IBERO-AMERICAN NEWS DIGEST
Argentine Default Causes Jitters on Wall Street; World Bank Credit Rating Shaky
Argentina defaulted on an $805-million payment due the World Bank on Nov. 14its first default to any multilateral financial body. The Duhalde government had said it would pay, were Argentina to receive funds from the IMF under a new agreement, but the levels of austerity demanded by the IMF for any accord were more than the government could possibly implement, and no accord was reached. The government chose to make an $80-million interest payment on the amount owed, but said the country's level of reserves prevented payment of the total $805 million, as that would drive reserves below $9 billion.
As indicated by the hysteria in the Anglo-American media, threatening that the country will become a "full-fledged international financial pariah," the default will have political and economic repercussions far beyond Argentina. A senior City of London financial expert told EIR that "the creditworthiness of the World Bank itself is, for the first time, being publicly called into question. What happens if other borrowers follow Argentina's path? This could call into question the credit rating of the World Bank, which is, at this point, the highest possible, AAA. And this will have knock-on effects, on the IMF directly."
The London Economist also warned Nov. 15 that while it would be politically disastrous for the Fund to give more money to Argentina without proper guarantees of reforms being implemented, "letting Argentina go further along the road to full-scale default with the multilateral institutions would not be much better.... [T]he IMF's own financial structure means it cannot afford to see a big borrower halt all repaymentsespecially when problems in Brazil and Turkey still loom large."
Argentina's total debt due by the end of the year to the IMF, World Bank, and Inter-American Development Bank is $2.4 billion, and the government no more be will able to pay that amount, than it is to pay anything today.
The Washington Post admitted Nov. 15 that financial interests are also worried that Argentina's default increases the danger "that popular sentiment throughout Latin America will turn increasingly against the Fund, its overseers in the U.S. government, and the system of global capitalism that they champion." The Post quotes an unnamed policymaker, who fears that Brazil's next President, Lula da Silva, won't be able to "hew to IMF-backed policies if neighboring Argentina rejects them."
Argentine Population Backs Government Decision To Default
There is broad popular support inside Argentina for the government's decision not to pay the World Bank. The Argentine Industrialists Union, trade unions, small- and medium-sized business owners, and other civic organizations fully back the government's action, expressing the view that Argentina would be better off to rely on its own resources and creativity, rather than bend to the Fund. Argentine media have given widespread coverage to statements by Finance Minister Roberto Lavagna that "the IMF doesn't have the political will to make an agreement with Argentina."
Prior to returning to Buenos Aires, Lavagna detailed for reporters how at the last minute, the IMF came up with a host of new demands that he, and the government, could not in good conscience accept. The provinces cannot be asked to impose more austerity, as IMF director Anne Krueger demanded, he said. At a time when Argentine children are dying of starvation (see below), Krueger was demanding that every available penny, from any sourcetrade balance, fiscal surplus, whatevergo to debt payment. Not believing government projections on tax revenues for next year, Krueger told Lavagna he must gouge further, no matter what the cost. Cabinet chief Alfredo Atanasof said Nov. 14 "Argentina was not going to accept the policy of savage budget adjustments as a strategy for getting over its problems."
IMF Kills: Children Starve as Fund Demands More Blood
Four children died of starvation in the Argentine province of Tucuman, where unemployment is at 50%, and health and sanitation services have collapsed, thanks to the International Monetary Fund's austerity dictates, which are still being demanded as a conditionality for any new agreement. The four children, aged 2 to 4, died from malnutrition-related diseases, Clarin reported Nov. 14; their deaths have sparked mutual recriminations between Federal and provincial authorities over who is to blame. But Presidential candidate and Governor of Cordoba Jose Manuel de la Sota made clear who should be held accountable, charging that the "IMF prescriptions brought us to this crisis which kills children.... Today all Argentines should feel shame, and political leaders more so," for their deaths. "The goal of any politician must be to improve people's lives, not [follow] market indicators."
There are currently 260,000 children in Argentina suffering from malnutrition, according to official statistics. Tucuman Province made the national news recently, because so many children were fainting in school from hunger. Juan Masaguer, the head of Tucuman's Provincial Health System, described the miserable conditions in which the families of the hungry children lived, lacking access to any kind of sanitation services, jobs, food, or decent shelter. The children died "over two or three successive days," Masaguer said, in their homes without having received medical attention. Although they were officially diagnosed with polyparasitosis, he said, "We can't ignore the fact that what really killed them was hunger." Doctors at the hospital told Clarin that "the hospital is totally overwhelmed. We do all we can, but we have serious limitations in terms of resources.... We're astounded, moreover, by the high degree of malnutrition seen in some cases."
Masaguer told Clarin, "It's incredible that we produce food to feed 300 million people; there are only 37 million of us, and people are dying of starvation."
