Ibero-American News Digest

IMF After Mexican Pension Grab: Now Go for the Oil!

In a Washington, D.C. press conference April 12, IMF Managing Director Rodrigo Rato "welcomed" Mexico's just-passed law opening the door to the privatization of the public sector pension system, but Rato emphasized that tax reform and "structural reforms like the energy sector" must follow. The London Economist of April 7-13 likewise drooled that this was "the first important structural reform in a decade"; the next measures need "to be reforms of tax and of Pemex, the state oil monopoly. The two are linked, and are just as urgent as state pensions."

On March 31, Mexican President Felipe Calderon signed the law "reforming" the huge ISSSTE pension and health-care system covering all federal public workers, except oil workers and the military. The politically explosive law, which no government had been able to get the Mexican Congress to approve for ten years, raises the retirement age and employee "contributions," and most importantly sets up individual accounts for pensions, similar to the de facto privatization of the social security system (IMSS) covering private sector workers from a decade ago.

Now the corrupt Congressmen and others who rammed the legislation through, are lining up to be given "administrative" control over the newly privatized pension funds.

Kirchner to IMF Chief: Bug Off!

On the eve of the annual IMF-World Bank meeting in Washington, Argentine President Nestor Kirchner sent a public message to IMF managing director Rodrigo Rato, who had used his April 12 pre-meeting briefing to once again criticize Argentine government economic policy for deviating from IMF rules:

"I am going to answer the President of the IMF: that they no longer can tell us what to do. That we have already seen what happened to us.... That the Argentines are making headway with our own ideas, and we have already forgotten about them. I am sure that there will not be another Argentine government that will go to ask them for instructions or money, because we know what hunger is. We know what we had to go through, the pressures we suffered, the number of unemployed, and the bankruptcy which the country went through, and the large indebtedness we had. Mr. Rodrigo Rato, with all due respect for your position, spend your time talking about somebody else, because we no longer remember you," Kirchner said in a speech announcing that the country now has reached a historic level of reserves.

What the IMF can't stand, is that the Kirchner government has adopted Franklin Delano Roosevelt's New Deal as the model for its policies, and as a result, Argentina is enjoying the greatest economic growth in real terms of any country in Ibero-America. (For more on Kirchner's New Deal policies, see "South America: Two Systems of Ideas Clash, And FDR Is at the Center," in InDepth, April 13)

Brazilian Government: Let Them Eat Money

"Clinically insane" is the only phrase that accurately characterizes the remarks issued April 4 by Brazilian President Lula da Silva's top foreign affairs adviser, Marco Aurelio Garcia, when he told the media that hunger in the world "is not a problem of lack of food, but lack of income."

Garcia's remarks—which are characteristic of the Baby Boomer generation's magical belief that economics is based on money, as opposed to physical production—are all the more stunning coming from a top spokesman for the Lula government, whose number one policy priority has purportedly been "Fome Zero" ("Zero Hunger").

Garcia's remarks were issued in response to April 3 comments by Cuban President Fidel Castro that the global biofuel offensive, in which Brazil is a major player, means the "internationalization of genocide."

Lula's self-proclaimed "obsession" with ethanol has clearly gotten the better of him ... and his advisors. As for Castro, he was simply doing what he does best: setting off international controversy with remarks that, in this case, were very much to the point.

Brazil Stalls Nuclear, Prefers Colonial Sugar Plantations

Completion of Brazil's half-built but long-stalled third nuclear plant, Angra 3, was put off again, when the April 3 National Energy Policy Council meeting where Angra 3 was on the agenda, was simply cancelled. Science and Technology Minister Sergio Rezende, who has been campaigning for approval for more than a year, now says that the decision will be made within the next two months, possibly by June. He's still gung-ho, telling the press, that given the price of oil and global warming, every country in the world is turning back to "renewable nuclear energy, which is even more secure today." Energy Minister Silas Rondeau finally came around, and in mid-March for the first time endorsed completing Angra 3, but the Environment Ministry is fighting fiercely.

If Brazil doesn't expand its nuclear industry, that industry will die, as the first generation of engineers and technicians which built Angra 1 and 2 reach retirement age, with no new generation trained to replace them.

President Lula, who cannot decide on saving Brazil's nuclear program, is currently "obsessed" with expanding sugar cane for ethanol. He did also find the political will to order the Science and Technology Ministry to set up a national network of research institutes working on climate change, which will advise the government on what measures Brazil must take to keep the sky from falling.

IDB Bio-Fuel Proposal for Mexico Is Pure Fascism

A report on "Feasibility of Ethanol and Biodiesel" for Mexico, sponsored by the Inter-American Development Bank and the German government's Technical Cooperation (GTZ) agency and coordinated by Mexico's Secretary of Energy, openly states that for production of ethanol in Mexico, "the net economic result is negative in all cases" with current prices of ethanol, because the raw material, particularly sugar cane, is very expensive, due to labor costs. The report, which was promoted at an April 2 Washington, D.C. seminar, goes on to suggest the "creative" revamping of the "extant social pact" among labor and the sugar cane industry, so that labor agrees to reduce their wages and benefits in order to "extend" their jobs and double the labor force in the industry, following "the Brazilian model" of slave labor.

The report, which was originally released in November 2006, adds that an added benefit is that Mexico, by saving on CO₂ emissions, will be able to issue "carbon bonds" in the financial markets.

Water Wars Between the U.S. and Mexico

The U.S. 9th Circuit Court of Appeals gave the go-ahead in early April for the Bureau of Reclamation to line the All-American Canal with concrete to prevent seepage. The canal parallels the California-Mexico border, and such a step would cut water to Mexico.

Both proponents and opponents of the plan are caught in a lose-lose situation, which can only be overcome by initiating water management programs such as the North American Water and Power Alliance (NAWAPA), and nuclear-powered desalination, as Lyndon LaRouche has emphasized.

Proponents of the plan to line the canal say it would provide 67,000 more acre-feet of water, enough to meet the needs of more than 500,000 homes in San Diego County, California. Opponents, who sued to block the project, say it would devastate farmers in the Mexicali Valley in Mexico, who rely on the canal's seepage to replenish their aquifer.

The 82-mile canal, fed by Colorado River water, was completed in 1942. It feeds crops along both sides of the border in an area about 100 miles east of San Diego.

Opponents of the $200 million project include both environmentalists and business interests. They say lining the area's 23 miles of canal will dry up tens of thousands of acres of Mexican farmland, cause wells to become polluted, and threaten migratory birds by eliminating wetlands. That in turn, they say, could cause significant job losses and other economic problems on both sides of the border.

The court said Mexico already gets 1.5 million acre-feet of Colorado River water a year under the terms of a 1944 treaty and is entitled to no more.

Argentine Daily Warns of Biofuel Bubble Bursting

The Argentine Internet daily Infobae raised the relevant question on April 10: "Are biofuels a green business, or a new 'dot-com' bubble destined to burst?"

Biofuels are the 21st Century's "gold fever," it states, given the high oil price, fears over energy security and global warming. But, "there are those who are beginning to compare this euphoria with the boom in IT investments in the 1990s, when the dot-coms grew artificially, without the necessary and sustainable balance, and ended up generating a bubble whose implosion left thousands of victims in its wake."

Infobae doesn't report that the bulk of investments going into biofuels are from speculative hedge funds and other financial vultures.