In this issue:

UNICEF Charges IMF Programs Harm Argentine Children

'Lima Declaration' Reveals Impotence of Lula Debt Strategy

Jacobins Promise 'To Set Fire' to Brazil in April

Brazil Gov't Coalition Cracking Over Economic Policy

Argentina's Energy Crisis Hits Broader Region

Desperate Miner Becomes Suicide Bomber in Bolivia

Oaxaca Governor Huntington Is Face of 'New U.S. Fascism'

From Volume 3, Issue Number 14 of Electronic Intelligence Weekly, Published Apr. 6, 2004

Ibero-American News Digest

UNICEF Charges IMF Programs Harm Argentine Children

Argentina's children have been so devastated by IMF genocide that UNICEF has officially asked the Fund to change the way it calculates the primary budget surplus for that country, in order to prevent any further "adjustment" to expenditures for social programs, Pagina 12 reported March 31. The primary budget surplus is the amount the government must set aside to pay the debt, and the IMF is pressuring Argentina to increase it above the current level of 3% of GDP.

UNICEF, which addresses the needs of children in developing countries, points out that as a result of Argentina's crisis of the last few years, 71% of its children now live in poverty. For the first time in decades, in 2002, infant mortality increased from 16.2 deaths per 1,000 births, to 16.8; and 1.5 million children aged 15 or younger have had to leave school and look for work to help support their families. Fifty percent of all children under the age of two suffer from anemia.

Some months ago, UNICEF's Argentina office sent a letter to the IMF requesting that all funds spent on social programs not be considered as public expenditures, but rather as investment; and that funds for these programs not be considered part of the regular budget when the primary budget surplus is calculated. Currently, funds for social needs constitute about 30% of the budget. Historically, the Fund has always considered funds for social programs to be part of general public sector expenditures, also including state-sector wages and pensions, which it has always demanded be brutally cut. UNICEF's director in Buenos Aires reports that the IMF never answered his letter.

'Lima Declaration' Reveals Impotence of Lula Debt Strategy

Eleven Ibero-American countries issued a "Declaration of Lima" March 29 at the annual meeting of the Inter-American Development Bank (IDB) which suggests the multinational financial institutions should consider "perfecting the criteria of accounting used as a parameter of fiscal policy goals," and open for consideration, the possibility of excluding all or some infrastructure spending from calculations of their fiscal deficits.

Despite Brazilian Planning Minister Guido Mantega's assertion that the Lima Declaration gives enough "critical mass" to get the IMF to agree to discuss the need to promote infrastructure spending, this declaration is a significant retreat from the "Copacabana Act," signed by Brazilian President Lula da Silva and Argentine President Nestor Kirchner on March 16. That latter document, while avoiding the urgency of restructuring the international financial system altogether, asserted the principle that economic policies must not compromise growth, and committed both nations to "conduct negotiations with the multilateral credit agencies, to achieve a primary [fiscal] surplus and other political economy measures which do not compromise growth ... in such a way as to preserve also investment in infrastructure."

The Lima Declaration, instead, states from the outset that the cuts in expenditures and structural reforms "of the past years are correct policies, which we should continue pursuing"; declares "the most important objective" of fiscal policy is to maintain a "sustainable" ratio of public debt to gross national product; and, only then, pleads the case for infrastructure investments, with the emphasis on the verb "pleads."

The statement sufficiently spineless that the Finance Ministers of all the major South American countries plus Mexico felt comfortable signing it, including Mexico's University of Chicago free-trader Francisco Gil Diaz, and ex-World Bank official Pedro-Pablo Kuczynski, now reinstalled as Peru's economics minister. Kuczynski, the same day he signed the Declaration of Lima, rejected any idea that Peru would support the Copacabana Act, contemptuously telling Peru's Canal N that "Peru had the obligation to pay, and therefore it was fufilling its obligation."

Jacobins Promise 'To Set Fire' to Brazil in April

Lyndon LaRouche warned Brazilian leaders during his historic June 2002 visit to Sao Paulo, that they must act to change the economic system, before they face a Jacobin revolution. "Don't wait for chaos; it may be too late. France could have been saved before July 14, 1789.... Don't wait for July 14, 1789 to hit Brazil," LaRouche told the Commercial Association of Sao Paulo.

Now President Lula da Silva's balancing act between his social base and Wall Street is blowing up under him, as LaRouche warned. Joao Pedro Stedile, national leader of the Landless Movement (MST), a Jacobin force with a mass terrorist capability, declared at the end of March that the MST would "create hell for the government during the month of April, by carrying out mass land invasions. Right on cue, Luiz Antonio Nabhan Garcia, president of the Rural Democratic Federation (UDR), which contains a mix of producers and latifundistas, called upon farm owners to hire private security to protect themselves. The MST coordinator for the state of Pernambuco, Jaime Amorim, shot back that any farm owner who tried to stop them with force, would be met in kind. "If they kill one of ours, we will kill 10 of theirs," he promised.

The MST move came as a wave of strikes and protests erupted among Federal police, port workers, and others. On March 30, some 2,000 college and high school students demonstrated for four hours in Belo Horizonte, the capital of the state of Minas Gerais, demanding more openings in the state universities, and a change in the economic model. Leaders of the National Students Federation (UNE) and Brazilian Federation of Secondary School Students (UBES) announced that this was the first in a series of street protests. Marches in four other northeastern state capitals—Recife, Fortaleza, Aracaju, and Salvador—are already planned.

