In this issue:

Brazil and France See Eye-to-Eye on Iraq

Policy Paradox in Lula Government on Display at Porto Alegre and Davoc

Rio de Janeiro State Defaults on $20-Million Debt Payment

Can Venezuela Avert Civil War? Or Will Chavez Blow Things Up?

Colombia Liquidates Public Service Provider for Cali

FARC To Build Youth Movement Among Former University Students

Argentine Bishop Cites LaRouche as Leader of Global Opposition to IMF Looting

Narco-Legalizer George Soros Blows Gasket at Argentine President's Criticism of IMF

Gutierrez's 'War Economy' Policy Sets Off Protests

From Volume 2, Issue Number 5 of Electronic Intelligence Weekly, Published Feb. 3, 2003

Ibero-American News Digest

Brazil and France See Eye-to-Eye on Iraq

Brazil and France have "identical" positions on Iraq, French President Jacques Chirac said in his joint press conference with Brazilian President Lula da Silva, following their Paris meeting Jan. 28. For his part, Lula said any unilateral U.S. attack on Iraq would be "madness," Folha do Sao Paulo reported Jan. 29. He expressed his sympathy for the American population for the Sept. 11 attacks, but added: "Any person can carry out any insanity, but a state cannot." Brazil's position is that more investigations are needed in Iraq, and then it is up to the UN Security Council to decide what to do, he said.

In a reception hosted by the Brazilian embassy in Paris later that evening, Lula was questioned by French Socialist Party members about his relations with U.S. President Bush. Folha's correspondents said Lula answered that Bush had treated him with great consideration when they met in December, but that "he is obsessed with Iraq," and therefore the matters which are important to Brazil and Ibero-America are off the U.S. radar screen.

Foreign Minister Celso Amorim reportedly joked while in Paris, that Brazil has no plans to form "an axis of criticism" with France and Germany against the United States. Amorim also commented to people that it is Lula's intuition that Bush lost the "timing" for war, and would like to see some movement by some country, group of countries, or institutions, which would allow him to avoid the war, but without losing face.

Policy Paradox in Lula Government on Display at Porto Alegre and Davoc

Brazilian President Luiz Inacio Lula da Silva spoke before Teddy Goldsmith's World Social Forum in Porto Alegre, Brazil on Jan. 24, and before the World Economic Forum in Davos, Switzerland on Jan. 26, promising to both that he would implement two irreconcilable policies.

In Davos, for example, Lula called for a "new world economic order," in which countries "unite around a world pact for peace and against hunger." He proposed the Group of Seven nations (the U.S., Britain, Canada, Italy, Japan, France, and Germany) create a fund to fight poverty in the developing sector, pressed for "urgent" land reform, and urged "more discipline" in international capital flows.

His Treasury Minister Antonio Palocci, however, after meeting with the IMF's Deputy Managing Director Anne Krueger in Davos, assured the press that "what is done, is done," and the Lula government will stick by Brazil's IMF accord, signed by the previous Cardoso government. He said Brazil must pay its debts, and therefore will increase the primary budget surplus to over 4%, and will continue the privatization of the state banks. (By definition, a primary budget surplus means those government revenues above all expenditures except debt service, which surplus is then used to pay the debt.)

Central Bank president Henrique Meirelles (representing the Bank of Boston's interests) also told reporters that the law formalizing Central Bank autonomy will be ready for Congress by March. The model for the law is the Bank of England, he said.

Foreign Minister Celso Amorim, however, representing the more nationalist currents in the government, denounced the neo-liberal program as a model which "simply does not function.... We cannot keep trying to adulate the market every minute.... The role of government is to govern," he told a Davos press conference. Amorim also went after the Mexican model of integration with the U.S. under NAFTA, pointing out that maquiladora investments flee at a moment's notice, just like speculative capital.

