Ibero-American News Digest
Argentine Television Seeks Out LaRouche's Advice, Again
U.S. Presidential pre-candidate Lyndon LaRouche told Argentines on prime-time television Aug. 7 that it is going to be a difficult fight, but he is optimistic that Argentina will be able to overcome its economic collapse, because "my chances of becoming President are greater than probably anyone outside of inner circles imagines." Interviewed on TV Channel 7 of the Patagonian province of Neuquen, LaRouche said that "when the United States comes to its senses, as it would under my Presidency, there would be a revival, a Renaissance, throughout the hemisphere." LaRouche has been interviewed before on Neuquen television, and an estimated 150,000 viewers watched this one. The full transcript of the 20-minute interview is available in the "Latest from LaRouche" section of this EIW.
Argentine Justice Minister Seals Alliance With Transparency International
Justice Minister Gustavo Beliz has officially joined with British Prince Philip's Transparency International hit squad, to launch a national "anti-corruption" campaign. After meeting with Peter Eigen, Transparency International's international director, Beliz announced on Aug. 6 that he is putting together a national "anti-corruption" plan, in consultation with TI. Beliz planned to participate in an all-day anti-corruption workshop on Aug. 7, at which Eigen was the invited speaker. Eigen also met privately with President Nestor Kirchner at the Presidential palace.
Beliz, a member of the right-wing Catholic group Opus Dei, has been the driving force behind the assault on Argentina's national institutions, particularly the Armed Forces, police, and security agencies. Under the guise of combatting "impunity," he wants to insure the extradition of military personnel to Spain, as requested by his ally, Spanish magistrate Baltazar Garzon, a key figure in TI's European "Clean Hands" apparatus, which destroyed Italy's post-war political institutions under the guise of "fighting corruption." Beliz is also focussing on such issues as control of public expenditures, campaign finance reform, and insuring that the activities of the state are "transparent," by involving greater public participation in monitoring them, particularly anything involving allocation of funds. This dovetails nicely with the activities of the "Citizen Power" non-governmental organization, run by former Argentine prosecutor Luis Moreno Ocampo, currently TI's director for the Caribbean and Latin America.
Lula's Honeymoon Has Ended
Brazilian President Lula da Silva cancelled his scheduled visit to Africa for the first week of August, in order to oversee Congress's passage of the pension reform demanded by the International Monetary Fund (IMF) and international financial circles. The cancellation drives home the fact that Lula's six-month honeymoon with Brazil's domestic interests and its foreign creditors, has officially ended. His active schedule of foreign diplomacy has been a key element of nationalist efforts to strengthen Brazil's international position against globalization, but this, too, is now being sacrificed, in order to do the impossible: satisfy Brazil's foreign creditors that the country will do whatever it takes to pay its unpayable, $500 billion-plus foreign debt.
The London Economist, in its Aug. 4 issue, made public the message coming from Brazil's creditors, that the pension reform is considered a test case for the Lula government. "The pension reforms' success or failure may determine Mr. da Silva's chances of implementing a long list of other equally important and equally controversial measures," which the country's creditors want to see imposed, the Economist wrote.
The Economist joined Merrill Lynch, Moody's Rating Service, B.C.P. Securities, and others, in announcing that "the honeymoon is over" with Lulatheirs, and that of the Brazilian population. Opposition to the pension reform has prompted strikes, bomb threats, building takeovers, and more. The big fear of the creditors is that Lula will yield to Brazilians' outrage over his failure to break with IMF policy, and will start "dragging his feet" over these so-called reforms. "Brazilians already have a good idea of how bad things might be if their president fails, from observing the unrest and misery that followed the economic collapse of their southern neighbor, Argentina," the Economist threatened.
"The strife over Brazil's pension changes is reviving investors' worries about the sustainability of its big public debt, of around 860 billion reais ($286 billion). If investors stop rolling over the debtas they did during last year's election campaign, until the IMF stepped in with a huge loantheir fears of a financial meltdown may become self-fulfilling. If so, the pain would spread across all of Latin America."
Lloyds of London put out the same view, in its latest newsletter on Brazil: "how much longer will the Lula government be able to tolerate weak economic growth without attempting to adopt less orthodox measures" outside the IMF strictures?
Pension Reform Passes Brazil Congress in First Round
The pension "reform" demanded by the IMF passed Brazil's Chamber of Deputies in the first round in the early hours of Aug. 6, by a vote of 358-128, with nine abstentions. As the Congressmen debated the bill, a march of 30-50,000 people against the reform turned violent, when hundreds broke through police lines, in front of the Brazilian Congress, and threw rocks at the Congress. Several people were injured. Signs included "Traitor, Get Out Mr. Lula," and "The Government Is Kneeling Before Capitalism."
To line up the votes needed for passage, the government had to agree to a couple of modifications (raising the salary ceiling for pensions of judicial employees by 10%, and exempting retired workers who receive under five times the minimum wage from social security contributions, and the like).
The modifications, which are estimated to reduce the fiscal "savings" of the original pension reform by a mere 5 billion reals (some $1.8 billion) between now and the year 2010, were sufficient to anger Bloomberg news service and the foreign financiers for which it speaks, who protested that "Lula bowed to opposition demands to limit spending cuts."
Because it includes Constitutional changes, the bill has to be voted up a second time by the Chamber of Deputies, with line-item changes permitted to be made. The bill then goes before the Senate for two rounds of votes, and then back to the House for a final vote.
Brazil's Industrial Production Plummets
Industrial Production in Brazil was 2.1% less in June 2003 than in the same month the year before, the third month in a row that it has fallen. A 10% drop in textile output and 7% drop in mining led the fall. Industrial production was down 0.3% in May 2003 over 2002, and 3.7% in April.
In addition to the world economic crisis, interest rates are killing the economythe benchmark rate is 24%, meaning that businesses and consumers pay much more than that.
The situation in the auto industry is critical. The Brazilian Association of Automakers reported Aug. 6 that car sales are at a 10-year low. In July, sales fell by 9% over June, after having fallen 7% in June. In an attempt to reverse this trend, Planning Minister Guido Mantega announced on July 27 that the government would offer some tax breaks and loan subsidies. Finance Minister Antonio Palocci specified on Aug. 5 that taxes on cars will be cut between 9% and 25% from now until November, as an incentive to increase sales. Automakers committed themselves, in return, not to dismiss workers, Palocci said. Volkswagen, Ford, and GM have laid off workers in recent weeks, because of falling demand for autos.
The foreign auto producers are threatening to leave Brazil, altogether. The president of General Motors in Brazil, Walter Wieland, announced at the end of July that his company is in the worst crisis of the 80 years it has been operating in the country. He warned the government that if nothing is done to change policy, auto assembly companies will have to dramatically reduce their investments, and, in the worst-case scenario, leave the country altogether. Wieland demanded a reduction in taxes, and the creation of a plan for the long-term development of the auto industry. Wieland wasn't optimistic about the government's plan, suggesting that unless it were devised for the long term, it would have little effect.
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