From Volume 5, Issue Number 3 of EIR Online, Published Jan. 17, 2006

Ibero-American News Digest

Fox and Crew Make Another Stab at Privatizing Mexico's Oil

On Jan. 3, Sen. Manuel Bartlett, a nationalist from Mexico's PRI Party, sounded the alarm that the government of Mexican President Vicente Fox is trying to privatize the national oil company Pemex before leaving office at the end of the year, La Jornada reported Jan. 4.

Bartlett attacked draft legislation presented by PRI Sen. Genaro Borrego which would permit 20% private ownership of Pemex. "This would begin the privatization of the national company.... Everything that they [the Fox government] propose, every proposal is to privatize and open up the energy sector.... For five years, a clear majority has defended the nationalist thesis of the Constitution" requiring state ownership of oil, against the Fox offensive. "That is the goal of this government, and they are desperate because they are about to go," he charged.

Mexicans Mock Fox Spokesman on Employment Lies

Mexico's Fox government made itself once again the object of ridicule on Jan. 9, when Presidential spokesman Ruben Aguilar announced that migration to the United States had fallen because of the government's social programs, and over 80% of the people who emigrate have fine jobs in Mexico, but they decide to go to the U.S. for cultural reasons! He was citing the spurious conclusions of a survey of Mexican migrants carried out by the Pew Hispanic Center, released in December 2005. Aguilar's implication that Mexicans leave their homes and families by the tens of thousands for "cultural" reasons set off a storm of ridicule in Mexico.

There are things that we simply cannot cover up, Cuauhtemoc Martinez, head of the manufacturers' association, Canacintra, responded. One million to 1.1 million people seek to enter the labor force every year, while only 500,000 jobs are created, along with some 150,000 "jobs" in the informal sector. Mexico does not have sources of work in either number or quality. To solve the migration problem requires economic solutions at home, the industrialist pointed out.

IMF Chief Descends on Brazil

International Monetary Fund chief Rodrigo Rato visited Brazil Jan. 10-11, ostensibly to mark that nation's payment of the last $15 billion the country owed the Fund. Quite a contrast with Argentine President Nestor Kirchner's use of the occasion of Argentina's paying off its IMF debt to denounce IMF crimes against his nation! Rato, Brazil's Economics Minister Antonio Palocci, Central Bank chief Henrique Meirelles made clear they sought to solidify the home front, before Kirchner arrives for a state visit on Jan. 18.

Rato, former Finance Minister in the government of Spain's former Prime Minister Jose Aznar, arrived in Brazil on Jan. 10 to deliver orders to the restive government of Lula da Silva that it had better "stay the course." The IMF will continue to play an important role as advisor to Brazil, despite Brazil's no longer owing the IMF any money, he said; my mere presence here shows our close relations.

Rato laid out the conditions the vultures expect Brazil to meet, if it wishes to receive the investment-grade rating the bankers' faction keep telling the President is required to entice foreign investors: Pass the law granting full central bank autonomy; ensure no slippage in the gigantic fiscal surpluses being channelled into debt payments; rip up labor regulations (I did this in Spain, Rato bragged); reduce state-"directed credit" programs which provide lower-cost loans to specified productive activities (nationalists have warned that behind this demand lurks the intention of shutting down the national development bank, BNDES, altogether); and eliminate constitutional requirements that certain percentages of the budget go to health care, social programs, and education.

Brazilian Economics Minister Antonio Palocci, under heavy fire from within the Lula government for pushing these very policies, used Rato's presence to insist that Brazil would indeed carry them out.

Economic Policy, Not Corruption, Is Threat to Brazil

Monetarist economic policy, not corruption, is doing the greatest harm to Brazil, the Governor of the state of Parana, Roberto Requiao, charged on Jan. 2, reports O Estado de Parana. A leading member of the Brazilian Democratic Movement (PMDB) and close collaborator of former National Economic and Social Development Bank chief Carlos Lessa, Requiao told a radio interviewer that the political corruption which obsesses the press is really an issue for the police and for the Congress. "It is a serious problem, but it is a small problem relative to the damage wrought by Brazil's economic policy," which is "extremely conservative and monetarist," and has created economic stagnation, he said.

Requiao also revealed that, after five or so statewide meetings of the PMDB Party to discuss the proposed economic platform drafted for the party under the direction of Lessa (see EIR Oct. 14, 2005), the PMDB national leadership stalled on convoking the meetings planned in the remaining states. Requiao, a potential Presidential candidate, said he is not interested in running, unless the national debate over the needed changes in economic policies is revived. Without proposing changes, why run? he asked.