Rio de Janeiro State Defaults on $20-Million Debt Payment

The Brazilian state of Rio de Janeiro has defaulted on a $20-million debt payment to the Federal government, Bloomberg reported Jan. 30. The state's Undersecretary of Finances, Henrique Bellucio, said the first priority was to pay salaries of state workers, which meant missing the payment to the government.

Rio de Janeiro's action underscores the problem of many indebted Brazilian states, which want the Lula government to offer them some kind of debt relief, and had pressured for that in the period leading up to last October's elections. At that time, and now, Lula's staff had been adamant about not giving in to the states—a position also held by the IMF. Rio Governor Rosinha Matheus had gone to court after the Federal government seized 86 million reals in state tax revenues to cover for debt payments missed earlier, but lost the case.

Can Venezuela Avert Civil War? Or Will Chavez Blow Things Up?

At the close of January, there appeared to be a break in Venezuela's national civic strike, which began on Dec. 2, 2002, and corollary moves toward negotiations to resolve the strike, which seeks to bring down the regime of President Hugo Chavez. The devastating economic effects of the strike upon both public and private sectors, combined with new international mediation initiatives led by former President Jimmy Carter and the "Friends of Venezuela" group formed at the initiative of the Lula government in Brazil (the United States, Mexico, Chile, Portugal, and Spain join Brazil in the group), have gotten the opposition and the Chavez government back to the negotiating table, at least for the moment.

The lead proposal currently under discussion, is for the Chavez regime to agree to permit the legal steps required to change the Constitution, so as to shorten the Presidential term from six to four years, and the legislative terms from five to four. That could permit new elections later this year.

Whether this can pull Venezuela back from the brink of civil war, remains to be seen. The opposition, which had said it would accept nothing less than President Chavez's immediate ouster, has said it would discuss the Carter proposal, and is winding down the strike, as they consider other tactics. Banks, schools, and retail and commercial centers are reopening.

What happens with the oil industry, has yet to be decided. The government has succeeded in upping oil production from its low of 200,000 barrels a day, to a bit over 1 million barrels a day, as some portions of the state oil company's labor force have gone back to work. Getting the government to rescind its firing of over 5,000 striking managers and workers, however, may prove a sticking point for any agreement.

The factor of Chavez's lunacy, combined with the outright terrorist wing of his movement, is another big question. Speaking before a special "Solidarity with Venezuela" act during the annual confab of the World Social Forum in Porto Alegre, Brazil on Jan. 26, Chavez threatened to unleash the "Che Guevara" model throughout South America, should his leaving office become a real possibility. If the Venezuelan oligarchy breaks the government, he ranted, "It will show the rest of the peoples of the continent that there is no point in struggling peacefully and democratically for change, and it would be necessary to think of other means." He made the threat of armed insurrection exploit: "I had a gun in my hands. I put it away. I would not want to use it again.... But if the oligarchs of the continent do not understand that the changes are inevitable ... the telluric force of this continent will erupt, and as Ernesto ['Che'] Guevara once said, 'the cries of battle and the flash of gunfire' will sound."

Colombia Liquidates Public Service Provider for Cali

Emcali, the state company responsible for the provision of water, electricity, and communications services to 500,000 users in Cali—Colombia's third-largest city—was liquidated by the Federal government, after it decided that Emcali's $193-million deficit made it "unviable." In addition to its operating deficit, Emcali also was responsible for $410 million worth of pensions and social security payments, which it was unable to meet. Attempts to bring the company into the black have been ongoing for five years.

Mayor John Maro Rodriguez called the Federal government's ruling, which will lead to least 4,000 layoffs, a "lethal blow" to the city, and announced he would not accept the decision. An emergency meeting of the City Council is being held, and the Emcali union has declared itself "in permanent assembly." Another company will reportedly be created to take Emcali's place, but what happens to the original agency's debts and obligations is anybody's guess.

