In this issue:

Venezuela Economy Undergoing Rapid Disintegration

Venezuela Central Bank: Servicing Foreign Debt Is Top Priority

Ecuador President Gutierrez Kowtows to Washington, IMF

Lula Government To Cut or Freeze $4 Billion From 2003 Budget

Porto Alegre Hails Trimuph of 'Left' as Nations Bow to IMF

IMF Demands Argentina Respect 'Creditors' Rights'

From Volume 2, Issue Number 7 of Electronic Intelligence Weekly, Published Feb. 19, 2003

Ibero-American News Digest

Venezuela Economy Undergoing Rapid Disintegration

Not since the civil wars of the 19th century has Venezuela's economy disintegrated so completely as is now occurring, several Venezuelan economic commentators have observed, according to El Nuevo Heraldo Feb. 11. Leaders of the industrial and commercial associations, Fedeindustria and Fedecomercio, project that 1 million people will lose their jobs in the coming months, as businesses fail. Already, 12,000 commercial establishments have closed, and 5,000 are bankrupt. This new wave of unemployment comes on top of the 1 million who lost their jobs in 2002—out of an economically active population of only 10 million. Unemployment is now at about 20%.

Venezuela Central Bank: Servicing Foreign Debt Is Top Priority

"I'm sure the debt will be paid, because with the exchange controls, the first priority over all others is servicing our foreign debt," Domingo Maza Zavala, one of the seven directors of Venezuela's Central Bank reassured Wall Street's Bloomberg wire service in an interview Feb. 18. Maza Zavala, a "former" leftist economist, insisted the bankers needn't worry that Venezuela would default.

This is in accord with the policy outlined by President Hugo Chavez on Feb. 5, that the exchange controls would serve: (1) to ensure his opponents would be cut off from dollars; and (2) that there would be money to pay the foreign debt.

Ecuador President Gutierrez Kowtows to Washington, IMF

Ecuador's "leftist" President told Washington he wants to be one of the "best allies" of the Bush Administration. President Lucio Gutierrez met with President George W. Bush in Washington for more than 40 minutes Feb. 11, lunched with Secretary of State Colin Powell, and met with other White House officials, Congressional offices, and heads of the international financial bodies, including the IMF's Horst Koehler, before heading to New York City on Feb. 12, to meet with Wall Street bankers and oil investors.

His message, as he told a forum jointly organized by the Heritage Foundation, the Center for Strategic and International Studies, and the Inter-American Dialogue, was that "Ecuador wants to offer the United States a permanent flow of oil, if international difficulties persist, or worsen." He stressed that he wants the foreign investment required to raise oil production. "We will guarantee you juridical security," and "all the incentives that today's competitive world offers," to get it, he promised.

During his meeting with Koehler, he signed the genocidal letter of intent his government just negotiated with the IMF.

The only possibly useful outcome of Gutierrez's trip, is that he assured Washington that he backs Colombia's President Alvaro Uribe Velez's efforts to take on the narcoterrorists.

How long he will remain in office, however, is not known. His governing partner, the Pachakutik Movement (the political arm of the National Federation of Indigenous Nationalities of Ecuador, CONAIE), which holds four posts in his Cabinet, already furious at the IMF accord Gutierrez is ramming through, protested immediately his offer to be "the best ally of the United States." Various members of the movement are calling for it to pull out of the government.

Lula Government To Cut or Freeze $4 Billion From 2003 Budget

The Brazilian government of President Lula da Silva will cut or freeze $4 billion from the 2003 budget passed by the Cardoso government, in order to reach its target of a 4.25% budget surplus, the Finance Ministry announced on Feb. 10. The IMF issued a statement welcoming the primary surplus target, as a sign of the Lula "government's commitment to a comprehensive and sustainable economic and social program," but there is hell to pay within Lula's Workers Party (PT), where Congressional deputies, despite threats of party discipline, are protesting that the Lula government is outdoing President Cardoso's in implementing austerity, despite his election promise to change IMF policies.

Porto Alegre Hails Triumph of 'Left' as Nations Bow to IMF

The message from this year's meeting of the supposedly anti-globalization World Social Forum in Porto Alegre, Brazil, according to liberation theologist Fray Betto, was that the triumph of Lula da Silva in Brazil, Lucio Gutierrez in Ecuador, and Hugo Chavez in Venezuela, could mark the first upward curve for the Ibero-American and world left since the fall of the Berlin Wall. "Latin America has given a new vote of confidence to the left," the liberation theology guru and adviser to President Lula's "Zero Hunger" program, said in an interview given at the Porto Alegre meeting to Rebelion, an Internet website which propagandizes for the terrorist movements of Ibero-America. He warned that "the left cannot withstand any more failures," even as he went on to hail how, "from Ecuador to Venezuela, the popular classes are demanding social reforms which neo-liberalism did not know how to give them," at the very moment his three purported examples of World Social Forum governments are putting through their IMF policies.

IMF Demands Argentina Respect 'Creditors' Rights'

Argentine President Eduardo Duhalde signed a decree Feb. 4 allowing for short-term, voluntary mediation between creditors and debtors, to prevent foreclosures on bad loans. Although the mediation is very limited, it violates the stipulation in the recently signed letter of intent with the IMF, to the effect that the government "must abstain from promoting any law ... which allows involuntary suspension of creditors' rights." The IMF and its friends made angry phone calls to Finance Minister Roberto Lavagna early in February, demanding he stop the decree, and one anonymous U.S. Treasury official told Clarin that many foreign banks, especially Citibank, are angry that Argentina keeps "changing the rules of the game."

In the Congress, legislators are further annoying the IMF by refusing to approve four new taxes it demands, which would purportedly raise $500 million in revenue. The promise to impose these taxes is included in the letter of intent.

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