Ibero-American News Digest
Foreign Banks Set To Control 92% of Mexico's Banking System
The Banco Bilbao Vizcaya-Argentaria (BBVA) of Spain announced Feb. 2 that it intends to buy up the remaining 40% of Mexico's largest bank, Bancomer, to give it 100% ownership of the bank. The purchase, for over $4 billion, would make BBVA the largest banker in Mexico, ahead of Citibank, which owns Mexico's second largest bank, Banamex.
BBVA has already announced that it will withdraw Bancomer from the Mexican Stock Exchange, meaning it will not be obligated to make its finances public. In attempting to explain its unprecedented decision to purchase 100% of the bank's stocks, BBVA's Francisco Gonzalez praised the health (!) of the Mexican economy, and pointed especially to the juicy $13 billion in remittances that the 20-25 million Mexicans working abroad sent back into Mexico in 2003.
In 1992, Citibank was the only foreign bank operating in Mexico, and its asset share was a mere 1.5% of the total. In 1994, however, the North American Free Trade Accord (NAFTA) went into effect. A 1997 study on the foreign takeover of Ibero-America's banking systems prepared by EIR Ibero-America editor Dennis Small, found that by that year, foreign banks owned "a stunning 59%" of national banking assets. Now, when the BBVA latest takeover is completed, foreign banks will control 92% of Mexico's banking system.
Congressman Francisco Suarez Davila, from the PRI Party, responded to the announcement with a warning that this "foreignization" of nearly the entire Mexican banking system poses "a serious national interest problem," above all since Citibank "has already given signs of opposition" to national policies. He urged "a strict application of the laws to the foreign banks, with clear guidelines on making their profits compatible with the flow of resources into national development." Suarez Davila pointed out that when Argentina's banking system collapsed, the foreign banks which owned the majority of that banking system, did not step in to support their local branches.
His viewpoint was echoed in part by a former director of the Mexican Central Bank, Carlos Tello Macias, who warned of the risk that the foreign banks would channel credit toward some companies, while ignoring others. With this loss of national control over Mexican banking, he warned, the financial system will obey interests which do not necessarily coincide with the nation's priorities. In other words, loss of national sovereignty.
CFR Boosts Castaneda's Presidential Bid
Mexican Presidential hopeful Jorge Castaneda was invited to inaugurate the Council on Foreign Relations' new "HBO History Makers Series" in New York, on Jan. 29. There was nothing hidden about the fact that the invitation was meant to boost his campaign prospects. "We couldn't have found anybody more interesting to begin this series with than Jorge Castaneda, who has made history in the past, and hopes to make history in the future, I think, in Mexico," investment banker and former Assistant Secretary of State Bernard Aronson said in introducing Castaneda. And, in concluding the event, Aronson added: "I don't know whether Jorge will decide to seek a political career in Mexico, but I think if he does, the Mexican people will be greatly benefiting from the kind of candor and thoughtfulness that we've heard tonight," praising Castaneda as one of those "authentic voices and voices that can think in new and creative ways," for which Aronson thinks democratic societies are "hungering."
Castaneda stuck to his message that the economic "reforms" will not be possible in Mexico, until "institutional reforms" are carried out. And not only in Mexico. He suggested that the United States weigh in on behalf of ending the Presidential system of government which remains in place in most of Ibero-America, in order to move "towards a semi-Presidential, semi-parliamentary regime." President Vicente Fox has nothing to lose by adopting institutional reform as his agenda for the last three years of his regime, he argued, since he is getting nowhere on economic reforms anyway. At worst, Fox would get a discussion of these reforms going, and, at best, one or two might be adopted.
Castaneda also called for Mexican "civil society" to change the national agenda away from issues such as "the legal status of power generation in Mexico in the 21st century," and get Mexicans "energized" over other issues, such as women's and indigenous people's rights, human rights, the media, institutional reform, etc.
Peru Fears Bolivia-style Coca-Insurgency
Five thousand Peruvian coca-growers (cocaleros) will converge on the capital of Lima on Feb. 18-22, for a national "congress" and show of force. Interior Minister Fernando Rospigliosi warned on Jan. 21 that the gathering could provide the fodder for "political interests" to organize demonstrations, protest marches, and highway blockades that could lead to more violent acts and eventually a "Bolivianazo," a reference to the cocaleros' leading role in overthrowing the Sanchez de Lozada government in Bolivia in 2003.
