From Volume 4, Issue Number 19 of EIR Online, Published May 10, 2005

Ibero-American News Digest

South American Officials Discuss Greater Cooperation

High-level officials from Chile, Argentina, Brazil, and Uruguay, in an intense meeting of "Mercosur's Progressive Parties," held in Montevideo, Uruguay April 28-29, discussed the need for a common strategy to deal with the major issues facing the region, including the foreign debt. Argentina's First Lady, Sen. Cristina Fernandez de Kirchner, who was one of the five Argentines participating in the meeting, argued the case for a common strategy toward the multinational creditor agencies. "I'm not talking about creating a debtors' club, but about having each of our countries moving in the same direction," she said, particularly in rejecting the IMF's constant lunatic demand for higher primary budget surpluses solely to generate debt payments.

The Chilean delegation was led by the Socialist Party's Michelle Bachelet, the front-running Presidential pre-candidate. From Brazil came President Lula's Chief of Staff Jose Dirceu and key foreign policy adviser Marco Aurelio Garcia; the Argentine delegation also included Nestor Kirchner's Chief of Staff Alberto Fernandez and Labor Minister Carlos Tomada. Uruguay's Foreign Minister Reinaldo Gargajo and Education Minister Jorge Brovetto made up that country's delegation.

Mrs. Kirchner is a Senator from Santa Cruz, and a political leader in her own right, who has had a great deal to say about the IMF's insane demands on her country. She will most likely be running for Senator from Buenos Aires province in the October legislative elections.

Officials Calm Frictions Between Argentina and Brazil

Leaders of Argentina and Brazil have begun mobilizing to reduce the tensions which had been building between the two countries over the past two weeks. The tensions reached a boiling point on May 2, when the Argentine daily Clarin published several stories asserting that Argentine Foreign Minister Rafael Bielsa had ordered a "hardening" of the Foreign Ministry's stance against various Brazilian initiatives, with which Argentina reportedly disagreed.

Brazil's Foreign Minister Celso Amorim and former Argentine President Eduardo Duhalde were among the officials who issued statements to cool down any potential conflict between the two countries. Both men indicated that, given the magnitude of the undertaking in which both nations are engaged—economic integration and cooperation—problems are to be expected. "But I don't see any serious problems," Duhalde said to reporters on May 3.

In remarks to the press in Paris on May 2-3, Amorim emphasized that Brazil has "a very good relationship with Argentina.... [O]n essential matters ... our positions are very similar, and have been very well coordinated." As for the Clarin story, Amorim said he thought "there is a lot of smoke in all this ... a lot of grist for the media, but nothing that worries us." Amorim did suggest, however, that perhaps Brazil had made mistakes regarding Argentina, and should help more economically, such as buying more oil and wheat from Argentina. Brazil should also have an "industrial policy in which BNDES (National Economic and Social Development Bank) could be used to finance investments in Argentina."

Clarin then reported on May 4, that an angry Argentine President Kirchner had called his Foreign Minister, to dress him down for making derogatory remarks in public about Brazil. Kirchner was said to be especially angry that Bielsa attacked Brazil at precisely the moment that First Lady Cristina Fernandez de Kirchner was in Montevideo holding discussions with top Brazilian government officials, on the possibilities for joint cooperation vis a vis the IMF and the foreign debt. For the President, coordinating with Brazil on these issues is a priority—although Brazil has been less than supportive in backing Argentina's fight with the IMF. The discussion with Brazilian officials in Montevideo was said to have been very serious and friendly.

Rumsfeld Admits He's Dumber Even Than 'the Markets'

"Anyone with an ounce of sense knows that the market is a lot smarter than government," said Defense Secretary Donald Rumsfeld, pontificating May 3 on the benefits of the free market for the impoverished nations of Ibero-America, in his speech to the annual conference of David Rockefeller's Council of the Americas. Speaking as if he was lecturing small children, Rumsfeld ordered the governments of the hemisphere to start "behaving in a more mature way," and accept "economic freedom," rather than constantly claiming that "somebody's causing poverty, somebody big, somebody evil, ... somebody's making us poor." The problem is, he said, is that nations aren't "willing to defer an immediate appetite or pleasure [like food?] in favor of a longer-term benefit," which is supposed to result from killer free-market policies. People have to be able to tolerate the "bumpy" times that sometimes occur with the free market, Rumsfeld advised, and resist the temptation to go to a more "controlled system," in which "they demand more."

