Latin American and the Caribbean weekly bulletin in English and Spanish
Issue 30, 13-18 October 2001

Contents

1. International news on sovereign external debt

2. War on terrorism?

3. International economics and politics

4. Latin America and Caribbean economics and politics

5. Human rights violations and corruption

6. Protests against financial globalisation and war

7. Articles

8. Campaign actions

9. Forthcoming events

Turkey (October 16): Turkey is hoping to secure up to $9bn in fresh loans from the IMF after the bulk of a $15.7bn package from the IMF and World Bank runs out this year. Turkey says its earlier plans to close an expected financing gap of around $12bn with the help of borrowing on international markets have been hampered by the fallout from the attacks on the US. Turkey's problems have been exacerbated by a loss of faith in the government after a devastating devaluation in February caused the collapse of an IMF-backed programme. Kemal Dervis, the economy minister brought in to great acclaim after the devaluation, has been loosing popularity as the economy has continued to shrink instead of recovering as he promised it would in the second half of this year.

Italy (October 17): Italy's centre-right government plans to set up an independent agency for the management of the country's sovereign debt, a job currently done by officials inside the Italian treasury. In a move that follows similar action by the UK, French and German governments, Mario Baldassarri, Italy's deputy treasury minister, said the government aimed to set up the new agency as soon as possible. Italy has one of the highest ratios of debt to GDP of any EU country and the figure is about 110% of GDP.

From a Press Release from the Uganda Debt Network (UDN)

Uganda (October 17): The Co-ordinator of the Uganda Debt Network, Zie Gariyo has been shot by gun men late last evening and it has not yet been established whether they were mere robbers or an attempt to assassinate him. He is now lying in Mulago Hospital in critical condition. Mr. Gariyo was expected to give a keynote address at the Youth Conference to mark World Poverty Day yesterday morning and later in the afternoon another one at a Public Dialogue. Zie Gariyo is a renown anti-corruption activist who is advocating for pro-poor policies to lift the standards of living of the poor people of this country. His latest campaign in this regard has been for government to reduce its expenditure on expensive vehicles and instead increase expenditure the monies put aside for availability of social services to the people.
E-mail: udn@africaonline.co.ug Website: www.udn.or.ug

Argentina (October 17):

In recent days, the Argentine government has presented domestic pension funds and banks with a plan for swapping about $30bn of high-yielding government bonds they hold for new securities paying much lower interest. Two credit rating concerns, Moody's Investors Service Inc. and Fitch Inc., cut their ratings on Argentine debt Friday to low levels on grounds that the government was apparently using its power as a regulator of local financial institutions to force them to take losses on their bonds. If those bondholders do incur losses after the details of the exchange are clear, Fitch said, it will "consider the debt exchange a default event." "Argentina is not solvent by any stretch of the imagination," said Michael Mussa, who recently left the IMF, where he served as its chief economist.

EU/Pakistan (October 17): The European Commission proposed opening up the EU's markets to textile and clothing imports from Pakistan to help cement that country's role in the international coalition against terrorism. The proposal Tuesday by the commission, the EU's executive body, must be approved by the 15 EU member governments in what will be a test case for the balance between geopolitics and domestic lobbying. However the use of trade policy to help the campaign against terrorism has upset European textile manufacturers. "The textile and clothing industry is paying for a purely political gesture," says Bill Lakin, director general of Euratex, a Brussels-based industry lobby group.

Argentina (October 17): The American assurance company Standard & Poor yesterday triggered some uncertainty with regard to the debt swap the Finance Ministry is negotiating with the pension fund administrators AFJP. They warned the Argentine government that it could drop it to one of the lower levels of qualification ("selective default") if it does not guarantee the operation be voluntary and safeguards the interests of investors. A reduction of the qualification of the Argentine debt to this level could lead to a sudden increase in the country’s risk assessment and complicate Finance Minister Domingo Cavallo’s attempts to bring down interest rates. The government will continue ahead with the operation, despite criticism.