Nearly Half of Ibero-Americans Are Officially Poor
By the end of this year, 44% of the population of Central and South America will be classified as poor, according to a study just released by the United Nations Economic Commission on Latin America and the Caribbean (ECLAC, or CEPAL, as it is known in Spanish). Seven million people have entered the ranks of the poor this year, bringing the number to 221 million. Between 1990 and 2001, the number of poor increased by 10 million, and in 2002, Argentina's extraordinary collapse will account for many of the 7 million newly impoverished. ECLAC director Jose Antonio Ocampo said that "Argentina, whose economic crisis is very severe, weighs heavily in the increased regional poverty." Its economy is expected to decline by 16% this year.
Most dramatic is the fact that of the 7 million new poor, 6 million are classified as "indigent," i.e., they cannot satisfy even minimal food needs. One in five Ibero-Americans does not have enough to eat.
Daring Rescue in Colombia of Kidnapped Bishops Council Head
A daring daylight operation Nov. 15, involving 350 soldiers and police, freed the head of the Latin American Bishops Council and a priest, four days after they were kidnapped by FARC narcoterrorists. Neither Bishop Jorge Enrique Jimenez nor Father Desiderio Orjuela was wounded in the rescue, which took place in a rural area of the Colombian province of Cundinamarca, where the capital city of Bogota is located. Two FARC fighters were killed and one captured in the operation, and Army units are still pursuing others involved.
The successful rescue has remoralized the country, and will strengthen the government. More than 10,000 people, waving Colombian flags and white handkerchiefs, took to the streets in Zipaquira, where Bishop Jimenez presides, when the rescue was announced. "It was do-able" (si se pudo), and "Freedom lives!" were chanted. President Alvaro Uribe Velez emphasized that the rescue shows that "Colombia is going to defeat terrorism and kidnapping." Lucy de Gecham, wife of Senator Jorge Gecham, who was kidnapped last February and is still being held by the FARC, told the media: "Why are they doing rescues now and not before? What has changed? The government."
Bishop Jimenez praised the heroism of the soldiers who freed him. "God has given me back my life so I can be of service to my country," he said upon his release, and later, speaking to the crowd that had gathered, he urged: "I invite you to support our country and its leaders."
The rescue set back the efforts by capitulationist political forces, including within the Roman Catholic Church, who sought to use the kidnapping to force President Uribe to agree to release jailed FARC members in exchange for some of the FARC's more prominent hostages. Monsigneur Pedro Rubiano, Archbishop of Bogota and President of the Bishops Council, said a humanitarian accord should be sought, "not an exchange. Human life cannot be an object of trade."
U.S. Indicts FARC Military Leaders on Drug, Kidnapping Charges
In a welcome assist to the Colombian war against narcoterrorism, the U.S. Attorney General's office issued indictments Nov. 13 against top military leaders of the FARC, including the FARC's #2, Jorge Briceno Suarez, a.k.a. "Mono Jojoy." The indictments, on kidnapping and drug-trafficking charges, are issued against eight major and minor military commanders of the FARC, and follow U.S. indictments that were unsealed in September and October against several narco-paramilitary leaders of the AUC.
They supersede earlier indictments against FARC leaders issued this past March.
Armed Forces commander General Jorge Enrique Mora responded to the news by saying that, as far as he is concerned, "I hope all these criminals who have done such damage to the country and to Colombians are taken there" (the United States).
Extradition requests for the indicted terrorists are expected to follow in short order, and Colombian President Uribe and Defense Minister Ramirez have already said they would "fully comply with the law" in considering the requests, although Attorney General John Ashcroft's call for the death penalty, should the FARC terrorists be convicted on all counts, will cause political problems in Colombia.
Chavista Riots Threaten Caracas Again; Mayor Asks, 'Who Is Arming Them?'
Violence in Venezuela escalated as oilworkers challenged President Hugo Chavez's "politicization" of the state oil monopoly. Even as Organization of American States head Cesar Gaviria attempted to mediate negotiations between government and opposition figures, Chavez's out-of-control mobs surrounded the Caracas City Hall on Nov. 12, pinning Mayor Alfredo Pena and others inside for several hours until National Guardsmen moved in to disperse them, leading to a bloody clash which left at least one dead and 20 wounded. The Chavistas immediately accused Pena of triggering the violence, although, unlike the Guardsmen, the rioters used real bullets. Pena was later assaulted by Chavistas while visiting some of the wounded at the hospital. In a televised interview, the Mayor asked, "Who is arming these circles? Why doesn't Chavez use the Army to disarm them?"
Later that same day, a grenade was thrown at the home of Caracas Archbishop Ignacio Velasco, another Chavez political opponent, and a tear gas canister was tossed at the office of an opposition newspaper, Asi es la Noticia. As tensions rise, all eyes are on the Venezuelan Workers Federation, whose leaders are travelling around the country, building up support for an indefinite general strike to force Chavez's resignation.
PDVSA, the state oil company, is being watched especially closely. White-collar PDVSA workers staged protests earlier this week against what they called Chavez's "politicization" of the company, and demanded the resignation of PDVSA president Ali Rodriguez and another PDVSA official who apparently let the company's video-conference facilities be used by Chavistas organizing pro-Chavez meetings.
|