UNE president Gustavo Petta promised that his organization, the MST and the CUT labor federation would together "set fire to the country." He vowed to make April a "red" month, and, echoing Stedile, promised the students will "give hell" to Lula.

Brazil Gov't Coalition Cracking Over Economic Policy

The Democratic Movement Party (PMDB) is threatening to pull out of the government coalition—which it only formally joined last January—unless the Lula government adopts "more audacious policies" to stimulate growth and deal with unemployment. During a meeting of the PMDB executive March 24, economists Luiz Gonzaga Belluzo and Ernesto Lozardo harshly attacked the government's economic policy, while party president Michel Temer warned that the government must start reducing interest rates, and alleviating the tax burden, among other things. "If over a period of time, the government doesn't respond to any of these reflections... it's clear that there is no reason for our party to support it," Temer said. Lula needs the PMDB badly in Congress to get through his proposed legislation.

In another sign of waning support, federal deputy Miro Teixeira, leader of the government's bloc in the lower House of Congress (although not a member of Lula's Workers Party), announced March 24 that he would leave that post within 15 days. And, the Liberal Party (PL) and Popular Party (PP) are threatening to vote against key legislation, unless Lula follows through on promises to offer them positions in several government agencies. Opposition parties also refused an offer by Chief of Staff Jose Dirceu to form a "national pact" for economic development.

Driving the political crisis, is the worsening economic crisis. Unemployment in February rose to 12% nationally, according to the government statistical agency, IBGE, up from January's rate of 11.7%. The total number of unemployed in the country is now 2.5 million. The situation in metropolitan Sao Paulo, the industrial heartland of Brazil, is even more dramatic. Unemployment increased to 19.8% in February, up from 19.1% in January, and March is expected to be worse, at 20% or higher.

Argentina's Energy Crisis Hits Broader Region

Uruguay has entered what is being called a state of "energy collapse," because crucial imports of natural gas from Argentina have been cut off, in the wake of Argentina's own energy crisis (see Economics Digest). At a press conference in Montevideo on March 30, the trade union association of the state-run UTE utility company called for urgent measures to minimize the effects of Argentina's action. Notably, Julio Garcia of the AUTE association, attributed the Argentine crisis to the pressure being exerted by that country's private sector—privatized companies—for an increase in utility rates. Due to lack of natural gas, two of Uruguay's generating plants are now out of service.

In Chile, some economists are calling for trade sanctions and reprisals against Argentina, for failing to comply with the contracts it had signed to provide that country with natural gas. Finance Minister Nicolas Eyzaguirre has warned the Argentine government that unless a rapid solution is found to the problem of supplying Chile with gas, Chile will "change its energy policy" so as not to have to depend on gas. Mont Pelerinite nutcase Hernan Buchi, a former Finance Minister, chided Argentina for not paying its debt, adding "it's been clear for a long time that Argentina is unstable."

From Uruguay, there is some discussion of the need to create a "Mercosur Energy Bank," to be able to deal with regional crises of this nature.

Desperate Miner Becomes Suicide Bomber in Bolivia

The economic crisis brought yet a new crisis to Bolivia, when a former miner walked into the Congressional building when it was in session on March 30, threatening to detonate the 40 kilos of dynamite he had strapped to his body, unless his pension be paid. The police evacuated the building, but as they were negotiating with him, he blew himself up, killing himself and two policemen, and wounding, some of them gravely, another 10.

President Carlos Mesa went on national TV and radio, to insist that this was "an absolutely isolated event.... The nation should remain calm and be assured that there is no political motivation in this."

However, the government ordered security tightened on public buildings, fearing others might follow his example. A rumor had gone out during the incident that other unemployed miners were planning to force their way into Congress also. The President later announced that the pension system, privatized in 1997 by the just-ousted Gonzalo Sanchez de Lozada, would be reviewed, for possible changes, and that public pensions would be capped at $1,000 a month, so as to be have money to pay pensions to more people. There are an estimated 35,000 people who currently do not receive any pensions.

Oaxaca Governor Huntington Is Face of 'New U.S. Fascism'

Jose Murat, the PRI Party Governor of the Mexican state of Oaxaca who was the target of an assassination attempt in mid-March, published an article in El Universal March 27, titled: "Huntington, the New Fascist Wave." Harvard's Samuel Huntington and his ilk are the real threat to the U.S., not migrant labor, the Governor warned.

"Immersed in a vortex of video-scandals, the decision-makers and public opinion shapers have not comprehended the gravity of the fascist threat against our immigrants in the United States, coming from the new racist and xenophobic right, led this time by an ideologue of warmed-over conservativism, sold as the vanguard, and represented by Samuel Huntington, an adviser to U.S. security agencies," Gov. Murat warned. "The Mexican immigrant is not a source of impoverishment, as Huntington assumes, but is a generator of wealth and a pillar of strength of the U.S. economy, as John Kenneth Galbraith has pointed out. This is a tangible, empirical reality, not the excessive speculations of the new U.S. fascism. The real threat to U.S. stability is not the migrant worker, but the new fundamentalists of the racist right."

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