From Volume 38, Issue 8 of EIR Online, Published Feb. 25, 2011

Ibero-American News Digest

When the Economic Crisis Hits Stomachs

Feb. 18 (EIRNS)—Mass forces in Bolivia today joined a 24 hour strike called by the nation's largest trade union federation, the Bolivian Labor Federation (COB), to protest food scarcity and high prices, and to demand an increase in the minimum wage. Another round of protests is scheduled in all nine departments (provinces) to begin on Feb. 21.

The trigger for the growing mass struggle in Bolivia was succinctly put by COB Executive Secretary Pedro Montes: "The economic crisis which the country is suffering affects the stomach of every Bolivian."

Crop Destruction, High Food Prices: Will Mexico Be the Next Egypt?

Feb. 16 (EIRNS)—Associates of Lyndon LaRouche in the Mexican state of Sonora report that the enormous crop destruction caused by frosts earlier this month has plunged the country into total crisis. An estimated 1.4 million hectares of wheat, corn, and produce sown for the 2010-11 Fall-Winter harvest have been wiped out in the states of Sinaloa and Sonora, and to a lesser degree, in Chihuahua, Durango, Coahuila, and León. While the government of President Felipe Calderón fiddles, peasant and farm leaders, as well as legislators, warn that resulting food shortages and high prices could cause a social explosion.

What makes the situation so volatile is that Mexican agriculture was already decimated, as a result of years of British free-trade policy imposed under the North American Free Trade Agreement (NAFTA). Once able to produce enough corn, wheat, and vegetables to feed its population, Mexico today is entirely dependent on food imports to meet national consumption needs. The crop destruction that just hit the North could be the final shock that unleashes an Egyptian-style response from an angry population.

A legislator from Sonora told members of the LaRouche Youth Movement (LYM) that the Calderón government is doing very little to address this crisis. In a Feb. 16 speech, the President admitted there is an emergency, but offered only token help. Agriculture Secretary Francisco Mayorga insists "there is no food crisis" in the country, and that the government will guarantee adequate food supplies, temporary jobs, tax breaks, etc.

But the $100 million fund available for disaster relief is a pittance. In southern Sonora alone, estimated losses stand at $250 million. Frost destroyed 113,000 hectares—500,000 tons—of wheat, and 50,000 hectares of produce. In Sinaloa, where 500,000 hectares of white corn, the key ingredient for tortillas, the main staple of the Mexican diet, were wiped out, estimated total losses are $3.3 billion—the equivalent of the state government's entire annual budget!

A farmer himself, this Sonora legislator reported that he had just introduced a bill demanding immediate government action, including declaring the affected area a disaster zone, and providing subsidies, credits, tax breaks, help in purchasing seeds, etc. Meanwhile, in order to prevent a total catastrophe, farmers are racing to plant substitute crops within the next 15 days. But in some areas, there is a shortage of seeds.

Food prices were already shooting up before this tragedy hit, and will now soar. According to the Independent Agriculture Workers and Peasants Union (CIOAC), between June 2010 and Feb. 14, 2011, the price of a kilo of garlic rose by 19%, squash by 4%, onion by 25%, carrots by 113%, eggs by more than 4%, papaya by 47%, bananas by 37%, and tomatoes by 80%. During the same time frame, the price of milk rose by 56%, the tortilla price by a whopping 100%, and the price of beans by 79%—-all these are products that are part of the daily Mexican diet.

Too bad, says Mayorga. "Very little" can be done to contain food prices, he stated on Feb. 17, as increases represent the "natural behavior" of the markets when faced with a scarcity of products!!

Fearful of Cholera Infection, Haitian Farmers Won't Harvest Rice

Feb. 16 (EIRNS)—In Haiti's rich Artibonite Valley, known as the country's "rice basket," farmers and day-laborers are afraid to go into the paddies to harvest rice, because they fear cholera infection from the water. This means a smaller food supply.

These fears are not unfounded. Because rural areas lack any sanitation infrastructure, local canals and rivers are used for everything—latrines, washing clothes, and food, and as drinking water. The Artibonite River was thought to be the source of Haiti's original cholera outbreak last October.

