The opposition began today gathering the signatures in the event called the "Reafirmazo" to have a recall referendum against President Hugo Chavez. From early in the morning huge lines have formed in all areas of Caracas and the country. In contrast to last week's petition drive by the pro-Chavez forces, where polling stations were mostly empty, today most polling stations had lines of more than two blocks. Compare last week's pictures, with those I placed today in my web page. The atmosphere is festive, there have been a few incidents but so far it has been quite peaceful.

Ecuador News Round-Up

Here's the news from Ecuador this week:

President Gutierrez: The Next Goni?
Ecuadorian President Lucio Gutierrez has found himself embroiled in a scandal that could cost him his job.

Gutierrez is accused of accepting a $30,000 campaign contribution from Cesar Fernandez, a suspected drug trafficker. Congress is investigating, and Gutierrez has said (though he later changed his mind) that he'll resign if the charges are substantiated.

With indigenous groups already angry at Lucio--they say they helped him get elected and now he's turned his back on them--this new crisis could undermine his authority irreparably. Indian groups had already begun planning protests to begin as early as next month beore news of the scandal broke.

Could Lucio be the next Goni? We shall see. (For more analysis and links regarding the developing situation, see my blog.)

Melting Glaciers
In other troubling news, this Reuters story says the "world's glaciers could melt within a century if global warming accelerates, leaving billions of people short of water and some islanders without a home..." And in addition to China and India, the "nations most at risk also included Ecuador, Peru and Bolivia, where melt water from Andean glaciers supplies millions during dry seasons." Yikes.

Child Labor
Finally, in FTAA news, this Reuters dispatch says "Ecuador will take steps to regulate child labor on its banana plantations and farms as it moves toward a free trade deal with the United States..."

That's it for now. I'm signing off from Cuenca.

At the risk of treading on Hank's territory, I regard taste in music as very personal, so I am loathe to criticize any particular artist outside the pop mainstream. Nevertheless, I remember in a college class called "Persuasion: Theory and Analysis" how often it was enough for something to be new and different to win over an audience, even if there were legitimate criticisms as to quality and content. Unfortunately, pop music has become an endless stream of such examples.

So imagine my annoyance when people start raving yet again about how Virginia Rodrigues is the "new voice of Brazilian music." with the release of her new disc, Mares Profundos ("Deep Seas") on Deutsche Grammophon, no less. Ms Rodrigues has a powerful musician on her side, Caetano Veloso, an artist who is a skilled and gifted performer and composer. But as someone - who happens to be a musician and teacher - on an e-mail list I subcribe to about Brazilian music wrote after seeing her perform in the Boston area had this to say:

I had the following thought: has there ever been another brazilian singer whose band had so much sense of rhythm, whose repertoire was in a such a rhythmic tradition, and whose singing had so little to offer rhythmically?

I couldn't agree more after seeing her a couple of years ago on television. The way this person on the list described her voice was that it sounded great from a choral tradition, but when she sang, an amorphous blob of sound came out. Here's how he described the band's work in accompanying her:

I noticed something about the band. They succeeded quite well at an almost impossible task: swinging just enough to keep Rodrigues sounding interesting, but never really laying into the syncopations to the point where it would show her weakness in that area. It seemed like a lot of work for the band, though as I said, they pulled it off admirably.

Of course, melody instruments and singers can "float" over the rhythm section to a degree, but when the music is jazz or samba related, you have to hook up with the rhythm section - once in a while - or the whole thing turns to mush.

I made and still make the argument that the woman has no sense of phrasing. Phrasing involves, among other things, interpretation of the lyric and Rodrigues in my opinion is just making sound, sound that is often completely removed from meaning. Compare this sample of her singing Baden Powell's Canto de Ossanha (Windows Media Player required) with this version of the same song (Windows Media Player required) by Joyce, the singer/songwriter.

But why all the hype? Well, as I said, she's got Caetano behind her as well as a big record label now. Yet this comment from the same writer on the e-mail list underscores why she is popular in the USA, but so far away from the traditions of Brazilian music:

To me her popularity illustrates (among other things) how unfamiliar North Americans audiences are with certain crucial features of Brazilian music, in particular the notion of interlocking rhythms which everyone in the band including the singer must draw on.

I just don't understand it. The "new voice of Brazilian music?" God help us!

It's easy to see why the literary genre "magical realism" is so typically Latin American: it's actually not that far away from what passes for reality here.