Bush Administration Blocks Brazilian Sale to Venezuela

The Bush Administration is blocking the sale of Brazilian training planes to Venezuela's Air Force, as well as impeding maintenance of Venezuela's American-made F-16s, Venezuelan President Hugo Chavez revealed in a Jan. 11 address to military officers in Caracas. Therefore, Venezuela is considering replacing its F-16s with Russian MIGs, and is prepared to get training planes from countries such as Russia or China, should the Brazilian deal fall through, Chavez said, as he launched into a diatribe against the United States.

After Chavez's speech, Brazil's Foreign Minister Celso Amorim confirmed that the U.S. is attempting to block the sale of the 24 Super Tucano planes made by the Brazilian company, Embraer, on the pretext that the transfer involves U.S. technology used in the planes' navigational equipment. Brazil continues to discuss the matter with the U.S., because it believes any such restriction would be "counterproductive" to the dialogue Brazil has sought to encourage between its two friends, Venezuela and the U.S., Amorim said. Brazil opposes the idea of imposing restrictions simply because some country agrees or disagrees with the domestic policy of another.

"Venezuela is a peaceful country" which doesn't represent a threat to anyone. People should not be shortsighted; if Venezuela doesn't buy from Brazil, it's going to buy from somebody else, Amorim added.

Will Bankers' Boys in Uruguay Break Up Mercosur?

Factions inside Uruguay are trying to break up the Common Market of the South (Mercosur), pointing to Chile's "successful" model of free-trade agreements with the U.S. as an alternative. On Jan. 6, Uruguay's Finance Minister, pro-IMF banker Danilo Astori, reported that the Tabare Vasquez government had begun informal talks with the Bush Administration on a possible free-trade agreement. He then went out of his way to lavish praise on the Chilean "model of economic growth," which he said was far preferable to what Nestor Kirchner is doing in Argentina. U.S. Senator Mel Martinez (R-Fla), who visited Argentina last week as part of a Republican Congressional delegation, told a Buenos Aires radio station that a trade agreement with Uruguay is almost ready for signing.

Any such agreement would violate Mercosur's statutes and require Uruguay to leave the customs union. While there is not uniform support for this inside Uruguay—more radical factions of the ruling Frente Amplio coalition are opposed, as is Foreign Minister Reinaldo Gargano—Astori may have convinced President Vasquez that he is better off lining up with the United States. In Paraguay, which last year had also talked of signing a free-trade deal with the U.S., the daily ABC enthusiastically praised Uruguay's "moderate socialism" in its Jan. 12 edition, likening it to "the successful Chilean model."

Meeting in Brasilia Jan. 11, Brazilian Foreign Minister Celso Amorim and his Argentine counterpart Jorge Taiana discussed the matter. Amorim warned that no Mercosur member can sign a separate trade agreement without leaving the bloc. He added, however, that Uruguay's actions were a "wake-up call," and that Brazil in particular is positioned to do more to assist smaller member countries like Paraguay and Uruguay.

Bolivia Battles for Control Over Its Oil and Gas

On Jan. 8, Andres Soliz Rada, member of President-elect Evo Morales' transition team, denounced the Spanish hydrocarbon company Repsol-YPF for listing Bolivia's San Alberto and Margarita natural gas fields as part of Repsol's own reserves—which is not true—in its filings for the New York Stock Exchange, in order to boost its stock earnings. He called this a Federal crime in the U.S., and fraud in Bolivia. Repsol-YPF has been playing hardball with Bolivia, refusing to negotiate any change in their contract. When the President-elect visited Spain on Jan. 6, Repsol-YPF executives demanded that his government offer "juridical security" for their investments.

One of the leading issues uniting the disparate interests that elected Morales, is the urgency of re-nationalizing the oil-and-gas industry, which was privatized for a pittance in the 1990s. In his international travels last week, Morales received promises from Venezuela's Chavez and from the Chinese government, at least, for help in developing a re-nationalized industry, including developing domestic uses of its natural gas, which today is almost entirely exported. No specific agreements were announced, as Morales will not be sworn in until Jan. 22, but last February, China's state oil company, Shengli International, and Bolivia's reconstituted state oil company, YPFB, had agreed to draw up ideas for how Shengli could work with YPFB on domestic projects such as converting cars to natural gas fuel and installing gas distribution for Bolivian homes.

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