In this issue:

Brazil's President-Elect Calls for TVA-Style Infrastructure Development

Lula Must Decide: The General Welfare vs. the Bankers

Colin Powell Intervenes in Attempt To Avert Argentine Default

Millions of Petition Signatures Demand Referendum on Chavez Dictatorship in Venezuela

Colombian Senators Slam IMF/Grasso Agent on Economic Policy

Narco-Courts in Colombia Win Release of Cali Cartel Boss from Prison

From Volume 1, Issue Number 36 of Electronic Intelligence Weekly, Published November 11, 2002

IBERO-AMERICAN NEWS DIGEST

Brazil's President-Elect Calls for TVA-Style Infrastructure Development

Brazilian President-Elect Luiz Inacio "Lula" da Silva cited the New Deal-era Tennessee Valley Authority as exemplary of fruitful public-private economic relations, in an interview with Lally Weymouth in the Nov. 3 Washington Post. To Weymouth's assertion that "there are two ways to generate growth: the free market or the socialist model that relies on the state. Which course will you follow?," Lula replied: "I don't think the state has to manage companies. I remember what President [Franklin] Roosevelt did with the Tennessee Valley Authority. The state's role is to plan, stimulate development with incentives and, if necessary, provide funding in partnership with the private sector."

As to whether he will maintain the autonomy of the Central Bank, a condition the IMF and current Central Bank head Arminio Fraga have demanded, Lula pointed to the immense pressure exerted on him during the election campaign, regarding the appointment of the Central Bank Governor. "I cannot give in to the international markets' pressure on whom I should appoint as Governor," he said. Differentiating himself from most of his top economic advisers, Lula said that Central Bank autonomy is "not a major issue." If it were so important, he asked, why didn't "the people who ruled Brazil for many years" adopt that policy, instead of demanding it now? "Give me the opportunity to prove that I am more competent than they, although I don't have their schooling," he added.

On the issue of the debt, Lula said he would prefer not to borrow from the IMF at all. "I would prefer to see Brazil increase its industrial production and exports, and achieve a trade surplus, so that we don't have to borrow money." Lula said he has proposed to outgoing President Cardoso that the two work together, prior to his January inauguration, to lower taxes on manufacturing industries, and on exports.

Lula also told Weymouth that the difference between himself and Venezuela's Hugo Chavez is that "I have a political party; I have a labor movement. We have structures in society in Brazil that are much more institutionalized than in Venezuela. I remember telling President Chavez, 'I would advise you to be more political. A President cannot fight with everybody at the same time. You need more political wisdom. You have to split your adversaries so that you can divide and rule and govern with them.' I believe he is paying the price for his lack of political experience."

Lula also said that no one should confuse the "passion" felt for the Cuban Revolution, with the state of affairs in Cuba today.

The Brazilian President-elect also cited the life of Abraham Lincoln, a man of "humble origins" who became "one of the most important Presidents of the United States," which he said had inspired him to continue his drive to become Brazil's President.

Lula Must Decide: The General Welfare vs. the Bankers

The second largest union federation in Brazil, Forca Sindical, led a strike of 100,000 workers in Sao Paulo on Nov. 1, demanding wage increases. Some 5,000 workers marched to the headquarters of FIESP, the Sao Paulo industrial federation. Forca Sindical leaders said that they intend to force President-elect Lula da Silva to fulfill his promises to increase wages, and will launch an indefinite strike if business doesn't grant the increases within one week. The union estimates that wages have lost 10% of their purchasing power since 1998.

But the financiers say that if salaries are allowed to keep up with inflation, "any attempt to keep the economy stable will fail"—a fancy way of saying that wages must be gouged, or they'll pull their money out. Financial interests are also demanding that Lula rewrite labor laws which date back the 1930s-40s administration of FDR's friend, President Getulio Vargas. Those labor laws "lock in costly benefits such as a ban on cutting salaries," Bloomberg wire service complained Nov. 1.

Various spokesmen for Lula's Workers Party (PT) have been sounding a note of retreat over the last few days, on the President-elect's campaign promise to raise the minimum wage his first year in office. The head of the PT faction in the Chamber of Deputies, Joao Paulo, for example, said that "the economy" will dictate how much (or if) the minimum wage could be increased, and that much will depend on negotiations with the IMF.

Since his election, the President-elect himself, however, has not said "yea" or "nay" on any suggested program or plan of action, except one: that his government will set up a "Zero Hunger" program, whose goal will be to ensure that by the time he leaves office, every Brazilian can eat three meals a day. While that may sound like a modest goal to any reasonable person, the "market" analysts reacted to the commitment as potentially dangerous to the health of the economy! Associated Press wire service asked, how's he going to pay for that?

And Reuters headlined a Nov. 1 wire: "Wall Street to Lula: Act Fast, or We Dump Brazil." An executive of the bankrupt JP Morgan was more generous than some, saying JP Morgan gives Lula one month in office to show that he "can get things right."