The repercussions will be felt nationwide. There will be less food sent to the capital of Port-au-Prince; families that normally travel from north to south, to work as day laborers on farms, won't do so this year.

In a recent government survey, 90% of Artibonite respondents said the water-cholera link has greatly affected them. Meat prices in local market have tripled, because people fear eating fish from the river; laborers who do agree to work, charge a premium, cutting into farmers' already small profits.

FAO official Etienne Peterschmitt told the Toronto Globe and Mail that cholera "just terrorized" people in the Artibonite; they didn't dare leave their homes, or have contact with anyone. One farmer says, "Our life depends on the rice we harvest. Since we have no other option, we'll have to start over again ... starting from scratch." The impact of this situation is expected to be felt throughout 2011. Farmers who aren't able to sell at market, will plant less this Spring, and when that crop is harvested, they'll have less to sell.

London's Carry Trade Is Driving Brazil Back to the Dark Age

Feb. 17 (EIRNS)—The manufacturing sector in Brazil is "running serious risk of extinction," the president of Brazil's Machinery and Equipment Industry Association (ABIMAQ), Luiz Aubert Neto, charged in a Feb. 10 call to arms. He pointed to the policy of favoring speculation over production, chiefly by high interest rates, as responsible for this calamity. Although Neto doesn't say it, those high interest rates are the key lure for the international carry trade, which is central to London's Inter-Alpha Group's operation.

As Lyndon LaRouche has been warning, this nation, which, not 30 years ago, was one of the up-and-coming industrial powerhouses of the developing world, its potential centered in its aerospace and nuclear sector, is now at the point of imploding, looted bare by London's carry trade.

Neto wrote that ABIMAQ has been ringing alarm bells that Brazil risks being reduced to a deindustrialized, denationalized, primary commodities-producing country for three years, and that warning now has been proven correct. In 2005, 60% of the machinery used in the country was made in Brazil, and 40% imported. By 2010, that ratio had inverted: 60% was imported, and only 40% nationally produced. In 2010, the machinery and equipment sector invoiced 12% less than pre-crisis (pre-2008) levels, but imports of machinery and equipment were 32.9% higher in 2010 over 2009, and 14% more than 2008.

"If this isn't deindustrialization, what is?" Neto asked. And it will bring unemployment and technological backwardness over the medium and long term."

ABIMAQ Head Challenges Banco Santander Lies

Feb. 17 (EIRNS)—When Alexandre Schwartsman, chief economist of London's key agency in Brazil, the Inter-Alpha Group's Banco Santander Brasil, attacked the Brazilian government's plan to cut its budget by R$50 billion as "very little, very late," the president of the Brazilian Machinery and Equipment Association (ABIMAQ) Luiz Auberto Neto fired off an immediate response, nailing Schwartsman on the policy that is killing Brazil: usury.

Schwartsman's demand for far deeper budget cuts was published on Feb. 17 in Folha de Sao Paulo, just days after he had demanded that the SELIC benchmark interest rate be jacked up to 13% by this June, from its already insane 11.25%, a move which, among other things, would radically increase the cost of Brazil's public debt. Schwartsman complained that the 2011 budget, even with cuts, is still going to be more than the 2010 budget in absolute terms, and thus, he argued, the government will not be able to cough up enough money to meet interest payments—the interest payments which his London owners are determined to increase.

In a letter published in Folha de São Paulo the very next day, Neto replied that Schwartsman "forgot to report" that Brazil will spend close to R$230 billion in interest payments on the public debt and currency reserves. "The R$50 billion which the government intends to cut represents only 21% of the transfer of income which goes only to one sector"—the financial sector. Any Brazilian family which had a cost like that solely for interest payments would be ruined.

"And that is what has been happening with the family of Brazil for the last 20 years. The high interest rate policy (defended in your column) is destroying the foundation of the family of Brazil, because investments in health and education do not represent a fifth of what we pay in interest. And you only have to look at the social indicators to see where the family of Brazil finds itself. Could your family survive with a cost like that?"

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