Ibero-American News Digest
Brazilian Foreign Minister Suggests Economy Could Stop War
War with Iraq is possible, "but it is not inevitable," Brazilian Foreign Minister Celso Amorim told President Lula da Silva and his Cabinet at their last meeting, Folha de Sao Paulo reported on Feb. 24. He repeated that statement to Folha, the paper reported. He then added that "many things, including the economy itself, are at stake." Citing the signs of "fragility" of the U.S. economy, he said that while many times war could be a solution for a recession, "with certainty, that is not the case now."
Mexico Wavers on Iraq War Under Brutal U.S. Pressure
Until Feb. 25, the Fox government in Mexico (currently a member of the UN Security Council), had held firm on a policy of "no war," including lobbying other Security Council members to side with Germany and France. "It's not just a matter of stating an opinion. It's a question of using convincing arguments so that there is no war. Our position is clear.... It is no to war," President Vicente Fox told reporters the previous week.
In this policy, the President was backed by "institutional Mexico." Fox met with the governors of the states on Feb. 21, and received their unanimous backingfrom PAN, PRD, and PRI governors alikefor Mexico's insistence that there must be a peaceful solution to the Iraq crisis. The governors told Fox that Mexico must be governed by its Constitution and the principles of international law, Juan Carlos Romero Hicks, the governor of Fox's home state of Guanajuato, reported at the end of the meeting. Mexico's Constitution establishes respect for sovereignty and non-interference in domestic conflicts of other countries, as its foreign policy.
Mexican papers headlined the statement of Interior Minister Santiago Creel on Feb. 21: "Mexico does not accept any pressure from anyone." Creel's remarks were made in response to U.S. Ambassador Tony Garza's Feb. 20 threats that the U.S. Congress might block pro-Mexican legislation, should Mexico vote against the United States at the UN.
Polls show that 70-80% of the Mexican population oppose any war against Iraq. With Congressional elections only five months away, Fox cannot afford to appear to grovel again before the United States, as Mexico did under the despised Foreign Secretary Jorge Castaneda.
The Bush team has not let up, however, threatening economic retaliation should Mexico, a country which sends 90% of its exports to the U.S., vote against the United States. In a speech Feb. 21 to the University of the Americas in Puebla, U.S. Ambassador Garza pounded away at the assertion that the special character of the U.S.-Mexico relationship is being put to the test at the UN, that Mexico could be hit by terrorism, and that people should listen to Henry Kissinger, because he speaks from decades of experience, etc. Kissinger had told 80 top Mexican businessmen in Monterey on Feb. 20 that "the United States would be very angry if Mexico voted against, or abstained from supporting," the new Bush-Blair resolution at the UN.
All the pressure appears to have gained some ground. In a speech Feb. 25 to U.S. and Mexican businessmen, President Fox emphasized Mexico's support for urgent "efforts to achieve the elimination of weapons of mass destruction in Iraq," and made no mention of his previous "no war" position. Associated Press reported Feb. 26 that after Fox's speech, the Foreign Ministry issued a confidential directive for its diplomatic representatives, which does not commit Mexico to voting for the Bush-Blair resolution, but says that Mexico agrees the resolution's sole aim is to disarm Iraq. The directive, of which AP obtained a copy, asserts that "this issue is of critical importance to the United States and to the Bush Administration," and Mexico's primary "national interest" is its relationship to the United States.
Chile Does Not Want a War
"Chile doesn't want a war, so we're not looking for any pretext for war," Chile's Ambassador to the United Nations Gabriel Valdes stated, according to a Feb. 21 Bloomberg wire. "We want the inspectors to have the possibility to disarm Iraq, and that Iraq cooperates with the inspectors."
FARC-Linked Drug Mob Shuts Down Sections of Rio de Janeiro
The "Red Commando" drug gang headed by Fernando Beira-Mar, Brazil's leading cocaine trafficker, who has been jailed in Rio de Janeiro since his 2002 capture in Colombia (where he was being protected by the narcoterrorist FARC), put out the word on Feb. 24 that businesses in sections of Rio must close and transportation shut down, or they would be "radically punished."
The drug mob then demonstrated once again that it has the capability to shut down one of Brazil's largest cities. Shops in 12 neighborhoods located near the drug-mob-dominated favelas (slums) closed their doors. Some 30 city buses were burned, one set afire before the passengers could get out, sending five people to the hospital with burns and broken limbs. Other buses were machine-gunned. Men on motorcycles threw grenades and homemade bombs at several buildings. A police unit was attacked, and several supermarkets looted. By the end of the day, police had detained 50 people, 22 of them on drug charges.
Estado de Sao Paulo noted Feb. 25 that the methods employed were modelled on those used by the FARC against Colombian cities.
The "Red Commando" sent out a letter portraying its attack as a demonstration that "the people" say "enough," and demand their rights.
Argentines Increasingly Depend on Largesse of Relatives Abroad
Many Argentines have now joined the ranks of those Central American countries whose populations depend for survival on money sent home by family members living abroad. In 2002, Argentines residing in the United States sent an estimated 20% of their income to family members back home, totalling $300 million sent for the entire year. U.S.-based agencies that handle money transfers into Ibero-America are accustomed to dealing with Hondurans, Salvadorans, Nicaraguans, and citizens of other Central American countries, whose remittances to family members back home often represent 10% of the GDP of their native countries, and can mean the difference between life and death in those countries. Argentines rarely appeared at such agenciesuntil now.