Colin Powell Intervenes in Attempt To Avert Argentine Default

Concerned about the political fallout of an Argentine default on $800 million to the IMF/World Bank (see ECONOMIC NEWS DIGEST), U.S. Secretary of State Colin Powell personally designated Undersecretary for Economic Affairs Alan Larson, to mediate between the IMF and the Duhalde government, to try to avert the default before the Nov. 14 due date. Larson has been following the Argentine crisis very closely and has been meeting regularly with the several Argentine government officials who've come through Washington in recent weeks, including those negotiating with the IMF, as well as with Finance Minister Roberto Lavagna.

When Lavagna left Washington Nov. 1, following acrimonious discussions with IMF Director Anne Krueger, it was decided that the two would resume talks by phone in the course of this week, after which Larson would jump in to try to resolve any remaining problems. The announcement of Larson's designation was made Nov. 1 to a group of Argentine reporters by Undersecretary of State for Environmental Affairs John Turner. Powell had informed Turner of the Larson appointment earlier that day, and wanted it made known that State would play a role in helping Argentina avoid a default. This is also the context in which rumors of a possible bridge loan from Treasury to Argentina began to circulate.

Millions of Petition Signatures Demand Referendum on Chavez Dictatorship in Venezuela

Tens of thousands of Venezuelans marched through Caracas Nov. 4, to present electoral authorities with 2.2 million signatures, a sixth of the registered voters of Venezuela, and nearly twice the required number for a referendum to be held on Hugo Chavez's despised government. Although, according to law, the referendum would be "non-binding," a massive vote against Chavez would severely weaken his already precarious political legitimacy, including in the "international community."

The march began in the Plaza in Altamira, Caracas where dissident military officers have been camped out for two weeks. Belligerent Chavez supporters, armed with rocks and sticks, congregated outside the electoral office and clashed with the opposition petitioners; at least 75 were wounded by a combination of rocks and rubber bullets. The Chavistas were eventually dispersed with tear gas by National Guardsmen.

Chavez himself continues to insist that early elections would only be called if the Constitution were amended by the National Assembly, where his forces still hold sway.

Electoral authorities have until Dec. 4 to validate the petitions and set a referendum date, which, by law, must occur within 90 days. The opposition CTV and Fedecamaras—labor and business organizations—threatened an indefinite nationwide strike if the referendum is not allowed to take place.

Colombian Senators Slam IMF/Grasso Agent on Economic Policy

A group of prominent Colombian Senators, with ties to the country's agricultural interests, have issued a formal statement of censure against former Economics Minister Rudolf Hommes for "heading a campaign against protection of national agriculture," and for "acting in representation of foreign, primarily U.S., commercial intermediaries."

Hommes is a former IMF employee and member of the board of Violy Byorum & Associates (sponsors of the infamous jungle meeting between New York Stock Exchange head Dick Grasso and narcoterrorist money man Raul Reyes of the FARC), who currently functions as an eminence grise of the Alvaro Uribe government, and has been a consistent target of the LaRouche forces in Colombia.

Narco-Courts in Colombia Win Release of Cali Cartel Boss from Prison

Despite the attempt by President Alvaro Uribe Velez's government in Colombia to stop the court-ordered release from jail of Cali Cartel bosses Miguel and Gilberto Rodriguez Orejuela, Gilberto "The Chessplayer" Rodriguez Orejuela was released from prison on Nov. 7, after serving only seven years in jail. The two brothers were sentenced in 1995, charged with being the capos of what was then the world's largest cocaine cartel.

A judge ordered the Rodriguez Orejuela brothers released on Nov. 1, after they had served only half their 15-year sentences (which many believed were too light to begin with). The judge relied on the testimony of a prison director, who claimed the cocaine kingpins had won time off through "work-study" and "good behavior."

President Uribe issued an executive decision Nov. 5 halting the release on the grounds that the very "dignity of the nation" is at stake. The government dismissed the prison director, accused the obliging judge of "suspicious" behavior, and ordered the release suspended pending an investigation. Another judge slapped an additional four-year sentence on Miguel for "bribery," and President Uribe appealed to the U.S. government to come up with any evidence it might have indicating that the Rodriguez Orejuelas may have committed an international crime after 1997, when an amendment to the Colombian Constitution reversed the Colombian ban on extraditions to the United States. Extradition to the U.S. was not an option in 1995, when the narcobrothers were sentenced, because at the time the (narco-drafted) 1991 Constitution, did not allow extradition.

According to Colombian narcotics czar Alfonso Plazas, "The Cali Cartel is alive ... and is sending cocaine to the United States." Miguel Rodriguez Orejuela's son William is believed to be a new cartel boss in Cali, and the U.S. has already requested his extradition.

Cries that President Uribe was being "dictatorial" were raised from the narco-legalization NGOs in the United States, and by narco-contaminated courts in Colombia. Colombia's National Association of Justice Employees accused the President of "arbitrary interference." The Supreme Court issued a non-binding ruling on the evening of Nov. 5, charging him with "violating the separation of powers."

Uribe initially responded that he would "rather be called arbitrary than soft. We have to defend the dignity of the nation." But when a second judge issued a new ruling that the brothers be released, Uribe backed down. Although Miguel must serve time on the new four-year bribery conviction, Gilberto walked free.

Interior and Justice Minister Fernando Londono lamented the court decision, saying, "It's terrible, terrible, terrible. This is a moment of mourning, of pain for the image of the nation, for the justice system of Colombia."

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