Switzerland/Honduras (October 17): Switzerland donated one million dollars to Honduras on Wednesday, to be used for the reduction of external commercial debt. The donation comes as part of a program approved in the past month by the World Bank in an effort to reduce the debt load of Honduras. Under this program, the government of Switzerland is donating one million dollars, the government of Norway is donating the same amount, and the World Bank will donate $900,00. The program for debt reduction has been initiated by the International Association for Development, which is calling on other countries to donate as well, hoping to reduce the debt of Honduras by 38 million dollars. The current external debt is 4 billion dollars.

2.War on terrorism?

Anthrax (October 15): Yesterday the Red Cross reported that 'since last September 16' they have had to abandon a Kabul laboratory where they were making 'animal vaccinations, including those used for carbuncle', i. e. the disease which, under the name of anthrax, is terrifying a goodly part of the population of the United States. The laboratory had been running for four years.

A Court to Try Terrorists (October 16): The United States is considering setting up a military court to try the perpetrators of the terrorist attacks. 'An act of war cannot be treated as a common crime', say officials from the Justice Department and the Senate Judicial Committee, who are analysing the possibility. They hold that a special military or other type of court would expedite the process and avoid having to disclose intelligence methods, not permitted in the current American legal system. A military court would also restrict the rights of the accused. Trials would be held behind closed doors and the burden of proof would be less onerous for the prosecution. Secret evidence could be admitted and the accused would have a restricted right to claim the Fifth Amendment, that is to refuse to testify so as to avoid implicating themselves. Essentially it would facilitate conviction.

Germany (October 16): The Green Party, the eco-pacifist junior partner in the German government coalition yesterday distanced themselves for the first time from the military operations in Afghanistan and called for a 'pause in the bombing’ to allow aid to the refugees. The German Prime Minister, social democrat Gerhard Schröder, dismissed the proposal as 'the personal opinion' of some Greens.

Red Cross (October 16): An International Red Cross compound in Kabul has been damaged by U.S. bombing. Warehouses containing grain and humanitarian aid supplies were destroyed and an Afghan security guard was slightly injured. The Afghan Red Cross team tried to salvage some of the goods, covering their faces with cloth to pass through the clouds of smoke, managing to recover some blankets, medicines and tents.

Germany (October 17): German Prime Minister, social democrat Gerhard Schröder, yesterday rejected the plan proposed last Monday by the Greens, junior partner in the government coalition, to interrupt the bombing of Afghanistan so as to be able to provide aid to the refugees. He threatened the Greens with ‘serious consequences’ if they were to persist with this idea. There are certainly echoes here of a possible break in the SPD (Social Democrats) – Green coalition. Schröder stressed that Germany 'would shortly have to provide more assistance to the operations, particularly military’.

India (October 17): Colin Powell, US secretary of state, on Tuesday attempted to stop military skirmishing between Pakistan and India over the disputed territory of Kashmir but succeeded in antagonising New Delhi by intervening in what it sees as a bilateral issue. Rising passions on Kashmir between the two nuclear-armed neighbours represent a diplomatic headache for the US as it seeks to sustain its international coalition against terrorism. Mr Powell said resolving differences over the province was central to improving relations between Pakistan and India - a line promptly rejected by New Delhi. India, which on Tuesday said it would continue to take "punitive action" in Kashmir to stamp out cross-border terrorism that it says is sponsored by Pakistan, has traditionally rejected third-party mediation over the dispute.

EEUU/Afganistán (October 15): President Bush forcefully rejected another offer from the Taliban to begin talks about the surrender of Osama bin Laden if the United States stopped bombing Afghanistan. "When I said no negotiations, I meant no negotiations," Mr. Bush said. He added that he was not interested in discussing Mr. bin Laden's innocence or guilt. "We know he's guilty," he said.

3. International economics and politics

Kofi Annan/UN (October 13): Declaring that the United Nations was rising at last to the mission for which it was created in 1945, the Norwegian Nobel Committee awarded the Nobel Peace Prize to Secretary General Kofi Annan and to the international organization itself.

This year's prize was especially significant because it marked the 100th year that it was awarded. In Oslo, the Nobel committee chairman, Gunnar Berge, stressed that the body "wishes in its centenary year to proclaim that the only negotiable route to global peace and cooperation goes by way of the United Nations."

World Food Summit (October 16): The United Nations Food and Agricultural Organisation is expected to announce within days whether the World Food Summit due to be held in Rome early next month will be postponed. Although the proportion of hungry people worldwide has declined from 37% in the 1960s to 17% now, population growth has meant the absolute numbers have only decreased from 956m in 1969-71 to 777m in 1997-99.

