In this issue:

U.S. Imperial Tone Provokes OAS Member Nations at Annual Meet

Ecuador Government Faces Upsurge vs. IMF Austerity

Uruguay Shaken by General Strike

Protests Erupt in Brazil, Too

Economists Press Lula To Adopt FDR Policies, Not Just Cite Them

Brazil and Argentina Strengthen Strategic Alliance

OAS, State Department Decide To Live with Chavez

From Volume 2, Issue Number 25 of Electronic Intelligence Weekly, Published June 24, 2003

Ibero-American News Digest

U.S. Imperial Tone Provokes OAS Member Nations at Annual Meet

Several Ibero-American and Caribbean diplomats who attended the June 8-10 General Assembly of the Organization of American States (OAS) in Santiago, Chile, reported to EIW that the imperial tone adopted by the U.S. delegation at the meeting, as to what the priorities of the region must be, provoked great tension among participants.

The urgent issue on the minds of most government and OAS representatives present, was that reflected in the formal agenda of the assembly: how to secure "democratic governability." In other words: What can be done to save democracy, which is being called into question across the region, because of the economic collapse produced by 13 years of faithful imposition of the "neoliberal" model of market economics? OAS Secretary General Cesar Gaviria admitted in his speech opening the conference that "what was once a question of economic models, has become an eminently political issue." The formulas of free markets, free trade, liberalization, and globalization, have not proved successful in reducing poverty or inequality, he said.

U.S. diplomats attending, however, insisted that issues such as terrorism and changing the regime in Cuba—or, as Secretary of State Colin Powell put it in his address, dealing with "tyrants, traffickers, and terrorists"—are what matter to the United States, and countries should understand that the United States expects its "friends" to agree to what it says.

How well this U.S. attitude was received, was seen when it came time to vote up new board members to various OAS entities. Of the U.S. candidates nominated for four boards, only one was elected—and that one, only after repeated votes were required to break a tie.

The most stinging defeat came when the OAS nations voted against seating the U.S. nominee to the seven-member board of the Inter-American Human Rights Commission, for the first time since the 1959 founding of that body. In this case, the Bush team had truly "asked for it." Washington's candidate was Ralph Martinez, a Cuban-American Republican Party official, who made his fortune in Florida as a medical malpractice lawyer, and is the brother of Bush's Housing and Urban Development Secretary Melquiades Martinez. Ralph's experience in human-rights matters was unknown; it was known, however, that both brothers helped mobilized to halt the vote recount in Florida, during the 2000 Presidential election quagmire.

Ecuador Government Faces Upsurge vs. IMF Austerity

The Ecuadorian government finds itself facing a mass upsurge similar to that confronting the Toledo regime in Peru, against its attempt to impose IMF austerity. Ecuador's President Lucio Gutierrez—who dumped his anti-IMF campaign rhetoric for an austerity policy, immediately upon taking office last January—made sufficient concessions to tentatively settle a month-long teachers strike in the second week in June. However, in a continuing oil-workers strike, the union is demanding that Energy Minister Carlos Arboleda resign and his privatization plans be rolled back.

Oil exports being the country's number one foreign exchange earner, this strike has greater consequences. On June 14, the state oil company Petroecuador declared "force majeur," alerting its customers that it might not be able to supply oil as contracted for reasons beyond its control, due to the strike. President Gutierrez ordered the Army to guard oil installations and supply centers, and pledged to fire union leaders for carrying out the "criminal" and "terrorist" act of shutting down the country's only oil pipeline.

The government's submission to Congress June 13 of a civil-service-reform bill to "streamline" the public-sector payroll, as demanded by the IMF, could result in a similar strike by public-sector workers.

Uruguay Shaken by General Strike

The government of Uruguay, like that of Ecuador, was hit by a 24-hour general strike June 17, the fifth such strike against the neoliberal economic and social policies of the Batlle government since it was installed in March 2000. The main labor federation claimed 80% success nationwide, 90% in the capital of Montevideo, and 70% in the interior of the country. Schools, banks, and transportation were shut down entirely, and only emergency functioning was maintained in public-sector areas such as health.