Many Argentine families increasingly depend on funds from relatives in the U.S., Italy, or Spain, in order to buy food or pay rent. In fact, 2% of all food sold by Argentine supermarkets today, comes from credit-card purchases made via the Internet, from Argentines abroad. The food is then delivered to the needy relatives inside the country.
Brazil Raises Interest RatesAgain
In a suicidal move, Brazil has again raised interest rates, from 25.5% to 26.5%. Announced following the Feb. 19 meeting of the Central Bank's Monetary Policy Committee (Cocom), the 1% hike automatically increases the public debt by 3.97 billion reals, because 62% of the official R$397 billion in public debt is indexed to the basic Selic interest rate. Monitor Mercantil pointed out Feb. 20 that the rate increase will therefore also nullify part of the R$14 billion worth of 2003 budget cuts announced the previous week. Finance Minister Antonio Palocci said the increase was necessary to combat rising inflation.
The announcement provoked an immediate angry response from businessmen, labor leaders, and consumer advocates, who warn of devastating consequences for industry, employment, and consumption. Only bankers were pleased with the move, while several Workers Party (PT) loyalists described the decision as "tough, but necessary." Horacio Lafer Piva, head of the Sao Paulo State Federation of Industries (FIESP), warned that "the option of fighting inflation with higher unemployment, declining wages, and reduced [operating] margins for the productive sector, is unsustainable." A FIESP statement warns that this new rate hike compromises economic growth for the first half of this year, and "severely threatens" growth for the remainder of the year.
Brazil Slashes Social Programs, Sanitation Infrastructure
The 5 billion reals in budget cuts for social programs announced by Brazil's Lula da Silva government, will drastically reduce vitally needed investment in Brazil's sanitation infrastructure, including sewer systems and potable water, Folha de Sao Paulo reported Feb. 17. It is estimated that at least 11.1 million people, most of them poor, and residing in the least developed regions of the country, will be denied infrastructure that was to have been provided by the "Sanitation Is Life" program. The cuts announced for this sector will reduce by 85% funds originally earmarked for this program. Planning Ministry head Guido Mantega said that sanitation projects will only be built "when there is money." The lack of basic sanitation infrastructure is one of the primary causes of infant mortality in Brazil. The 1991 census reported that only 52.4% of households were connected to sewer systems, and there was only minimal improvement shown in the 2000 census.
Financial Times Warns Uruguay Against Debt Restructure
Were Uruguay to restructure its foreign debt, as has been rumored, that would be seen as a default by "the markets," the London Financial Times warned on Feb. 19. IMF Western Hemisphere Division chief Anoop Singh announced Feb. 23 that an agreement had been reached with Uruguay for 2003, but didn't say whether a debt restructuring were part of the agreement. However, President Jorge Batlle told AFX news service Feb. 18 that his government was negotiating "a rescheduling of part of the debt" with the Fund.
Uruguay is desperate for IMF assistance, which was cut off last December because the government hadn't met IMF criteria for shutting down insolvent banks. The country's $11-billion debt load represents 90% of GDP; after the government dipped into its reserves to make recent debt payments, reserves stood at a record low of $534 million. A 19% increase in the price of diesel oil is expected to hit the agricultural sector especially hardUruguay depends on agriculture for most of its revenueright in the middle of the harvest.
Chile Faces Domestic Economic Paralysis; Fears Possible Brazil Default
Fears are growing in Chile over the possibility of a Brazilian default, and domestic economic paralysis. Fitch rating agency downgraded Chile's peso-denominated debt by one notch on Feb. 24, due to its concern over a budget deficit expected to reach $460 million this year. Although touted as the most "stable" of the Ibero-American economies, Chile is not doing well. Totally dependent on revenue from copper exports, it has been hurt by the slump in the copper price, now at $0.75/lb. "Chile is vulnerable to global shocks," Fitch warns.
Business leaders are extremely anxious about lack of growth in the domestic economy, reflected in January's 16% drop in capital-goods imports. Bloomberg frets that economic expansion that was supposed to occur this year, will be stunted by concern over a possible Brazilian debt default, as well as by the rising oil price, and the impact of a war against Iraq. Chile is wholly dependent on imported oil.
LaRouche Visit to Arkansas Reported on Argentine Radio
Radio Municipal in the southern Argentine province of Neuquen, where Lyndon LaRouche has been interviewed a number of times over recent years, ran a 90-minute interview with EIR Ibero-American editor Dennis Small Feb. 24. In the course of the interview, which was conducted by a panel of local dignitaries, including two state legislators and a city councilman, Small reported on LaRouche's recent historic visit to Arkansas, where he was hosted by the leader of the state legislative Black Caucus; the policy brawl inside the Democratic Party and the U.S. generally; the Chickenhawk drive to war, including their nuclear option; the international LaRouche Youth Movement's recent activities on Capitol Hill; and LaRouche's global economic reorganization policies.
Most of the questions from the panel centered on economic issues, with a fairly heavy provincial emphasis at the beginning, but all of the participants showed real familiarity with, and respect for, LaRouche's ideas. Indicative was the question from the city councilman: We understand what LaRouche proposes, and that he is a major contender for 2004. Now explain to us, if he were to win, exactly what would his policies be to save nations like Argentina, and to help us industrialize?
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