If you read last Wednesday's wrap up of news from Argentina, you might remember a paragraph about Adolfo Rodriguez Saá, formerly the President of Argentina for a few days, former Governor of the state of San Luis and now member of the lower House. Well, it turns out that San Luis is really something out of a Gabriel García Marquez story.

Last weekend's municipal elections in the state capital (also named San Luis), won by Saá's candidate María Angélica Torrontegui, are but the second ones recently carried out. Depending on where do you stand politically (and I'm utterly confused about the issue), you might or might not say that there were municipal elections earlier this month, with victory going to one Daniel Pérsico. As you might have guessed, this oversupply of mayors poses a bit of an administrative problem, to the point that city accounts have been blocked by a judicial act.

So what's to be done? The legislative branch of San Luis came up with an... unique idea: run a parallel (or the true one, who knows?) City Hall in the legislature's building. The city now has two deliberative bodies, two mayors, and a big heap of political confusion.

I'm not sure if it's clever or deranged, but it's thoroughly Latin-American.

Oh, by the way: the current governor's name is Saá, Alberto Rodriguez Saá. Don't ask.

The BBC Brasil site is reporting this morning about a large march on the streets of Mexico City. Thousands of trade unionists, peasants and activists were marching against the Fox government's proposed reforms, including the planned privatisation of the electricity sector and the imposition of a value-added tax (IVA). The report suggests the march, which came off peacefully, had the support of opposition politicians.

One farmer is quoted by the Associated Press as saying, "We have an abandoned field. No one is making money, now the production is paralysed and many farmers are emigrating. We want national sovereignty in food and only to consume Mexican corn, beans, wheat and meat."

Considering the agenda is broadly similar, I suppose the successes of peasant protestors in Bolivia might strengthen the hand of the Mexican protestors and be some cause for concern in the government. The protestors called for a national strike if their demands were not met.

Recall elections were the only game in town last week and this week. Last week supporters of Hugo Chavez had their chance at recalling opposition Deputies to the National Assembly. The results were not very good fo Chavez' MVR, turnout was low, despite the huge resources spent by Chavez and his party to get the vote out. The initial reaction by Chavez and his Vice-President was to be conciliatory. Chavez went as far as saying that this was the time to build bridges between the two sides. But it did not last long. Chavez was once again on the offensive accusing TV stations of rejecting his party's ads. The problem was the ads were paid by the oil Company PDVSA in violation of both corruption and electoral laws, which made the stations reject them. In the end the official Chavez headquarters said that 2.7 million venezuelans actually signed the petition, which represents only 22.5% of registered voters and quite small when compared to the heydays of Chavez' popularity. Tomorrow is the "Reafirmazo" the signing of the petition to ask for a recall referendum for Chavez' mandate by the opposition. The opposition needs to gather 2.4 million signatures in the next four days. For the recall to be valid, 3.8 million Venezuelans will have to go out and vote in March 2004. Thus, this number becomes the benchmark by which the petition drive will be measured when the numbers are in in early January. The magic number is simply the same number of votes that Chavez got when he was elected in 2000. If the opposition gets a number anywhere near it (The signatures will be published, which might intimidate many from signing) the landscape of Venezuelan politics will have changed dramatically. And we know it, this is a crucial time...

After nearly a year of protests and strikes, including an invasion of the floor of the congress and an extraordinary week's work stoppage by the country's federal magistrates in August, and despite partisan grandstanding up to the last minute, the Brazilian Senate finally approved yesterday the first reading of the proposed constitutional amendment setting out the basis of pension reform for Brazil's 800,000 civil servants. The reforms, one of Lula's key objectives for his first year in office, will put a gradual end to the slushy and expensive pension system that saw many retiring as early as 50 on large full final-salary, inflation-indexed pensions (aposentadoria integral).

The new system requires more years of service, including years of public service. Men will have to work to 60 years of age, including 35 years of employment, at least 20 years in public service and five in their last job to receive a full pension. For women, the requirement is 55 years of age and 30 years of service. After 2006, each year lower than the requirements will cut the pension amount by 5%.

The reform also imposes income tax on recipients, a payroll tax of 11% on active workers, and reduces by 30% any pension amount over R$2400. It also caps the amounts to be received by any one person (at a generous equality to the top salary of a Supreme Court justice, R$17,170 monthly, although most will be governed by "sub-ceilings"), and limits full inflation-adjustment parity with active workers only to those already receiving their pensions.