Protests Erupt in Brazil, Too

Street protests against the continuation of IMF policies domestically by the government of Brazil's President Lula da Silva, are also breaking out. On June 11, 30,000 state-sector workers affiliated with the CUT trade-union federation—affiliated with Lula's own Workers Party (PT)—marched in Brasilia to protest the IMF-dictated reform of social security. This sector is a crucial part of the ruling PT base, and it is up in arms. Slogans attacked Lula harshly as a "traitor" whose policies are "worse than FHC's" [former President Fernando Henrique Cardoso], and one speaker said the reform was the work of the "IMF's gigolos." Ignoring orders from the PT leadership, 26 Federal deputies and one Senator attended the march. Lula loyalists who tried to speak were booed.

On June 17, former Presidential candidate Anthony Garotinho led a 2,500-person demonstration in Rio de Janeiro, under the banner "Lula, Wake Up!" Garotinho, who backed Lula's election, demanded that Lula implement his campaign promises. In Sao Paulo, Forza Sindical, a trade-union group led by Paulo Pereira of the Populist Socialist Party, allied with the government, also held a demonstration, demanding elimination of the 4.5% primary budget surplus, and threatening to call a national strike.

According to one report, state-sector workers have set July 8 as the date for a strike against Lula's proposed social security reforms.

Economists Press Lula To Adopt FDR Policies, Not Just Cite Them

Two documents have been issued thus far this June, warning that Brazil faces an "unprecedented" crisis, and requires an immediate policy shift away from the "neoliberalism" which is destroying it. One, titled "The Interdicted Agenda: an Alternative for Brazil's Prosperity," and issued by a group of 299 economists, argues that the way for Brazil to get out of its crisis is by strengthening "state intervention, along the lines of what happened historically with the New Deal in the United States, to correct the distortions created by the 'free market.' " There must be "genuine debate" on economic policy, the economists demand, given the magnitude of the crisis resulting from the government's obedience to the "dogma that the 'market' is wise and virtuous, and if left to itself, will promote collective prosperity."

Among the measures called for, are exchange controls; elimination of the primary budget surplus; an increase in public expenditures, especially for health, education, security and housing; lowering interest rates; and increasing public and private investment, especially in infrastructure. It concludes that none of the proposed measures "are anathema in light of the real economic history of countries which have experienced economic and social success." Those policymakers who are "hiding in the shadows, behind the omnipotent god of the 'market'" should have the guts to openly debate their "abstract formulas, which, once put in practice, result in the permanent destruction of the social fabric, economic activity, and national sovereignty."

A second declaration was issued June 14 in Brasilia, by the Regional and Federal Economic Councils of Brazil, representing a total of 84,158 economists in the country, including 17 economists from the National Economic and Social Development Bank (BNDES), a government agency. This group also demands an end to "the economic fundamentalism of the market" and immediate establishment of the "minimal conditions for economic and social growth and development."

Warning of "unforeseeable consequences for the country should there be no effective and immediate changes in current economic policy," the declaration urges an end to budget slashing, and the immediate channelling of public investment into sanitation and housing infrastructure, and thus the "necessary immediate reduction of the target set for the primary surplus." It also demands stimulation of the internal market, and warns that highly praised "macroeconomic results"—a surplus trade balance, primary surplus, lowered country risk, etc.—are irrelevant, in light of the "increased exclusion, falling sales, paralysis of production, closing of businesses, growing unemployment, and prohibitive interest rates."

