IBERO-AMERICAN NEWS DIGEST
Dangerous Impasse Continues in Venezuela
A dangerous impasse continues in Venezuela, as President Hugo Chavez attacks his opposition as criminal coup-plotters, and the opposition sticks to its single-minded "Chavez must go" position.
Chavez had been silent for the first three days after a group of 14 generals and admirals declared themselves to be in rebellion against the regime, and took over the main plaza in the Altamira section of Caracas, the capital, on Oct. 21. But on Oct. 24, he accused the military officers of committing "criminal acts," and promised the government would take action. The next day, he charged that the officers were preparing "a military insurrection," and said he would repress them by force of arms, should any coup attempt occur. Chavez argued that the military has no right to take recourse to Article 350 of the Constitution which grants the right to civil disobedience to restore democracy, if a government is violating it because his government is the democracy. "I am not going to resign," he vowed, and called on his supporters to be prepared "to take to the streets to defend our Venezuelan democracy."
Late on Oct. 25, a judge issued summonses to at least 43 military and civilian protesters to appear in court on Oct. 28, to face possible charges of rebellion, which can carry a prison term of up to 30 years.
One week later, no action had been taken against the Altamira Plaza protest, which continues unabated. In fact, the opposition movement has been gaining adherents, and political steam. There are now an estimated 100-150 military officers who have come out in support of the rebellion, most of them staying in the Altamira Plaza in order to avoid arrest. The opposition civilian and military leadership have agreed that neither side would take action separate from the other.
Adding to the show, was a visit by Organization of American States Secretary General Cesar Gaviria, who flew to Caracas Oct. 27 for several days of shuttle diplomacy between the government and various opposition leaders. Gaviria insisted, as have U.S. State Department officials, that the solution to the crisis lies in elections, but there are no signs of any agreement whatsoever on when elections could be held, and for what, and under what conditions. Proposals range from Chavez's promise that, come August 2003, he might accept a referendum on whether he stays or goes, to demands that that referendum be held by Dec. 4, to the ultimatum that elections be held only after Chavez resigns, which is the position of the military officers camped out in the Plaza.
Meanwhile, the situation within the Armed Forces remains as tense as that nationally. The heads of three key military garrisons (Caracas, the central command in Maracay, and the command in Venezuela's principal oil region, Zulia) proclaimed their loyalty to Chavez, but the tension in the military bases around the country is reportedly extremely high, as no officer is sure where another officer stands in the crisis which appears certain to come. Army Commander Gen. Julio Garcia Montoya held an eight-hour closed-door meeting Oct. 24 with the officers of the Maturin base, one of the two bases rumored, falsely, to have rebelled on Oct. 21. General Montoya's attempt to pass off his visit as previously scheduled and routine, convinced no one.
Political Crises Hit Uruguay, Paraguay; Will Chile Be Next?
Uruguay's governing coalition fell apart Oct. 28, when four Cabinet members from the National Party, the minority partner in the government of President Jorge Batlle, resigned in disagreement over how to handle the economic crisis rocking the country. The Industry and Energy, Sports, Housing, and Education and Culture Ministers handed in their resignations, while National Party leader and former President Alberto Lacalle stated publicly that he had made a mistake in supporting Batlle's campaign for the Presidency.
Despite receiving a $3-billion bailout package from the IMF earlier this year, Uruguay is on the verge of default. "Investors have already priced into Uruguay's bonds the significant likelihood of a default," New York analyst Christian Stracke told Bloomberg Oct. 29. But Stracke insisted that the U.S. Treasury and IMF will "bend over backwards to prevent Uruguay going the same way as Argentina," adding that Batlle is "the only real ally they have in South America now."
Things aren't looking good for Uruguay's neighbors, either. In Paraguay, President Luis Gonzalez Macchi may not last in office through next April's elections. Accused of illicit enrichment and corruption, he has lost the support of his own Colorado Party. A week ago, his Vice President, Julio Cesar Franco, an ally of nationalist Gen. Lino Oviedo, resigned to launch his own Presidential campaign. Intersecting this, is the battle in the Congress over the austerity package demanded by the IMF. The package, which includes big tax increases, has passed in the Senate, but may go down to defeat in the lower House.
There are jitters over what might happen in free-market bastion Chile, particularly should Brazil default. Reuters notes that foreign investment in Chile would be hit very hard by a Brazilian default, and that the peso, which has declined by 11% this year, is extremely vulnerable to speculative attack.
Urban Terrorism on the Rise Across Colombia
Since the bombing of the Presidential palace in Bogota on inauguration day this past August, the FARC/ELN narcoterrorists in Colombia have thrown much of their resources into building urban terrorist networks, largely recruited from the dregs of the defunct Medellin and Cali drug cartels, and from the lumpenized population in every major city. In response to President Alvaro Uribe's attempts to use informants and targetted military/police raids to clean out these terrorist nests in Medellin earlier this month, the FARC/ELN have gone on an urban rampage. In just the last week in October, car bombs and grenades have been used against political and military targets in the cities of Bogota (Cundinamarca province), Medellin (Antioquia), Barranquilla (Atlantico), Arauca (Arauca), and Subia (Cundinamarca). Other provinces that have been hit include Sucre, Cesar and Cauca. Scores of casualties are being reported, while targetted assassinations also continue, of mayors and city councilmen who have refused to resign at the FARC's demand.