FARC To Build Youth Movement Among Former University Students

Enrollment in Colombia's universities, both public and private, has dropped by 50% due to the economic crisis, and 80% of the students who remain, receive some form of financial aid. This provides a perfect opportunity for the narcoterrorist FARC, which is concentrating its activities on a national recruiting drive—lowering the profile of their military actions, while building up forces for an all-out offensive when the economy collapses completely, which they view as likely within three to six months. The FARC flaunted their targetting of students for recruitment recently, by bringing in a group of journalists to observe a student "cadre school." They are boasting that they will create a new military front, called "Los Universitarios," from the ranks of these students.

Argentine Bishop Cites LaRouche as Leader of Global Opposition to IMF Looting

Argentine Bishop Hector Aguer, speaking on his Jan. 29 television program, cited American Presidential candidate Lyndon LaRouche as the U.S. politician who is leading the global opposition to IMF-World Bank looting. Monsignor Aguer praised the accuracy of LaRouche's forecasts in his interview with former Peruvian President Alan Garcia's brother-in-law and former top economic adviser, Daniel Carbonetto, a man who himself is not entirely unfamiliar with LaRouche's work.

Aguer has taken the lead, within Argentina as a whole, and within Roman Catholic circles internationally, in organizing for an end to the genocide perpetrated through the fraudulent mechanisms of the foreign debt. In August 2000, he warned that Argentina would be buried as a nation, should it continue paying the debt. In December 2001, when the government fell because of the debt crisis, he issued an Open Letter, demanding Argentinians give up their "cowardly attitude toward the creditors," who are trying to collect on billions of dollars which Argentina never received, but which were cooked up as debt "through arbitrary and unilateral changes in interest rates and morally unacceptable fees. In fact, they have already collected their original loans, which were multiplied through financial alchemy ... [and] murky accounting entries," he wrote.

On May 26, 2002, LaRouche representative Dennis Small was a guest on his radio program, where the two discussed LaRouche's New Bretton Woods solution to the debt crisis; Aguer expressed his hope that LaRouche's thinking would "find an echo also in Argentina."

Narco-Legalizer George Soros Blows Gasket at Argentine President's Criticism of IMF

Drug legalizer George Soros became unhinged at the annual meeting last week of the World Economic Forum in Davos, Switzerland, when Argentine President Eduardo Duhalde criticized the IMF. Duhalde had the misfortune to be seated next to Soros at a Davos panel entitled "Globalization at the Crossroads," in which the Argentine President merely suggested that globalization was "unjust," adding that IMF policies had caused crises in Argentina and all of Ibero-America over the past decade.

This was apparently too much for Soros: When asked by a reporter for La Nacion what kind of solution he sees for Argentina, Soros sputtered, "There is no solution for Argentina." Asked about the measures the government should take, he angrily shouted "What government? First you need to have a government." Argentina's problem is due to the fact that it borrowed too much money, he said, adding that its default "showed investors that they can lose all their money if they bet [only] on certain countries." Apparently, his own investments in Argentina aren't in such good shape, as he told the same reporter that he was in a "very complicated" situation in the country.

Gutierrez's 'War Economy' Policy Sets Off Protests

Predictably, the imposition of a "war economy" by Ecuador's new President, Lucio Gutierrez, set off immediate protest, and calls for Gutierrez to fire his economics team. The announcement of a 35% increase in gasoline prices and freezing of public-sector wages enraged the trade unions, indigenous and peasant organizations, and others who had voted for Gutierrez, based on his promise to find "imaginative," rather than IMF, solutions to Ecuador's economic crisis. Instead, they charged, he has opted for the same old neo-liberal policies demanded by the IMF.

Barely five days after Gutierrez's inauguration, leaders and legislators of indigenous organizations threatened to join with peasant and other sectors in mass demonstrations, to demand the ouster of Finance Minister Mauricio Pozo, while transportation workers and taxi drivers want an immediate increase in fares. Gutierrez is pathetically justifying the austerity measures, explaining they are not a "band-aid, but part of a four-year plan" to allow future governments to aid the poor. Insiders suggest that this guy may not be around for long.

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