The government relied on support from 13 opposition senators to carry the measures through and ensure the necessary constitutional amendment will take place. Only one PT (Workers Party) member voted against the measure, Heloisa Helena, who tearfully refused to sell out her principles and who takes the PT to task for an about-face from their years in opposition, allowing so many to continue to receive so much on the backs of those who receive much less. Despite her long-standing friendship with Lula, Helena is likely to find herself expelled from the PT for maintaining her convictions against the party discipline.

Paul Krugman's most visible work might nowadays be his NY Times columns about budgetary issues and the war in Iraq, but let's not forget the reason why he got the job in the first place: he's one of the sharpest economists in the world, a referent in issues of international trade, and a damn fine writer. These days, with the relationship between the US and Latin America at its lowest point in a long while, let's go back to what Krugman wrote as early as in 1995, as quoted by Bradford DeLong:

...Mexico's crisis is neither a temporary setback nor a purely Mexican affair. Something like that crisis was an accident waiting to happen because the stunning initial success of the Washington consensus was based not on solid achievements, but on excessively optimistic expectations. The point is not that the policy recommendations that [John] Williamson outlined are wrong, but that their efficacy--their ability to turn Argentina into Taiwan overnight--was greatly oversold. Indeed, the five-year reign of the Washington consensus may
usefully be thought of as a sort of speculative bubble--one that involved not only the usual economic process by which excessive market optimism can be a temporarily self-fulfilling prophecy, but a more subtle political process through which the common beliefs of policymakers and investors proved mutually reinforcing. Unfortunately, any such self-reinforcing process must eventually be faced with a reality check, and if the reality is not as good as the myth, the bubble bursts. For all its special features, the Mexican crisis marks the beginning of the deflation of the Washington consensus....

Eight years later, with more leftist governments all over Latin America and a US that seems unable or unwilling to build any kind of consensus anywhere, the above paragraph looks even more insightful.

The good news is that, nonetheless, Latin American countries are still trying to increase trade with each other and with the rest of the world as fast and extensively as possible. While the emergent markets bubble of the '90s and Latin America's semi-automatic alignment with the US are both dead for the moment, the underlying lesson that trade helps growth was well-learnt by the continent.

Miguel sent some media links for Venezuela that I've added to the national links section:

El Universal On-line is one of Venezuela's national newspapers, the last one with free content.

Globovision is a site for a 24-hour news network in Venezuela, with live breaking news.

Venezuela Today is a portal site, a "one-stop source for the latest news and information."

I also added a link to the Mexican media magazine Etcetera which has good coverage of economics and politics in Latin America, often from a media perspective.

I've added a couple of weblogs in Portuguese to the blogroll at right.

Economia Everywhere is a 3-man effort commenting on economic topics in the news, usually with an amusing spin.

Austriaco is intelligent insights and interviews from the keyboard of Lucas Mendes.

I've also started by adding some country-specific links for Brazil and Argentina in the links section. Meta-message to my fellow SE bloggers - if you have content you would like to see added here, please send it to me. I'd love to add the "paper of record" for each country if it's free-to-web, and anything else you deem a must-visit from your patch.

Voting early and often: There were a few elections at the state level and below during the weekend, consolidating president Kirchner's power by giving him his own majority in Congress, and the support of most governors.

The state of EntreRíos' governorship went to justicialist candidate Jorge Busti (with the explicit support of President Kirchner), while in the southernmost state, Tierra del Fuego, three lower House seats were evenly split between Lilita Carrió's ARI, the justicialists, and the local "Frente de Unidad Provincial".

A quick note for our American readers and others living in a (mostly) two-party political system: it really simplifies things. While the last national election and president Kirchner's political maneuvering have consolidated the power of the justicialist (peronist) party at the national level, state-level parties traditionally play important, sometimes even hegemonic, political roles.

An example is Rodriguez Saa's "Alianza Frente Movimiento Popular", which last Saturday got more than 70% of the votes in the state San Luis, grabbing of course the two lower House seats that were in play. If the name Rodriguez Saa sounds familiar, you've got very quick reflexes: he was president of the country for a few days after de la Rua's ousting in 2001. Unlike his replacement Duhalde, Saa lacked the clout in the peronist party (where he technically belongs) to keep himself in power, but during his brief period in power he had the country default on its international debts, and ended his presidency with an intermittent, interference-filled, almost apocalyptic televised discourse from his home state. Later, he run for the presidency in the last national elections, but performed remarkably poorly.