IMF and WB meetings in Ottawa (October 18): The delayed autumn meetings of the International Monetary Fund and the World Bank have been rescheduled to take place in Ottawa next month. The meetings were originally due to be held in Washington in September but were postponed following the September 11 attacks on the US. The meetings will be held jointly with the Group of 20 (G20) in the Canadian city on November 17. The G20 had planned to meet on that date in New Delhi. The IMF said the meeting would focus on the global economic outlook following the attacks, in particular their impact on the poorest countries and preparations for the forthcoming United National Conference on Financing for Development.

AIDS (October 17): A Medical Research Council report made public yesterday in South Africa estimates that 40% of deaths of South Africans between the age of 15 and 49 are AIDS-related. It says one in four pregnant women attending public health clinics carry the AIDS virus. A decade ago, the figure was one in 100. Average life expectancy is expected to drop from 54 years at present to 41 by the end of the decade. At that time, about 780,000 people will be dying each year from AIDS, the highest number in any country.

  4. Latin America and Caribbean economics and politics

Tourism in Cuba (October 14): The slump in the main source of dollar income for Cuba in the last fortnight has been in the order of 10% and it is thought this could soon be 25%. A large part of the population are affected; not only are jobs disappearing in the hospitality industry but also the small authorized private sector is feeling the consequences. Further, a sharp contraction in remittances sent home by exiled Cubans is expected. Last year Cuba received some 1,800.000 tourists: it was estimated that two million would visit in 2001, providing approximately $2,000 million gross income for the sector, compared to annual Cuban exports of $5,000 million.

Venezuela and OPEC (October 16): Venezuelan President Hugo Chávez declared yesterday in Brussels that a rise in oil prices is 'urgently needed'. At the same time he said he was ‘very concerned' that the U.S. military operation might spread to other oil producing countries. Chávez would not give a clear answer with regard to a future oil summit, but announced that he will extend his current world tour to Iran, Saudi Arabia and probably also Russia. 'We are campaigning to restore balance to the market', he said at the end of an interview with the President of the European Commission, Romano Prodi, and in reference to recent meetings with Algerian and Libyan Presidents, Abdelaziz Buteflika and Muammar Gaddafi. Last Sunday Chávez made surprise visits to Algeria and Libya to discuss the current international situation with them.

Argentina (October 15): Argentina's governing center-left coalition was heading toward a stinging defeat in key legislative elections, a loss that could further complicate the government's attempts to stem the growing financial crisis in Latin America's third-largest economy.

According to exit polls and early official results in key districts around the country, the main opposition Peronist Party chalked up major gains as angry voters sought to punish the governing Alliance coalition headed by embattled President Fernando de la Rua, who came to power two years ago.

Peru (October 16): Peruvian President Alejandro Toledo has suffered a small but significant slip in his popularity as impatience over the pace of economic improvements has increased pressure on the new government. According to the latest poll by the Apoyo polling agency, support for Mr Toledo slipped to 42 per cent in October. However support for Peru's leader still outweighed the negative sentiment aired by his critics. About 36 per cent of those polled said they disapproved of his efforts in the first 80 days of his centrist government. Only 25 per cent approved of the government's economic policies, while 52 per cent disapproved. Peru's $54bn economy, Latin America's seventh largest - has been in decline for the last three years, amid dwindling metals prices and a slump in demand. Gross domestic product spiked up 0.7 per cent in August after declining for nine consecutive months. Growth in 2001 is expected to be flat or to rise less than 1 per cent this year, after growth of just over 3 per cent in 2000.

Brazil (October 17): In the next few days, President Fernando Henrique Cardoso will sign landmark legislation designed to improve Brazil's corporate governance and boost the country's waning capital market. The new corporate law, which follows more than three years of intense public debate, is considered a key structural reform to make Brazil more investor-friendly. It heightens guarantees for minority investors, introduces clearer and tougher capital market regulations and strengthens the Comissão de Valores Mobiliarios (CVM), the securities and exchange regulator. The law is part of a concerted effort by authorities to reverse the decline of the equities market and follows similar legislation in Chile last year and in Mexico and Argentina earlier this year.

