From Volume 4, Issue Number 51 of EIR Online, Published Dec. 20, 2005

Ibero-American News Digest

Argentina Fights To Get Out from Under IMF Dictate

As he announced his decision Dec. 15 to pay off the entirety of Argentina's debt to the IMF, President Nestor Kirchner challenged the premise that "reality is untouchable ... or that not to do anything new is the only realistic option."

Kirchner brought together provincial governors, mayors, labor leaders, legislators, the heads of the armed forces, and business leaders, at the Casa Rosada (the Presidential palace) to be present for his announcement that Argentina would pay the $9.8 billion owed to the Fund, using reserves. It is his explanation of why his government had made that decision, which gained Kirchner the support of leading layers of the country, and has made the financiers and their IMF nervous:

"For a very long time, we have been instructed in impotence and told that we can't do anything," the President said in his address, which was broadcast to the nation. "They wanted to make us believe that we are worthless, that we don't have the ability or persistence to stand up for ourselves, as a nation. They wanted to instill in our soul the certainty that reality is untouchable; to convince us that our difficulties are so great, that it were better for nothing to change. They wanted to make us believe that not to do anything new is the only realistic option," he said.

The debt to be paid to the Fund, Kirchner said, "has been a constant vehicle for interference, because it is subject to periodic review and is a source of demands and more demands... The International Monetary Fund has acted toward our country as a promoter of, and vehicle for, policies which provoked poverty and pain among the Argentine people." The relationship with the IMF had led to a "real addiction to indebtedness, in which our creditors increasingly raised interest rates, toughened their auditing, control, and demands." With this $9.8 billion payment, President Kirchner emphasized, "we are burying a good portion of the ominous past, that of infinite indebtedness and eternal adjustment."

LaRouche Comments on the Argentine Debt Decision

The Ibero-American countries all know that the George W. Bush Administration is not in the greatest shape, and they are taking the occasion to get out and get themselves free of as many sources of threat as possible. This takes the form of concessions; but these are concessions to end concessions, EIR's founding editor Lyndon LaRouche noted on Dec. 16, about the decision to repay the IMF. "They are saying: 'We did the nice thing by paying you. You demanded it; now why don't you be reasonable?'"

So, the IMF is no longer the creditor. LaRouche continued. What about the other creditors, or the ones who claim to be the creditors, who may not be recognized as creditors in good standing? If the Argentines and others start to say: "Well, we did this nice thing with the IMF, now why aren't you nice to us?," then it just screws things up, but good. Because there is a fiduciary relationship between the IMF and these countries; there's not a fiduciary relationship between private interests and debtors, many of whose debts are highly doubtful in character.

What's going to happen is that the ability to impose regulation on these countries' internal balances is ended, he added. None of these other creditors has the power to demand—that is, with the force of regulatory authority—that they obey. They are just ordinary creditors, that's all. They have no special juridical authority.

So, if I were sitting in IMF headquarters, I'd treat that nice gesture as a threat. It sounds like fun, LaRouche concluded.

Brazil Pays Off IMF, Too

Two days before President Nestor Kirchner's announcement (see above), the Brazil's Lula da Silva government announced Dec. 13 that it would pay the remaining $15.5 billion Brazil owes the IMF, out of its reserves. Brazil's economic officials, who made the announcement, did not attack the IMF, instead, they claimed their payment was a show of the success of their economic policy, which faithfully adheres to IMF orthodoxy. London's Financial Times voiced financier expectations Dec. 14, that it is now "inevitable" that Brazil will next begin to pre-pay its gigantic—$200 billion, at the current exchange rate—sovereign debts to private interests.

There are reports, however, that Presidents Lula and Kirchner had discussed these actions, when the two met with Venezuelan President Hugo Chavez during the Mercosur summit in Uruguay on Dec. 8-9. The role of Venezuela's government in the decision was to agree to increase the amount of Argentine bonds it will buy.

Reflecting financier nervousness over all this, the Wall Street Journal growled Dec. 16 that Kirchner's announcement "marked a hostile rupture with the Fund," contrasting it to Brazil's, which IMF managing director Rodrigo Rato "welcomed enthusiastically." Rato did welcome Argentina's decision, but quickly pointed out that it faces many "economic challenges" ahead, suggesting that Argentina would do well to follow Brazil's example in applying "coherent" and "prudent" economic policies.

