From Volume 5, Issue Number 30 of EIR Online, Published July 25, 2006

Ibero-American News Digest

LaRouche to Mercosur Summit: We Need Large-Scale Development Programs, Now!

On the eve of the July 20-21 summit meeting of Mercosur (the Common Market of the South) in Cordoba, Argentina, attended by 10 heads of state from across South America, EIR's Lyndon LaRouche issued a statement supporting Mercosur's efforts to launch major regional infrastructure and other development programs.

"We have been fighting for this since 1982," LaRouche stated, "with the presentation of our study 'Operation Juarez.' Now times have changed, conditions have changed, but in principle, the same thing is required. We have to reorganize the debts of the hemisphere, so we can use the pooling of the debts as a source of credit, under treaty agreements among nations. Because we need large-scale development programs now, especially with the world system collapsing the way it's collapsing." LaRouche's historic 1982 study "Operation Juarez" is available in Spanish at

LaRouche added: "We have been posing this policy for decades, and we recommend it to people today. Obviously, our sympathies are with what Mercosur is trying to do on this basis. What Mercosur may be able to do would be a vehicle for getting something like this into motion. And so we wish you success in this stage of your continuing adventure."

Mercusor Development Bank Endorsed at Summit

The final communiqué issued by the Mercosur Summit on July 21 endorses the proposal brought to the summit by Argentine Finance Minister Felisa Miceli for the establishment of a Mercosur Development Bank. After Venezuelan President Hugo Chavez made an initial proposal in this regard some months ago, officials at the Argentine Finance Ministry began collaborating with their Venezuelan counterparts and have been working for the last three months on the details, in consultation with other member governments. Brazil's support was crucial to moving forward with the proposal.

The plan is that the bank will be capitalized with some portion of each member country's reserves now on deposit in foreign banks or lending agencies, for the purpose of creating a financing mechanism independent of the IMF and World Bank, and the austerity conditionalities attached to those institutions' loans. Having paid off their debts to the IMF, Brazil and Argentina are considered to be in a much stronger position to guide this process. Reportedly, new permanent Mercosur member Venezuela has offered to put $5 billion to help capitalize the bank.

The ministers also agreed to set up a $100-million fund to provide development credit, to be initially managed by Brazil's National Economic and Social Development Bank (BNDES) and Argentina's state Banco de la Nacion. Other state-run banks should also participate.

Finance Minister Miceli also announced that the Mercosur countries will formulate a "common position" for the next annual IMF/World Bank meeting in September.

'We Face Historic Challenges' Kirchner Tells Mercosur Presidents

"We have a great historic responsibility," Argentine President Nestor Kirchner told the opening session of the Mercosur summit in Cordoba, Argentina on July 21. Regional integration and Mercosur "are not mere rhetorical issues," he said. "Mercosur is an instrument for the integral development of our countries...for energy and infrastructural integration...a strategic project."

Difficulties in the process are to be expected, he underscored, especially in a region that has been looted as much as South America has. But no one should think that Mercosur has failed because two or three countries have differences. "Those who continue to think that individualism or xenophobic nationalism are the solution to our peoples' problems, will try any way they can to ensure that this integration process fails."

Integration takes work, Kirchner said. "It is a process that must combine persistence and tenacity on a daily basis with clarity as to our strategic path.... We are advancing." There is greater understanding of the difficulty "of going beyond the concept of integration as a strictly economic agreement to the vision of a political community oriented toward the productive and social development of our people.... We're not interested in a region of the world where economic integration exists alongside poverty, exclusion, unemployment ... and lack of industrial development."

Kirchner emphasized an issue that was a focus of the summit: that the disparities within the common market, affecting smaller member-states Uruguay and Paraguay, must be addressed now. The issue "is not which country is slicker and can obtain more benefits for itself," he said. "Solidarity must be the banner which guides our actions.... Integration must be fair for everyone." Kirchner reported on the plan to set up a special fund to provide development credit to smaller economies, and on the proposed development bank "which will give us the financial means to concretize our plans."

Brazilian President Lula da Silva, who now takes over from Argentina as Mercosur's President pro-tem, called for expanding the body to become a "Merco-America" that would include the region "from Mexico to Patagonia," as well as Cuba. He too emphasized that Brazil, Argentina, and Venezuela must respond with generosity to Paraguay and Uruguay, even if they have to go against local interests within their own countries.

Uruguay's Finance Minister and Paraguay's Foreign Minister both said at the summit that they wanted to make bilateral free-trade deals with countries outside Mercosur—the United States. Paraguay's Leila Rachid was explicit. If Paraguay's problems in Mercosur aren't resolved, she warned, her government will have no option but to leave.