5. Human rights violations and corruption

UN (October 15): Yesterday, Mary Robinson, UN High Commissioner for Human Rights and former Irish President, warned that the situation in Afghanistan could degenerate into a tragedy 'comparable to that of Rwanda' where in 1994, the inaction of the West resulted in the death of hundreds of thousands. Robinson called upon the United States to make a pause in the bombing of Afghanistan to allow 'access of humanitarian aid to the country'.

WTO meeting (October 15): WTO meeting: Singapore yesterday signalled it was ready to host next month's ministerial meeting of the WTO, after other governments voiced anxiety that US attacks on Afghanistan could scuttle plans to meet in Doha, capital of Qatar. Qatar has the right to block a change on venue by the WTO, a move that would throw the organisation in disarray.

Philippines (October 17): The Philippines' main anti-corruption court issued four arrest warrants yesterday against the former first lady, Imelda Marcos, on charges of embezzling hundreds of millions of dollars while housing minister in the 1970s. The warrants are for four separate charges of maintaining Swiss bank accounts with money Ms Marcos and her husband allegedly stole during their 21 years in power. They fled into exile after a popular revolt in 1986. The amounts were far more than the Marcoses' "lawful income of $945,487.75" for the years 1965 to 1985, the charge said.

6. Protests against financial globalisation and war

London and Berlin (October 14): Twenty thousand demonstrators brought central London to a near standstill yesterday as they marched from Hyde Park Corner to Trafalgar Square in protest at the bombing of Afghanistan. Hundreds of demonstrators scrambled on to Nelson's Column, chanting: 'We want peace'. A thousand police officers controlled the demonstration. 'Clearly there is a very large section of the public who feel disgusted by the war,' said Nigel Chamberlain, a CND spokesman. Thousands of Germans (10,000) turned out today to protest the war in Afghanistan. It was the largest antiwar rally in Germany since the September 11 attacks in America. The German protesters carried banners that said, "Fight terrorism only with justice," "Against repression and war" and "The American way of life is too expensive for our world."

Protests funds (October 17): Unilever, one of the world's biggest multinationals, has been giving financial support to anti-globalisation groups through its Ben & Jerry's ice-cream subsidiary. The donations were reportedly made by the Ben & Jerry's Foundation into which Unilever ploughed $5m under the terms of its controversial takeover last year. The takeover prompted protests throughout the US.

Pakistan (October 15): Two demonstrators were killed and at least six were wounded today when the police fired on a stone-throwing crowd trying to block entrances to an airport where American aircraft are based to provide logistical support for airstrikes on Afghanistan.

Several thousand protesters evaded a security cordon set up around the city of Jacobabad in southern Pakistan and tried to reach the airport, prompting police officers and paramilitary rangers to open fire with live ammunition and tear gas. One man was shot in the chest, and demonstrators took his body from the local hospital and paraded it through the streets, chanting anti- American slogans. Authorities said a second protester was shot to death in an outlying area as a group tried to break through a security line. The demonstration was organized by the Jamiat Ulema Islam, the militant religious political party that has orchestrated most of the protests across Pakistan in the week since the bombing began in Afghanistan.

Nigeria and Indonesia (October 15): Fires smoldered in burned cars and ruined buildings in this northern Nigerian city today, one day after fighting between Muslims and Christians left at least 13 people dead and religious tensions high. The fighting apparently began on Friday with clashes between the police and an armed mob following a protest by Muslims against the airstrikes on Afghanistan. Today, hundreds of soldiers patrolled Kano, 500 miles north of Lagos, the commercial capital, restoring an uneasy calm. Burning tires and garbage littered a four-lane road in Kano, and firefighters battled to put out fires in several buildings.

Witnesses said three churches and a mosque were partly burned on Saturday, but government officials said only one church and one mosque were damaged.

Italy (October 15): A growing anti-war movement found its feet across the world yesterday when thousands of peace protesters in Italy and India called for an end to the bombing of Afghanistan.

More than 200,000 demonstrators braved an unseasonably hot autumn day for the annual peace march from the central Italian town of Perugia to Assisi.