Finally, in the state of Corrientes the governing coalition of peronists and radicals (that's the "Union Cívica Radical", ironically the archetypical centrist party in Argentina, and usually the peronist party's arch-rivals) won two out of the three open seats in the Senate, with the remaining one going to "Tato" Romero Feris' "Partido Nuevo". Corrientes being my birth state, I could tell you stories of political maneuvering, crime, legal chicanery, corruption, drugs, marches, kidnappings, and general stereotypically Latin-American politics that would make Florida in 2000 look like a textbook example of a clean election. But then we'd get sidetracked in this local wackyness, and never get to the national wackyness.

Strange calls: Kidnappings (and violent crime in general) is perhaps the most politically charged theme in Argentina, practically and industry on itself. So there is a lot of concern about suspicions of links between military personnel and kidnappers. Although some dismiss these allegations as an attempt by the Policía Bonaerense to deflect this same charges directed at it, if proven true it would devastate the already historically low standing of the military in Argentina.

Miscelanea that happens almost every week someplace or another: After "cleaning house" in the Postal Service, the government is going after Aguas Argentinas (the privatized water company)... Yesterday there were episodes of violence in a march in southern Neuquén, and some traffic chaos in Buenos Aires... A partial banking strike... And security forces are in alert for possible terrorists attacks in Buenos Aires.

Brasil's Minister of Culture, Gilberto Gil, has been involved in developing a new standard Creative Commons "some-rights-reserved" license to encourage the sampling of original works by others:

The Sampling Licenses

Inspired by world-famous musician and composer Gilberto Gil and developed with the help of the veteran found-art group Negativland, Creative Commons will launch our new Sampling Licenses on December 16, 2003.

The new licenses, which will encourage the creative transformation of existing works, will kick-off in Brazil тАФ home of Gil, who now serves as the nation's Minister of Culture, and the FGV Law School, which coordinates Creative Commons' activities in Brazil. Gil and FGV Law School will collaborate on a release of the first Sampling-licensed creative works, which will then serve as the model for the adoption of the Sampling licenses around the world.

The week's news from Brazil

Free Trade - By agreeing to disagree (for now), the US and Brazil, the region's two largest economies, managed to put aside the toughest issues remaining between them in order to keep the FTAA (ALCA) negotiations on-track for a 2005 rollout. Some critics are calling the current version "ALCA light", "menu ALCA", and "ALCA a la brasileira." Brazil held fast to restrictions on liberalising government purchase contracts, standardising rules for investment and intellectual property reform, while the US refused to reform agricultural subsidies, insisting that this be conducted through the WTO mechanism. The agreement reached will allow negotiations to continue (in February), while not accepting the more broad-ranging, inclusive and binding agreement desired by other participants such as Chile and Canada.

Slave Labour - The government published a list of 52 persons or businesses that have been convicted of using slave labour between 1995 and 2002. In the past year, 4300 people have been freed from conditions of slavery, nearly twice as many as in the previous year. Typically, those in slavery sign onerous contracts they do not understand, then are removed to rural locations where they have no means to leave.

Income Tax - New proposals to adjust the tax bands and deductible limits would see the average middle class Brazilian income taxes rise by about 23%. The restructuring is expected to bring an additional R$3.5bn into government coffers.

Interest Rates - The Monetary Policy Committee of Brazil's Central Bank lowered interest rates from 19% to 17.5%. The rate has fallen from 26.5% since earlier in the year, and is starting to alleviate some of the pressure this very high rate was having on economic growth. This was the first reduction since the downward trend started not to have unanimous support, suggesting that further reductions may be on hold pending a review of the impact the current reductions have had.

Buying on Time - led by the recent cut in interest rates, Brazil's retailers are lowering interest charges and lengthening the sem juros (interest-free) period on purchases in the hopes of a strong holiday shopping season. Some are offering interest-free shopping until after Carnaval (late February). There are signs that the strategy is working - an early 12-15% increase in numbers and in purchases has been reported. In Rio, this is partially credited to a run of overcast weather which has kept the beaches relatively empty and people in the malls in search of diversion.