Argentina's new Finance Minister Felisa Miceli has already indicated that she intends to change the "dialogue mode" with the Fund. On Jan. 15, the government will present the IMF with a document outlining its policy goals and how to achieve them, and Miceli has made clear to the IMF's Rato that she will only discuss implementation—not the goals themselves.

U.S. Congressmen Warn Andean FTA Foments Drug Trade

The reinvigorated anti-free-trade sentiment within the U.S. Democratic Party was demonstrated again, in the Nov. 7 letter sent by 24 Congressmen, led by Rep. Jan Schakowsky (D-Ill), to U.S. Trade Representative Robert Portman, warning that the current push by the Bush-Cheney Administration for an Andean Free Trade Agreement "may well jeopardize the viability of a stable, prosperous rural sector in the region, leading to the very real possibility of increased coca production and, consequently, transnational crime." The Congressmen cite a report prepared by the Colombian Ministry of Agriculture, which estimates that the income of traditional farmers "could experience a total reduction of 57% in income and a 35% reduction in employment in the nine major agricultural sectors." Similar results have been estimated by others for Ecuador.

The letter also warned that overly rigid enforcement of patents by Washington could mean that access to essential medicines would become largely impossible for the poorest in the Andean countries, leading to "increased levels of disease and premature death." The Congressmen cite figures compiled by the Peruvian Health Ministry, some 700,000 to 900,000 Peruvians could lose access to key medications.

'Ethno-Fascist' Humala Climbs in the Polls

Demonstrating the political vacuum in Peru today, the Presidential candidacy of nazi-communist Ollanta Humala has begun to rise dramatically in the polls, and currently stands at over 20%, taking the number two slot.

While much can change between now and the April 2006 Presidential elections in Peru—including the possible emergence of former President Alberto Fujimori as a serious political contender—the sudden rise in popularity of the neofascist Humala option (especially viewed in connection with the possible Presidential victory of cocalero candidate Evo Morales in neighboring Bolivia), threatens major destabilization and chaos in the Andes over the coming year.

Humala, who until recently served as President Alejandro Toledo's military attache in South Korea, is a retired lieutenant colonel who, together with his brother Antauro Humala, heads up the Peruvian National Party, an ethno-fascist movement which models itself on the Italian "Fascisti" blackshirts, and which has capitalized on widespread discontent within the population over the disastrous and weak Toledo regime. It is explicitly racist, anti-Semitic, xenophobic, and has documented links to the drug trade.

Brother Antauro made the headlines on New Year's Day 2005, when he and 100 heavily-armed followers seized and occupied a police station in the south of the country, murdering four policemen, and then surrendering en masse to the authorities. That "uprising," a typical fascist propaganda ploy, not unlike the 1923 Munich putsch that thrust Hitler into the limelight in Germany, used the Humala's "indigenist" banner to capture the imagination of desperate students, workers, and peasants (especially Peru's coca farmers), who have turned the Humalas into folk heroes.

Second Round Needed in Chilean Presidential Election

Chile's Presidential elections will go to a second round on Jan. 15, after the candidate of the governing Concertacion coalition, Socialist Michelle Bachelet, failed to win 50% of the vote on Dec. 11. Bachelet won 46%, followed by "centrist" free-marketeer Sebastian Pinera of the National Renewal (RN) party with 25.5%, and Joaquin Lavin, the Mont Pelerinite knuckle-dragger who was formerly the Mayor of Santiago, of the Pinochetista UDI party with 23.3%.

Former Defense Minister Bachelet, who was jailed and tortured by Pinochet in 1975, has said nothing to indicate she will break with the current government's "miracle" free-trade policy, although she has committed herself to addressing Chile's growing poverty, and to "reform" the privatized pension system to make it more equitable. The Kirchner government in Argentina has expressed support for Bachelet—Mrs. Cristina Kirchner has met with her more than once.

Billionaire Pinera, who made his money from the Pinochet regime's corruption, is the brother of the infamous pension privatizer and Cato Institute fascist, Jose Pinera. Lavin has thrown his forces behind Pinera for the second round, and they hope to siphon off votes from a demoralized Christian Democracy, which, while a member of Bachelet's Concertacion coalition, is factionalized.

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