Carrying coloured banners and singing songs, historic pacifist groups, boy scouts, trade unions, the Tute Bianche (White Overalls), and left- wing and Catholic-inspired political parties buried their differences in their call for peace.

India (October 15): About 70,000 people in Calcutta staged the biggest anti-war protest the country has seen. The demonstration in the West Bengal capital, organised by the state's ruling Left Front coalition government, drew intellectuals and students and members of leftist groups and unions. The protesters marched more than 7.5 miles through the city, entertained by performers who sang anti-war folk songs.

Japan (October 15): A five-day torch relay protesting the US-led military operations in Afghanistan and the potential involvement of Japan's Self-Defence Forces kicked off Monday [15 October] morning in front of the Kawasaki municipal office in Kanagawa Prefecture, southwest of Tokyo. The participants will be carrying a torch lit from a flame in the Hiroshima Peace Park and pass by US bases and facilities as part of the anti-war protest.

   7. Articles

IMF's choices

Editorial taken from the Financial Times, 15 October, 2001

The global economic slowdown was already making life difficult for emerging market economies even before September 11. But the terrorist attack on the US has made their predicament far worse. Among the most vulnerable are Argentina and Turkey. Turkey's economy is likely to shrink by 8 per cent this year. In Argentina, the recession, now in its fourth year, has deepened still further. Should these countries be helped with new loans?

Particularly now that a self-reinforcing global contraction is looming, the International Monetary Fund's job is to help those confronting short-term liquidity constraints. Yet there is no point in advancing new loans to a country that has next to no chance of restoring its access to markets. The answer, then, is to recognise that truth, write down debt and start all over again.

The immediate problem for Argentina is is the flood of liquidity out of its banking sector. But the inability of Argentina's government to prop up its banking system reflects the twin constraints it is under: its currency board and its inability to borrow in world markets. Only vast new loans could securely underpin the banking system. But in September Argentina received a big new IMF loan, raising its standby credit to $21.6bn (£14.9bn). Given the country's currency regime, poor growth prospects and debt burdens, lending more would be throwing good money after bad.

Turkey's situation is a bit better. While the ratio of debt to gross domestic product is even higher, there is a better chance, given its monetary autonomy, of returning to growth next year. Moreover, the country has made substantial progress with its structural reforms. On balance, the chances that Turkey will be able to restructure and grow its way back to solvency are somewhat higher than in Argentina.

Many will also argue that Turkey is strategically more important than Argentina. This is true, particularly now. That may itself encourage policymakers to wish to help Turkey. But the IMF should be expected to lend only if it makes sense on economic grounds. On balance, it does.

Hard times create hard decisions. It is right to help solvent countries overcome temporary difficulties but wrong to sign blank cheques. Differentiation among borrowers is inescapable, even now. Where there is little prospect of a return to solvency, there is no sensible alternative to writing off debt.

The IMF should take another chance on Turkey, provided the government sticks to its structural reforms. But it is hard to believe that Argentina can grow back to solvency: the crisis has gone on too long and constraints on its policies are too tight.

Some may fear that any debt write-downs must trigger a wider crisis in emerging markets. This is conceivable but unlikely. In any case, it is impossible to run a market with spreads of 18 percentage points over safe securities, as in Argentina today, without accepting at least the occasional default.

To lend is to choose. The IMF and its shareholders must choose between those who need additional loans and those who cannot hope to service what they already have. Such choices are even more difficult now. They cannot be evaded, all the same.

8. Campaign actions

October 8-12
First Congress of the Ecuadorean Indigenous Peoples and Nations, Quito, Ecuador
The Confederation of Indigenous Nations of Ecuador (CONAIE) has held its first congress with more than 1,100 delegates. The Congress supported the creation of a Council of the Ecuadoran Nations and Peoples which will plan, supervise and evaluate CONAIE’s future for the next three years.  It will be made up of a delegate for each nation or people. CONAIE has drawn up a Political Programme, with strategies to deal with the major economic, political, social, and cultural problems faced, as well as those engendered by dependency and corruption throughout the government administration. Website: www.conaie.org

 October 12
The Cry of the Excluded, Santo Domingo, Dominican Republic
This Thursday 12 October a Way of the Cross procession walked some 15 kilometres across Santo Domingo. The procession was joined by organisations of neighbourhood committees, peasants, workers, transport workers, women’s groups, and ecumenical representatives and marked the day of the excluded and indigenous dignity. They demanded that the Dominican government cease forced evictions, provide land titles and stop the neo-liberal economic policy of privatisation and foreign indebtedness that has exacerbated the poverty and dependence of Dominicans. The procession was led by leaders of local and national organisations such as the Popular Unity Council, COPADEBA, CONAMUCA, FENATRANO, among others.