Drug Gang Rampage Will Spread without Job Policy: Governor

Sao Paulo Governor Claudio Lembo warned on July 16 that a new "Canudos War" could soon spread across Brazil, with drug gangs deploying "waves of the poor and wretched in acts of violence" against the state. Lembo made the comparison of today's crisis to that bloody late-19th-century war in a dramatic interview with Folha de Sao Paulo. What became known as the Canudos War of the 19th century was an uprising against the authorities of the state of Bahias in Brazil's impoverished northeast by 30,000 poor peasants, led by a charismatic monk who preached that the world was coming to an end. The rebellion lasted from 1896 to 1897, and withstood four assaults by regular Army troops. It was finally put down when a force of more than 10,000 soldiers armed with cannon reduced the rebel encampment to rubble, and killed all of its inhabitants.

Last week, squads under the control of Brazil's Colombian FARC-linked PCC drug gang carried out some 421 coordinated attacks in the city of Sao Paulo and other cities in the state, killing at least eight people, burning dozens of buses and garbage trucks, and attacking police outposts and offices. Transport came to a halt, and stores and schools were shut at one point. In May, the PCC had carried out five days of systematic attacks on Sao Paulo alone, a "week of horror," as people call it, in which at least 46 people were killed.

Without using the word, Governor Lembo placed the blame for this descent into a New Dark Age upon globalization. Lembo told Folha that while last week's wave of drug gang attacks on Sao Paulo appears to have died down, they will occur again, not just in Sao Paulo, but in other states across the country, and across all of Ibero-America. The traffickers are using guerrilla methods, attacking and retreating, deploying "waves of extremely economically fragile people, he said. The "endemic misery" in which millions live across Ibero-America has created a "dramatic cultural cauldron. Today, all of Latin America faces a very great risk," he warned. Governments are either very pro-American, or, as always, turn their back on Brazil to eye Europe; they must instead "think of social integration."

The hard core of the PCC itself is not so large, maybe 1,000-5,000 people, in his view. But the danger comes because "that organization is using waves of poor and wretched in acts of violence," particularly the youth. Repression can stop an outbreak, "but if there is no great social project for Brazil's large cities, we are going to have very grave situations throughout the country. The situation of poverty is dramatic." He repeated: "The problem is extremely serious. It's the unemployment, it's the disintegration of nuclear families."

Pinochet Synarchists on the Offensive vs. Bachelet

The same crowd that helped Henry Kissinger and George Shultz install Augusto Pinochet in power in Chile in 1973—British asset Agustin Edwards and his daily El Mercurio—is charging Chilean President Michelle Bachelet with incompetence, weakness, and lack of leadership, to try to break her government. After having been hammered by these Synarchists for weeks, accused of failing to deal effectively with student protests, increased crime, and severe flooding in the south, Bachelet removed her Interior, Education, and Deputy-Finance Ministers July 14, replacing them with Christian Democrats who, at first glance, appear to shift the ruling Concertacion government in a more conservative direction. The new Deputy-Finance Minister is a free-market man.

These fascists are also attempting to sabotage Chilean-Argentine economic cooperation, as well as the government's focus on regional integration. After Argentine President Nestor Kirchner recently imposed a tax on gasoline sold along the border with Chile, and since he may be forced to curtail natural gas exports to Chile as well, the right-wing Alliance for Chile has demanded a boycott of Argentine products, and has accused Bachelet of being "weak" in defending Chile's interests. Foreign Minister Alejandro Foxley, a Christian-Dem free-marketeer, slammed Argentina, reportedly without consulting Bachelet. El Mercurio, cackled on July 16 that "the certainty that the Argentines can no longer be trusted has now been established" in the Bachelet cabinet.

Yet, on July 15, Bachelet reiterated that her government would "insist on the integrating effort based on a policy of regionalism ... and seek new initiatives for integration and cooperation that will allow us to find common solutions to common challenges." She said that the Alliance for Chile's "strident and unwise" tone borders on "irresponsibility." She met with Kirchner in Cordoba on July 21.

Chilean Mayor Files Criminal Charges Against Endesa

The mayor of Hualqui, in Concepcion, Chile, filed charges against the Spanish utility company Endesa, after it became known that Endesa opened the gates of the giant Ralco and Pangue dam in Alto Bio Bio, supposedly for "technical" reasons, flooding the surrounding area and causing great damage and many deaths. The company, historically a front for British and other Synarchist financial interests, acted unilaterally, without ever warning the population or the local government of its plans.

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