Rospigliosi met with leaders of the Peruvian cocaleros, including Nancy Obregon, to promise that as long as the "congress" was academic and scientific, their rights to gather would be respected and protected, but he warned that there were those who sought to emulate Bolivian cocalero leader Congressman Evo Morales, and interests like Peru's brownshirt-clad synarchists, led by the Humala family, who want to use the cocaleros as a battering ram against the government. Said Rospigliosi, we know the cocaleros are not drug-traffickers, but "neither are we fools. The drug trade has its interests in this. And they want to expand the coca crops and make the alternative development programs fail."
Obregon, like Evo Morales, is an integral part of George Soros's drug legalization apparatus. Obregon was a leading speaker at a pro-drug legalization conference in the city of Merida, Mexico, in February 2003. That conference was financed by Soros's Lindesmith Center.
Bolivian Economic Plan No Solution
While the economic plan announced by Bolivian President Carlos Mesa on Feb. 1 addressed none of the country's pressing problems, Mesa, in a desperate attempt to reduce the fiscal deficit of 8.5% of GDP, outlined a series of austerity measures. These included reducing expenses of the government bureaucracy by 10%, cutting salaries, merging ministries, etc. And to increase revenues, Mesa announced higher taxes on oil companies, a new tax on financial transactions (including personal checks), and increased income taxes on middle- and upper-class sectors.
Mesa did back off the two most controversial measures that had been expectedan immediate increase in the gasoline price and an elimination of the subsidy on liquified natural gas. Mesa said, however, that the government would free government-controlled gasoline prices "over time," eventually allowing a 6% increase, and while for the moment, the subsidy on liquified natural gas (used for cooking) will remain in place, it will not be increased, even if the international price increases.
On Feb. 2, the Bolivian Workers' Central (COB) announced it would launch an indefinite general strike to protest the economic program. COB Executive Secretary Jaime Solares charged that the program had nothing in it for workers, since it failed to address such issues as social security, the pension law, and promised changes in the Hydrocarbons Law. Roberto de la Cruz, COB leader in El Alto, added that the population hadn't been consulted on the government's proposed changes in the Hydrocarbons Law, as Mesa had promised he would do when he took office, and called for the immediate nationalization of Bolivia's oil industry.
Cocalero Congressman Evo Morales, meanwhile, ranted that the proposed spending cuts aren't nearly big enough; instead of 10%, they should be 50%, he said.
All That Austerity, and Brazil's Debt Still Grows
"Record Surplus Is Insufficient To Pay Interest," was the banner headline across the economics page of O Estado de Sao Paulo on Jan. 31, reporting the 2003 debt figures released the day before by Brazil's Central Bank.
In 2003, the Brazilian Federal, state, and municipal governments cut expenditures radically, generating a record primary surplus of 66.2 billion reals: US$22.5 billion at today's exchange rate of R$2.94 to the dollar; R$1.2 billion more than agreed in the IMF accord; R$13.8 billion more than the R$52.4-billion primary surplus reached by the Cardoso government in 2002; and an amount equivalent to 4.38% of GNP.
"The government collected more taxes and economized more, and, even so, the effort was small, in the face of the weight of interest payments which the public sector had to pay in 2003," O Estado admitted. Brazilian President Lula da Silva's first year in office produced the greatest fiscal savings in the nation's history. "Nonetheless, all this economy did not cover even half of the R$145.2 billion in nominal interest on public debt, also a record." Government bodies paid the equivalent of 9.49% of the GNP in interest payments alone. Almost 40% of the budget went to pay interest on the debt in 2003, Folha de Sao Paulo reported.
Nor was the overall debt load reduced by the government's brutal cuts in expenditures on infrastructure, health, and education programs, scientific and technological development, the space program, military and security forces to keep the peace, etc. Brazil's total public-sector debt, according to the government's calculations, grew by nearly US$11 billion (R$32 billion) in 2003, to total R$913.1 billion, or US$310.6 billion, by Dec. 31, 2003.
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