From Volume 5, Issue Number 41 of EIR Online, Published Oct. 10, 2006

Ibero-American News Digest

Morales: Bush Team Is Fomenting Bolivia-Paraguay War

Bolivian President Evo Morales has accused the Bush Administration of orchestrating a new "Chaco War" between Bolivia and Paraguay, to destabilize his nation and the region. On Sept. 11, Morales charged that the Bush Administration is behind a "campaign to get us to fight each other," as occurred 70 years ago when Standard Oil and Royal Dutch Shell manipulated the two nations into the brutal 1932-35 Chaco War, as they sought to grab the region's oil wealth. "They want to bring us to war, but that won't happen," Morales vowed.

In recent weeks, tensions between the two nations have escalated in ways that fit the Bush/Cheney scenario for unleashing regional warfare, documented by EIR last year. Paraguayan legislators and media charge that Venezuela's military assistance to Bolivia is proof of a Bolivian "arms race" that threatens Paraguay, possibly including an aerial attack on the country (a ludicrous charge, considering that Bolivia has no air force). Tensions increased following a Sept. 18 incursion by Bolivian soldiers into Paraguay, after which one Paraguayan Senator called for a greater military presence in the Chaco region, before "some Venezuelan general" occupies it.

A key suspect in fanning conflict between the two nations is U.S. Ambassador James C. Cason, a high-level Bush intelligence operative who served as Chief of Mission at the U.S. Interests Section in Havana from 2002-2005, where he played a particularly provocative role in promoting Bush's "transition to democracy" agenda. His 2005 transfer from Cuba to Paraguay makes sense only if he is being deployed to advance the Bush/Cheney regional war plans. He is particularly cozy with neo-con Vice President Luis Castiglioni, the Dick Cheney ally who arranged for Donald Rumsfeld to visit Paraguay in mid-2005, and meets frequently with legislators to hear their complaints about the Duarte government. In August of this year, Cason and Castiglioni together inaugurated the new U.S.-financed and equipped anti-drug military base, which many see as evidence of planned U.S. aggression in the region.

"This is not a time for war. It is a time to fight together against poverty and in favor of regional economic integration," Bolivia's Defense Minister Walker San Miguel stated during his Sept. 27 visit to Paraguay's capital Asuncion. San Miguel was sent to Asuncion to officially apologize for remarks made by Bolivia's Deputy Interior Minister earlier in the week, when he insulted Paraguay's President by accusing him of being a "liar."

San Miguel assured the Duarte government that Bolivia does not seek war with Paraguay, and that Venezuela's military assistance is focussed on advancing economic development, rather than aggression against neighbors. "At this crucial time in my country's economic history," San Miguel said, "the government is safeguarding its natural resources, so they may be used for the benefit of our people, and nothing more."

Brazil's Presidential Elections Head to Second-Round Vote

Brazilian President Lula da Silva failed to win 50% of the vote in the Oct. 1 elections, and now faces a run-off Oct. 29 against conservative free-marketeer Geraldo Alckmin of the Brazilian Social Democratic Party (PSDB). Lula had reportedly expected to "coast" to a first-round win against the politically inexperienced Sao Paulo governor. Instead, he came away with 48.7% of the vote against Alckmin's 41.6%.

Media spin is that the electoral outcome was due to corruption scandals that have plagued Lula's Workers Party (PT) and government. The PSDB, led by the very corrupt former President Fernando Henrique Cardoso, deployed heavily in the last week charging that the PT had accumulated large sums of money to influence the election. Political analysts predict a nasty, "violent" campaign leading into the second round.

But the real issue in this election is economic policy. The large number of poor Brazilians who remain loyal to Lula weren't about to vote for Alckmin, but they have benefitted little from Lula's economic policy, which was the application of orthodox IMF policy since his 2002 election. Moreover, Lula offered little evidence that he intended any dramatic policy change, despite maintaining a foreign policy opposed to globalization. Wall Street is salivating over Alckmin's higher-than-expected vote, as the Sao Paulo governor is promising to impose "fiscal restraint" and more neo-liberal economic "reforms."

Nonetheless, under conditions of global financial collapse, there is a good deal of banker nervousness about what Lula might do should he win. A worried London Economist uses its most recent editorial to warn Lula not to stray from his "responsible macro-economic policy," or even contemplate following the path of "populist" Venezuelan Hugo Chavez, chiding him for abdicating regional leadership to Chavez, and giving the Venezuelan a "global forum."

Vulture Funds Seize Argentine Deposits at N.Y. Fed

Having refused to participate in the restructuring of Argentina's debt, in hopes of getting a better deal, two of Wall Street's most notorious vulture funds, NML Capital and EM Limited, have now joined forces with a group of Wall Street lobbyists, "businessmen," and anti-Castro Cubans in the Republican Party—the so-called "Latino Coalition"—to argue that they are justified in seizing $105 million that Argentina's Central Bank has deposited at the New York Fed. The pretext? President Nestor Kirchner is allegedly a "dictator."

In their case before New York Federal Judge Thomas Griesa, the two funds say they are justified in seizing the $105 million because, like Venezuela's Chavez, Kirchner has taken control of all of his nation's institutions, including the Central Bank. NML lawyer Robert Cohen states that the Central Bank and its assets "are under the complete control of the Kirchner Administration. We believe that such control makes those assets available to satisfy the sovereign debt in the United States and other countries, and that is what the new case will demand." Afraid that the U.S. Treasury might intervene on Argentina's behalf, as it has done in the past, one of the vulture fund lawyers warned, "I don't think the Treasury wants to support a President who is doing in Argentina what Chavez is doing in Venezuela."

The Latino Coalition sponsored a conference Oct. 3 entitled "Venezuela and Argentina: The Hemisphere's Troubling New Axis." Former Assistant Secretary of State Roger Noriega, and Clinton Administration UN Ambassador Susan Soderberg, pointed to Argentina's growing "financial dependence" on Venezuela, and warned of the danger of Argentina sharing its nuclear technology and know-how with Chavez. "We need to shoot straight about [Kirchner's] nuclear program," Noriega said. "We're talking about Chavez now. That we're concerned about these policies."

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