The Mexican daily La Jornada aptly characterized Rumsfeld's speech as in the tradition of what decorated U.S. Marine General Smedley Butler had denounced in 1933 as those military men willing to be "a high-class muscle-man for Big Business, Wall Street, and the Bankers."

Mexico City Mayor Cleared of Wrongdoing

Newly appointed Mexican Attorney General Daniel Cabeza de Vaca dropped charges against Mexico City Mayor Andres Manuel Lopez Obrador, after President Vicente Fox ordered Cabeza de Vaca to conduct an "exhaustive review" of the case when he had just been sworn in at the beginning of this week. On Sunday, April 24, about a million people gathered at Mexico City's major plaza, El Zocalo, to protest the attempt to put Lopez Obrador on trial, and thus exclude him from next year's Presidential race. Three days later, Attorney General Rafael Macedo, who had started the prosecution, was asked to resign.

Commentators and analysts in Mexico characterized the Fox government's about-face, as an "unconditional surrender," as the real intent of the case was to outlaw Lopez, the leading pre-candidate for the Presidential elections.

Macedo had tried to jail Lopez on charges of contempt of court, after a judge had ordered him to stop the construction of a road to a hospital. The new AG, Cabeza de Vaca, dropped the charges because the legal code laid out no specific punishment for that kind of alleged offense, so no trial was possible, which is what Lopez lawyers were contending from the outset.

Fox stated from Jamaica, on an official visit, that the decision was a bid to "remove obstacles to dialogue and open up space for a legitimate, clean election, truly fair play."

Moves To Privatize Chile's State Copper Company

The now-open debate on allowing private investors to participate in Chile's giant state copper firm, Codelco, is a foot in the door toward the privatization which Gen. Augusto Pinochet's former Mining Minister, Jose Pinera, has sought, since he revamped the country's mining regulations, to favor foreign private investment, in 1981.

Recent statements by Codelco's executive president Juan Villarzu, to the effect that now is the time to permit private capital to participate in the company, "and open Codelco to the market," unleashed a heated debate on how to obtain financing for future copper projects. Alberto Arias of Goldman Sachs investment bank suggested Codelco's "partial privatization," with possible 20% private investment, was a great idea. Why? These "fresh" funds could help develop the local capital market to allow the private pension funds, the AFPs set up by Pinera, to "participate in Codelco's growth!"

Opponents of this privatization scheme warn of a government giveaway, noting that the $15 billion, which Codelco executives say the company is worth, is far below its real worth, which is closer to $1 trillion. To offer private investors a 20% participation in the company "would be a giant fraud against the Chilean state," warned Julian Alcayaga, president of the Committee for the Defense and Recovery of Copper. "This is a covert way of moving toward privatization in the next few years."

Codelco's former general manager Orlando Caputo also points out that while Chile has increased its participation in the world copper market, Codelco's participation has actually decreased. Why? Because six large foreign mining conglomerates (Anglo American, BHP Billiton, Noranda, etc.) have vastly increased their participation over the last ten years, "directly related to increased [foreign mining] investment Chile has allowed as well as the handover of mining deposits."

Cuban-Venezuelan Alliance Deepened

Venezuelan President Hugo Chavez and Cuban leader Fidel Castro discussed their project for a "Bolivarian Alternative for the Americas," in opposition to the Bush Administration's efforts to create a Free Trade Accord of the Americas, during Chavez's state visit to Cuba April 27-28.

A highlight of Chavez's trip to Cuba was the announcement that the Venezuelan state oil company PDVSA "plans to use Cuba as its center of operations in the Caribbean," and toward that end, is setting up an operating base there. In effect, Cuba would be participating in the newly-formed PetroAmerica, as the PetroCaribe branch, and would primarily be involved in trade, storage, and transport of oil. Venezuela is currently providing 90,000 bpd of oil to the island-nation, whose lack of energy resources is considered the regime's Achilles' heel. The Chavez government also announced the opening in Cuba of an office of the Industrial Bank of Venezuela, and a variety of other bilateral deals.

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