Brazil and Argentina Strengthen Strategic Alliance

Brazilian President Lula da Silva and his Argentine counterpart Nestor Kirchner took steps in a June 11 bilateral summit in Brasilia to strengthen the possibilities of a unified South American stance in the world, on the eve of the summit of the Common Market of the South (Mercosur), held in Asuncion, Paraguay on June 18. Argentina, Brazil, Paraguay, and Uruguay are the member states of the Mercosur, with Bolivia and Chile granted associate status.

The Brazil-Argentine summit took place just after Secretary of State Colin Powell offered Kirchner the possibility of a bilateral free-trade agreement with the U.S., in a transparent attempt to break up stronger Brazilian-Argentine collaboration. Kirchner has made clear however, that he, like Lula, prefers to bank his government on the strengthening the Mercosur and South American integration, than go for a bilateral deal. Both Lula and Kirchner, in fact, support expanding Mercosur to include all the Andean nations.

One of the most interesting features of the discussion in Brasilia, was that of the need to perfect Mercosur as a customs union, by applying the Common External Tariff (TEC) to all goods entering the four-nation Mercosur from nations outside the bloc. This distinguishes it from a free-trade agreement of the type that former Argentine President Carlos Menem and his sidekick Domingo Cavallo wanted, and which the Bush Administration would prefer. Brazil and Argentina agreed to establish a 14% TEC for imported capital goods, and to eliminate all exemptions to the TEC which Cavallo had in fact instituted to sabotage the customs union.

In their final joint communiqué, the two Presidents identify Mercosur and South American integration as high priorities, and call on the relevant authorities to analyze the possibility of financing infrastructure projects of common interest. Energy, transportation, and port infrastructure projects are singled out as particularly important for Brazil and Argentina, as well as for all of Mercosur.

In a speech following the meeting, Lula warned that integration can't be based only on trade, but must be political and economic, as well. And, he specified: "For there to be the integration of which I, Your Excellency, and so many other South American Presidents have dreamed, we must consider the need for our continent's physical integration. There won't be integration without highways; there won't be integration without railroads ... without bridges ... without the political conviction of both governments."

OAS, State Department Decide To Live with Chavez

On May 29, OAS Secretary General Gaviria presided over a ceremony between the Hugo Chavez government in Venezuela, and that country's "Democratic Coordinator" (CD) opposition, signing an agreement which purported to resolve the nation's crisis by committing both sides to peaceful dialogue and the convening of a referendum on whether President Chavez should be removed from office after next August, should the opposition muster the required support for this. Gaviria declared that he had "successfully concluded the task entrusted" to the OAS, which was to ensure that in Venezuela, "every action, every attitude, and every utterance must reflect tolerance, pluralism, and respect for opponents."

In his speech to the OAS General Assembly in Santiago, Chile on June 8, Gaviria went so far as to assert that this OAS-mediated pact in Venezuela is "undoubtedly the best example of a comprehensive application of the Inter-American democratic charter." The State Department has joined in applauding the deal.

Leaving the issue of his rule to a possible referendum has been the strategy favored by Chavez all along. Confirming suspicions that the Bush Administration had made a decision to declare victory and go home, thus leaving Chavez with the upper hand, was the recent acknowledgement by the U.S. State Department that it had cancelled the U.S. visa of one of the leading military figures in the opposition camp, Gen. Enrique Medina.

Certainly, no sign of "tolerance and respect for opponents" can be seen on either side in Venezuela.

On June 6, when the Chavista majority in Venezuela's National Assembly attempted, but failed, to ram amendments down the opposition's throats, which would have given the Chavistas a lock on the legislature, the Chavistas staged a walkout and held a rump session of the National Assembly in the street.

The opposition's decision to hold demonstrations in Chavista-controlled neighborhoods in Caracas, led to predictable results on June 13, when clashes between Chavez's supporters, the Metropolitan Police, and opposition figures, left 17 wounded. Chavez declared then that he might take over the Metropolitan Police again, and might order the imprisonment of the Mayor of Caracas Alfredo Pena, and the Governor of the state of Miranda Enrique Mendoza, because they are with the opposition.

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