Ibero-American News Digest
Argentina Fights To Defend Its Public Banks
The government of Argentina has agreed to "partially" privatize the state-run Banco de la Nacion, founded in 1891 by nationalist President Carlos Pellegrini, and intended as a source of cheap credit for native industry. The IMF has for years demanded privatization of both Banco de la Nacion, and the Banco de la Provincia de Buenos Aires.
The ultimatum that the state-run banking sector be dismantled, before Argentina can qualify for new funding, was communicated to Finance Minister Roberto Lavagna on Aug. 23 by International Monetary Fund official John Thornton, a.k.a. "The Undertaker," in charge of the Argentine case. Thornton insisted that "international auditors and investment banks" be hired to "manage the strategy of state-sector banks." (One observer asked: Which auditors are they planning to hire? Arthur Andersen?)
The Fund states there must be a reduction in the size of the state-run banks Banco de la Nacion and Banco de la Provincia de Buenos Aires to be achieved by eliminating all existing incentives to increase new deposits. Moreover, neither bank should increase its participation in the market, and the Central Bank should cease granting discount loans to both banks. In the case of Banco Provincia, the IMF demands abolition of its founding charter of 1822, which grants it certain Constitutional rights, as well as its special regulatory regime, thus placing it entirely under the control of the Central Bank.
Finance Minister Roberto Lavagna announced Sept. 4 that the government had "made the decision" to sell a "small part" (10%) of the Banco de la Nacion's stock to private interests. At the same time, Felipe Sola, Governor of Buenos Aires province, advised Lavagna that he is willing to do the same thing with the Banco de la Provincia. Lavagna slavishly explained that allowing private capital to own 10% of both banks' stock, would increase the "transparency" of state-run banking operations, precisely as the IMF is demanding. The Fund wants any state-banking sector abolished altogether.
Banco de la Nacion and Banco Provincia are Argentina's two oldest banks, and a source of great pride for the population. All attempts at privatization in the past have provoked outrage, and a strong popular mobilization in the banks' defense. In response to the latest scheme, former President Raul Alfonsin issued a press release calling for a defense of state banks against IMF pressures, and accusing the Fund of "an undisguised maneuver in favor of private [financial] entities still operating in the country." The IMF "wants public banks to disappear, to the benefit of multinational capital," Alfonsin charged, adding that Argentina "must firmly oppose any new adjustment policy."
Ibero-Americans Are Eating Less and Less
Across Central and South America, food consumption has declined dramatically over the past year. Here are some of the reports:
*Supermarket sales in Argentina fell 27.6% in July over July of 2001, and have fallen a total of 21.7% so far this year. To date, the volume of food sent to supermarkets has also declined each month.
*Venezuelan supermarket sales have dropped by 12% for far this year, the president of the country's national supermarket association, Nelson da Gama, announced Sept. 2, adding that the association projects sales will fall by 14-15% by the year's end. Venezuelans, in other words, are eating less and less.
At the same time, food prices have risen by 20-25% this year, because much of Venezuela's food is imported, and the currency (the bolivar) has devalued by 47% so far in 2002. According to a study by the private firm Datanalisis, the average monthly income of Venezuelan families fell by 67.5% in the first half of 2002. Eighty percent of the population is considered poor, receiving a monthly income of less than US$300 a month.
Living standards are about to fall even faster. On Sept. 1, the Chavez government's new austerity package went into effect. (See Ibero-America News Digest in EIW #24.)
*More than half, or 53.7%, of Mexico's population is now classified as poor, according to a study completed by the Ministry of Social Development (Sedesol). This means that in "NAFTA-land," over 50 million people, out of a total population of 100 million, are poor. The study, elaborated by a "technical committee" hired by Sedesol, calculated varying degrees of poverty, based on daily income. The average daily wage for the poor is 34 pesos, or a little over $3, at an exchange rate of 10 pesos to the dollar, but many people make much less than that, and are unable to purchase enough food to cover the most minimal caloric requirements, in agriculture-rich Mexico. In 18.6% of households surveyed, the average daily wage is between 15 and 20 pesos ($1.50-$2.00); the Sedesol study categorizes this group as "food-poor" i.e., they don't have enough to eat.
Argentine Candidate Says Stealing Garbage Is a Crime
In a development that would make Marie Antoinette blush, Argentine mayoral candidate and Mont Pelerinite Mauricio Macri says the impoverished citizens who pick through the garbage every night looking for food, or something perhaps to sell, so they can buy food, should be arrested and "taken off the streets," because they are committing the crime of "stealing garbage"! Even Marie Antoinette (who lost her head in the Jacobin Terror), when told that the people had no bread, supposedly said, "Let them eat cake." Macri, who is being wooed by the Anglo-American financial oligarchy and Mont Pelerin circles as a potential President, would have them jailed!
"I will take them off the streets" if he is elected, he announced, adding that "stealing garbage" is no different than "mugging the man standing on the street corner." Really?
Increasing numbers of poor and unemployed pick through the trash in urban centers each night, to find food for themselves and their families, but Macri thinks they give the city of Buenos Aires a bad image.
In Mexico: Opposition Mounts to Fox Electricity Package
Mexican Finance Secretary Francisco Gil Diaz admitted at the end of August that the government has "limited political capital," and therefore, it intended to temporarily abandon the fight to impose a 15% value-added tax on food and medicine at this time. Instead, said Diaz, it would put all its energies into the fight for President Vicente Fox's new proposed electricity reform, which would open up the sector to takeover by foreign energy giants.
