% next year.

The government is either out for revenge against the Armed Forces, or wants to demoralize them, the military statement charged. Speaking for all three forces, Air Force Brigadier Ivan Frota warned of possible organized protest, and demanded "more respect from the government, which is involved in the shameful corruption process which is devastating the country."

Corruption scandals continue to swirl around the government of Lula da Silva. On July 25, Roberto Busato, national president of the Brazilian lawyers association, the OAB—which is a very powerful, national political institution—warned that "the political situation is deteriorating, the institutions are becoming paralyzed, and the President is not coming forward with explanations for the public, which is worsening the picture." The situation is worse now, Busato said, than in the days of President Fernando Collor de Mello—who was impeached and thrown out of office in 1992 for corruption.

Close allies of President Lula da Silva, including former President Jose Sarney, are warning privately that Lula might not finish out this year as President, according to the July 25 Tribuna da Imprensa.

Argentina Fights To Put Financial Reform on Summit Agenda

There has been a brutal fight going on in recent weeks over the agenda for the Nov. 3-4 Summit of the Americas, which is to be held in Argentina this year, attended by 34 heads of state. The Argentine government, as host, has proposed that the summit's official agenda be "job creation to deal with poverty, and strengthening of democratic governability," and called for debate on the need to reform multilateral lending agencies, and the "international financial architecture."

Naturally, the Bush Administration has instead demanded that debate focus on free trade, fighting corruption, juridical security, and "transparency" in international relations. This had led to tense debate at a number of meetings called to discuss the agenda. At a July 17-18 meeting in Washington, U.S. Ambassador to the Organization of American States (OAS) John Maisto told Ibero-American diplomats that there was nothing wrong with the free-market policies of the 1990s. The problem was just the "corrupt" governments who failed to apply them appropriately.

According to Argentine diplomats, there are now "two currents of opinion" that have formed around the agenda: the U.S., Canada, and a slightly more cautious Chile are in one group, and the rest of the continent is lining up, with varying degrees of support, with the Argentines. Reflecting the fray, Argentina's Deputy Foreign Minister Jorge Taiana told foreign reporters in Buenos Aires on July 25 that the issue of free trade wouldn't be included at all on the Mar del Plata agenda, as it fits more appropriately into the negotiations for the Free Trade Area of the Americas (FTAA). However, he added, those negotiations, for which Brazil and the U.S. are responsible, are currently "paralyzed."

British Murder of Brazilian Immigrant Provokes Rage

Spain's "Alliance of Civilizations" approach is preferable to Britain's shoot-to-kill policy against terrorist suspects, said Argentine Foreign Minister Rafael Bielsa, commenting on the July 22 murder of an unarmed, 27-year-old Brazilian electrician, Jean Charles de Menezes, by British police. Instead of this "shoot-to-kill" policy, Bielsa said he preferred the "Alliance of Civilizations" proposed by Spanish Premier Jose Rodriguez Zapatero. The British confirmation of their shoot-to-kill policy, "doesn't exactly bring us closer to the best the human race has to offer, but rather forces us backwards to the darkest eras in the history of humanity."

There has been a broad outcry in Ibero-America in response to the de Menezes murder.

The Lula government is reported to be considering sending a Brazilian legal official to London to carry out an independent investigation, because it doesn't trust the British to come up with the truth of what happened. The announcement by British authorities, on the eve of Menezes' funeral, that his visa was expired, infuriated Itamaraty (the Brazilian Foreign Ministry), which issued a statement in response on July 28: "Leaving aside the merits of this latest information, the Brazilian government's view is that this in no way affects the responsibility of the British authorities for the tragic death of an innocent and peaceful Brazilian citizen. It should not, therefore, have any influence on investigations of the tragedy, or the measures which the British government should take as reparations for the family of Mr. Jean Charles de Menezes."

CAFTA May Bury Central America

In the tradition of Enron, Halliburton, and the attempt to privatize Social Security, the Bush Administration continues to reward its mega-business constituency by arranging a license to steal. CAFTA (Central American Free Trade Agreement), a step toward expanding NAFTA (North American Free Trade Agreement) to all of Ibero-America in the projected Free Trade of the Americas Agreement, permits the Bush-Cheney base to "invest" in raw materials extraction (at minimal cost) and sweatshop businesses in the dying countries of the Dominican Republic and Central America, while dumping consumer products, and selling necessary imports such as medicine at premium prices.

Among the murderous features of CAFTA, passed by the House in the wee hours of July 28 (see USA Digest), are:

* opening of even relatively small government contracts to transnational corporations at the expense of local business;

* allowing such corporations to sue governments which pass environmental, social, or labor laws, for impinging on their operations;

* privatizating of government services in health, water, energy, and social security;

* allowing dumping of food commodities at below-market prices; and

* forbidding the public-health sector from buying generic drugs for diseases such as AIDS. Some project that prices for HIV/AIDS medication could rise by as much as 800%.

Congressional Committee Exposes Pinochet Looting of State Sector

The privatization of 725 Chilean state-sector companies between 1973 and 1990 was carried out with complete disregard for any existing laws, for the sole benefit of large financial predators, banks, and individuals who worked for the Pinochet government, reveals a report released on July 20 by Deputy Carlos Montes, who oversaw the work of a Congressional investigative committee.

The committee, which seven of its Pinochetista members boycotted, found that the privatization of only the 30 largest state companies meant a loss of $2.5 billion in revenue—$6 billion in 2005 dollars—to the state. And the real loss, when it is finally calculated, "will be far more" than $6 billion, he explained. Typical was the sale of Chile's only steel company, the Pacific Steel Company, which was valued at $811.5 million, but sold for $105.5 million. The state sugar company Iansa, the energy firms Endesa, Chilgener and Chilectra, and the Banco de Chile, were all sold for a song.

Thirty percent of the funds obtained from privatizations were offered as credits to individuals so they could in turn buy up stock in other state companies. The other 70% went into a general slush fund, used for whatever purpose the Pinochet government wanted. "Ad hoc legal norms" were simply decreed to facilitate the process, and the owners or controllers of the privatized firms turned out to be the same people who designed the privatization process in the first place.

Pinochet's son-in-law, Juan Ponce Lerou, who started out in 1973 as a low-level bureaucrat, ended up as the multimillionaire owner of the giant formerly state-owned Soquimich chemical firm, which was sold off for 261.9 million less than it was worth.

Chile's CODELCO Targetted for Privatization

Two months ago, legislators from the right-wing UDI party began to attack Chile's giant state copper company, Codelco, charging "irregularities," nepotism, cost overruns, "lack of transparency," etc. UDI Sen. Evelyn Matthei said Codelco was "the Chilean Enron," and should be investigated immediately.

Codelco, 100% owned by the Chilean state, is the world's largest copper producer, and possesses 20% of the planet's copper reserves, as well as technological and engineering capabilities crucial to Chile's—and the region's—future development.

Ramon Espinoza, president of Chile's Copper Workers' Federation, said what many Chileans know: "Those charging corruption in CODELCO seek its privatization." Everyone has the right to ask questions, and demand investigations of contracts, "but those who have always wanted to privatize the company point to the lack of probity, corruption or poor management."

Indeed, it was the UDI's friends who looted the Chilean state in barbaric fashion under Pinochet. As Finance Minister Nicolas Eyzaguirre asked on June 29: When will the UDI and right wing ever shine the spotlight of "transparency" on the private pension funds—the AFPs—they created?