IMF Turns the Screws; Tells Argentina, 'No Deal'
Argentina's negotiating team returned to Buenos Aires Nov. 1, without any deal with the IMF. Finance Minister Roberto Lavagna met in Washington with IMF Managing Director Horst Koehler, Deputy Director Anne Krueger, and Western Hemisphere Division chief Anoop Singh, but "key" issues were not resolved, according to an IMF statement released late on Nov. 1. Both the Fund and Argentina are now saying that they will continue working on the issues in hope of reaching an agreement. But, speaking from Quito, Ecuador, Foreign Minister Carlos Ruckauff said his government's relations with the Fund were "stormy," due to the demands made by the IMF's "technocracy," whose guidelines "don't work in today's world." Right now, he said, "We don't have the conditions to keep paying the multilateral [agencies]." Argentina is scheduled to make an $800-million payment to the World Bank on Nov. 9.
What the IMF wanted was "shock" policies, demanded specifically by Deputy Managing Director Krueger. This included a fiscal "adjustment" of $4.5 billion, a 30% increase in utility rates, tax increases, and a full free-float of the peso (no Central Bank intervention to defend it). The Fund also wants the government to halt the practice of allowing taxes to be paid with either provincial bonds or government debt paper something that cannot practically be done in today's Argentina. The situation is such that one-third of September's tax revenues were paid in the form of these bonds, which are also used by provincial governments to pay salaries and suppliers. Many companies are also able to buy greatly devalued debt paper, and then use this to pay taxes to the government at the bonds' nominal value, thus saving between 10% and 30%.
A Clarin correspondent also reported that the IMF is demanding a primary budget surplus which is double what Argentina says it can generate. (A primary budget surplus requires government revenues exceed all expenditures except debt payments, which are not permitted to be cut.)
One anonymous IMF source was quoted in Clarin Oct. 31, saying that Lula's victory in Brazil doesn't favor a quick agreement with Argentina. The Fund thinks "that if it lets up with Argentina, later it will have to loosen up with Brazil."
Financial Times Moots Possibility of Argentine Default
As negotiations between Argentina and the IMF go down to the wire, London's Financial Times worries that the threat of a default on $800 million due the World Bank on Nov. 9, is putting pressure on the IMF to come to an agreement. "While the world's financial markets have been focusing nervously on Brazil, a hazardous game of chicken has been unfolding in neighboring Argentina," the FT notes. Will Argentina allow itself to become an "international pariah" country like Iraq or Somalia, by defaulting on loans to multilateral institutions? The Duhalde government is using the threat of default as a "new weapon in their interminable negotiations" with the IMF, and even though it may not actually go over the brink, "the prospect of a default adds to the pressure on the Fund," the paper frets. The World Bank "has been affecting nonchalance," and while president James Wolfensohn says the Bank would survive a default, "he wouldn't like it much."
FDR 'Letter' to Lula: Go for a 'New Deal' in Brazil
In an imaginary letter from President Franklin Delano Roosevelt to Brazil's President-elect Lula da Silva, well-known Brazilian journalist Elio Gaspari uses his column in Correio do Povo Oct. 30 to tell Lula that if he wants to implement his program to help Brazil's poor his anti-hunger program, for example he'll have to contend with the same Wall Street "money-changers" that FDR confronted. And, he'll have to find the courage to "throw them out," as FDR did, in order to carry out his New Deal.
In the fictional "letter," FDR recounts the history of what the United States looked like in 1933, and says that, beginning the day after his electoral victory, he too was warned by Wall Street bankers and big business that he had to "make a commitment to the market." Former President Herbert Hoover said that "my New Deal would bring fiscal irresponsibility, inflation, and ... dictatorship." Bernard Baruch "told me: Cut costs and collect taxes. Collect on everything, from everyone." But, Roosevelt explains, the country's social crisis was "ripping the hearts out of the poor.... The people proposed a reform of society; I go to the people, win the election, receive a mandate and then these characters appear, giving the impression that the voters are imbeciles, and we're asses, unless we do what they want."
FDR opted for a different policy: "America had to produce, and the Americans had to consume. It was a matter of getting out of the crisis by returning to basics something like your proposal to ensure Brazilians eat three meals a day." In his first Inaugural Address, FDR explains, he became famous for the phrase "The only thing we have to fear, is fear itself." But, "I like the part in which I deal with the 'money-changers,' the people who pose as wise as long as they have profits to distribute, but when the crisis came, they cried, begging for 'restoring confidence.'
"You see, Mr. da Silva, how things really change very little?"
"FDR" concludes with this message to Brazil's next President: "You, Sir, embody the Brazilian dream, happily very similar to our old and good American dream. Inter-American greetings, from Franklin Roosevelt. "
Texas Demands Water from Drought-Stricken Mexico Region
Farmers from the South Texas agricultural region have cited a 1944 treaty to demand that drought-stricken Mexico provide water to Texas. In reality, the treaty has been nullified by 30 years of failure to build water infrastructure in the Rio Grande Basin.
Sanctions should be imposed on Mexico, stated South Texas farmers, a demand they have made for over two years. They charge that Mexico is withholding water: "Basically Mexico lied to the State Department, lied to everybody.... They refused to discuss the issue," said Gordon Hill, manager of the Bayview Irrigation District.
Texas Agriculture Commissioner Susan Combs raised the option Oct. 30 that the U.S. might withhold delivery of Colorado River water to Mexico. Combs said it's time to look at reprisals, such as cutting off U.S. foreign aid to Mexico.
Under the 1944 water-sharing treaty, the U.S. is to receive an average of 350,000 acre-feet a year from Mexico, mostly from the Mexican state of Chihuahua, in the Rio Grande River Basin. On Oct. 2, Mexico "defaulted," and "owes" about 1.5 million acre-feet of water. This area of North American has been suffering from intense drought for two years; the water resource base on which the 1944 agreement is premised, had been exceeded decades ago. New water supplies must be created.
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