Fox insists that under his reform, he would not sell the state electricity company, nor take away its distribution monopoly. He hopes, he says, only to attract the billions in foreign capital that Mexico could not generate to "prevent future shortages." His idea is to allow the large industrial consumers of more than 2,500 MW-hours per year to be able to turn to private producers for their energy. However, according to the Mexican Electricity Workers Union (SME), this will necessarily lead to the privatization of electricity in Mexico. In a two-page ad taken out in the weekly news magazine Proceso, the SME insists, "Taking away the state's income from the big industrial consumers, which is called for in [Fox's] proposal, would mean the technical bankruptcy" of the state electricity company. This would lead to its sell-off by the government.
The SME has declared this policy unacceptable, and has called on the Congress to block the Fox reform. In a general assembly of the SME held Aug. 28, its 51,000 affiliate members vowed to become "an army of activists" against Fox's electricity reform. Said SME leader Francisco Brena Alvarez, "This is not a personal fight, but one by the entire union. The government can put [our leaders] in jail, but it can't put away 50,000 electrical workers who will defend the sovereignty of the fatherland." The union is planning a series of actions, including distribution of 10 million leaflets, and collecting an equal number of signatures against the Fox reform proposal, as well as a series of mass marches in Mexico City.
PRI Senator Manuel Bartlett, the acknowledged leading opponent of the privatization of Mexico's energy sector inside the Congress, is also on the offensive. On Aug. 22, he issued a public warning and a challenge to the president of the PRI Party, Roberto Madrazo, that the Constitutional reform required to implement Fox's electricity reform would be determined by the Senate, and not by the PRI executive. Bartlett is chairman of the Senate commission in charge of Constitutional matters.
Energy Pirates Ready To Abandon Brazil; Will Country Be Left in Darkness?
Five foreign energy pirates are now considering selling off electric utilities in Brazil, the New York Times reported Aug. 30. The simultaneous pull-out by foreign interests, like the proverbial rats deserting a sinking ship, will force the government to choose between re-nationalizing the power industry, or abandoning huge swaths of Brazil, including some of its biggest population centers, to darkness.
Enron, now liquidating 90% of its assets internationally, must sell Elektro, its distributor in the state of Sao Paulo, a Cuiaba thermoelectric plant, and the Brazil-Bolivia gas pipeline. AES announced this week that it will sell AES Sul, which supplies a million customers in the state of Rio Grande do Sul, as well as its Uruguaniana plant in the same state. AES officials claim they are not yet planning to sell the company's main asset, Eletropaulo, which is the largest power supplier in Sao Paulo, although the company is facing imminent bankruptcy. Electricité de France is being pressured sell its 95% ownership of Light Servicios de Electricidade, Rio de Janeiro's biggest electricity supplier, serving 3 million customers. Electricidade de Portugal is trying to sell its minority stake in a Rio utility.
The government retook control of the Companhia Energetica do Maranhao (Cemar) earlier in August, when its owner, the U.S.-headquartered PPL Corp. tried to declare bankruptcy on that distributor in Maranhao, one of Brazil's poorest states. PPL is looking for buyers for its 90% stake in the company.
The Times makes an accurate point: It will be hard to find foreign buyers who, at this point, will want to enter the Brazilian market, and especially in Brazil's less developed regions. An analyst for Banco Santander Central Hispano warned that any European company which announced expansion plans in Brazil at this moment, would find its share price "heavily punished."
Haas Presses Brazil To Line Up with Bush Foreign Policy
State Department Policy Planning chief Richard Haas spent three days in Brazil at the end of August, meeting with Foreign Ministry officials and representatives of the candidates in the first-round Oct. 6 Presidential elections. Top items on his agenda were lining up support for the Bush Administration's campaign for "regime change" in Iraq, and coordinating policy on Colombia and Venezuela. Haas stated in his final press conference that while no decision has yet been taken to attack Iraq, regime change is "indispensable," and "if we decide to use military force so that this occurs ... I can't say what we would ask of Brazil, but certainly we would need diplomatic support. We would need also military and economic help, but this would depend on the possibilities of every country."
What "action" he was proposing when it comes to Colombia and Venezuela, is less clear, except his constant theme that Brazil must join with the United States in coordinating some regional strategy. This, the Cardoso government has refused to do for some time, on the grounds that domestic conflicts within countries must not be "internationalized."
"Brazil has two problems on its doorstep: Colombia and Argentina. I suppose that it would not wish to have a third" i.e., Venezuela Haas warned in a press conference before leaving. The governments and businessmen of the U.S. and Brazil should agree on the same strategy towards Venezuela, to break the impasse between President Hugo Chavez and his opposition, he argued.
He insisted also that Brazil has great potential to aid Colombia. Brazil has played a key role for years internationally in helping countries get out of acute crises, citing Brazil's role in East Timor and Africa as examples. No one is talking about sending Brazilian soldiers into Colombia, he said, but Colombia's neighbors must help Colombia, as the United States is doing.
The Deputy Secretary General of Brazil's Foreign Ministry, Gilberto Saboya, repeated after their meeting, that Brazil is ready to provide "political and diplomatic aid, but any other type of action is more complicated."
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