October first week
World March of Women, in the wake of the attacks on New York and Washington
"We, delegates from 35 countries who are in Montreal for the 3rd international meeting of the World March of Women, vigorously condemn once again, all terrorist acts perpetrated on the planet, of which those of September 11 constitute the latest barbaric examples. The thousands of citizens savagely killed in these attacks join the numerous thousands of innocent civilians who, long before September 11, were also brutally wiped off the face of the world, victims of equally barbaric acts of terrorism: wars improperly termed "humanitarian" or "low-intensity," state violence, economic blockades, occupations, colonialism, genocide, patriarchal oppression, and the hunger and daily misery, our sympathy goes to all the victims and their loved ones.
The World March of Women propose a long process demanding patience and determination, to build a world of justice and equality between women and men as an alternative to terrorist acts and armed interventions. We reaffirm our desire to live in a world where the security of persons is valued more than the security of nations and where all human beings enjoy the same rights and freedoms regardless of their sex, ethnic origin, nationality, religion or sexual orientation. We, women of the world march unite in solidarity with all the people across the planet who are mobilizing to affirm that "another world is possible" and to make it happen right now"
Website: www.asc-hsa.org

November 3
Trade Justice Parade. London, England
As governments get ready for the next World Trade Organisation meetings in Doha-Qatar, the Trade Justice Movement is organising a Trade Parade with a huge procession. Major speakers including Naomi Klein, author of No Logo. Originally planned as a carnival, the Trade Justice Parade has been changed in response to the current international situation, and will include a one-minute silence for victims of injustice everywhere.
Rewriting the unfair trade rules is now more vital than ever. Fairer and greener trade rules can help make the world a safer place for everyone.
Trade Justice Movement: www.tradejusticemovement.org.uk

November 9-10
The Andean Tribunal receives support from the President of Peru and CONADES
In front of more than 2,000 representatives of civil society organisations, the Peruvian President Alejandro Toledo, expressed his support for the initiative of the Ethical Trial to investigate corruption during the negotiation of Peruvian foreign debt. The President called upon these organisations to institutionalise their efforts and to work together to eradicate poverty and corruption in Peru: "You can’t do it alone neither can I - but together we can".
The Sixth National Social Development Conference (CONADES) held in Lima has decided to support and participate in the Public Hearing of the Andean Tribunal on Foreign Debt called for November 9 - 10. Also on the issue of corruption CONADES will participate on the 30 November demonstration called outside the World Bank offices: the same day that the Regional Hearing of the Andean Tribunal on Foreign Debt will be held in Quito, Ecuador.
More information with Dante Vera. E-mails: ppdhdd@cedal.org.pe, dvera@cedal.org.pe

 9. Forthcoming events

October 2001
15 World Food Day
24 United Nations Day
30-31 International Preparatory Committee Meeting for the World Social Forum of Porto
Alegre/ Brasil. Dakar, Senegal

November 2001
4 Presidential and Parliamentary elections in Nicaragua
5-8 World Forum on the WTO. Beirut, Lebanon
WTO meeting in Doha, Qatar
9-11 World Food Summit. Rome, Italy
13-16 Hemispheric Encounter against FTAA/ALCA. Havana, Cuba
17 IMF/World Bank Annual meetings. Ottawa, Canada
25 Presidential and Parliamentary elections in Honduras
28-30 Seminar on foreign and domestic debt and its implications for social policy. Recife, Brazil.
30-02 Dec. Debt and sovereignty: the role of the multilateral financial institutions. Río de Janeiro, Brazil.

December 2001
1 World AIDS Day
4 Human Rights Day

January 2002
31-5 Feb. II World Social Forum. Porto Alegre, Brasil

March 2002
18-22 UN Conference on Finance for Development. Monterrey, Mexico.