Police Matters - Brazil's governors support a new constitutional amendment which would clear the way for (without obliging) the merger of the civil police and policia militar at the state level. The result would be to streamline Brazil's policing. The current distinction between the two is roughly between investigation and street policing. Separately, in Rio state, the government is proposing that the police force declare their possessions and how they came to pay for them in an effort to expose corruption.

Futebol - Brazil's national side had a lucky escape, drawing with Uruguay after allowing a 2-0 lead to evaporate with three quick Uruguay goals in the second half. Ronaldo scored his 50th goal for the Brazilian side with just 3 minutes remaining to level the score at 3-3 and allow Brazil to remain near the top of the standings for the World Cup qualifiers. Back in the Brasilerao, Cruzeiro won it's match vs Parana, leaving them one victory short of the championship. Bahia assumed the lanterna position by losing at home while Gremio managed to beat Vasco. Both teams are still in the zone, but with three matches left, there's still a chance of escape with the next few teams only 2-3 points ahead of them in the standings. Rio side Botafogo gained promotion to the first division.

It seems Mesa's finally realized he'll never befriend the populist left, no matter how hard he tries. So he's back to being a constitutional democrat, giving the middle class a huge collective sigh of relief.

In the past few weeks, Mesa & his ministers did everything in their power to appease the demands of syndicalist dirigentes like Felipe Quispe, Evo Morales, Angel Duran, Jaime Solares, Roberto de la Cruz, and others. When he offered to negotiate their myriad demands, they scoffed, insulted cabinet members, walked out of meetings, or called on the use of mobilized violence to achive their goals. Last week, Mesa found his spine.

In the end, it seems the government's decided to negotiate w/ other dirigentes who, not only are more willing to negotiate, but it seems are actually more legitimate. Bolivian papers never reported this (investigative journalism isn't a strong suit here). But. It seems Quispe's not actually head of the Confederaci├│n Syndical Unica de Trabajadores Campesinos de Bolivia (CSUTCB), de la Cruz doesn't lead the Central Obrera Regional de El Alto (COR), and Duran isn't chief of the Movimiento Sin Tierra (MST). While they are of course major players in these organizations (and have their own clientelistic networks w/in them), they seem to forget that these organizations have organizational structures & elections.

Is this merely a divide and conquer strategy on the part of the government? Probably. But I don't see why Mesa & his ministers, who've shown tremendous good faith in trying to negotiate can't also decide which leaders they'll negotiate w/. And if Someone from MST wants to negotiate, rather than call on campesinos to forcefully seize lands (as Duran does), I see no reason why Mesa can't negotiate w/ the actual executive secreaty of the MST. The same goes for all the other groups.

Meanwhile, the formal investigation of Goni & his ministers is going forward. But it might not make Evo & co. happy. While the courts found enough reason to try Goni & his ministers for excessive use of force in October, it also found enough reason to investigate Evo, Quispe, Solares, and five other dirigentes for crimes against the state (such as for callign on armed insurrection). Meanwhile, two sets of lawyers have also filed individual criminal suits against the populist dirigentes for their actions in October. It's gonna be an interesting legal process.

I came across the Houston Chronicle's lengthy summary of Brazil's current domestic situation via Danny Yee's Pathologically Polymathic weblog. It's a pretty thorough laundry list of the difficulties facing Lula as he nears the one-year point of his presidency.

I thought I'd add that in my own experiences, while people are starting to ask hard questions about how much of the government's programmes are talk vs. action, he does still command a lot of respect for even daring to act in some of the areas he's tackling. He's had a relatively lengthy honeymoon. Without a majority in the congress, he has to build consensus for major policies outside his relatively narrow spending mandates. His comments about the cowardice of his predecessors have a ring of truth about them.

He must personally shake with frustration that the situation that he inherited leaves him relatively little room to manoeuver despite his mandate, but he's still out there horse-trading, practicing the art of the possible. The government is criticised for its inability to spend even the money it has allocated to it, but one might attribute this to cautious first steps. There are a lot of holes to plug, and I suspect the government wants to act prudently rather than follow on without reviewing what they've inherited. Given time, and given a stable economy in which to work (big "givens"), I still think there's a lot of promise in the Lula agenda.

Lula has recently been making more "promises" to the likes of the landless (MST) movement. Patience and loyalty, he asks, and deliveries he promises. He has only seated 30,000 families in his first year of power. He promises to seat another 500,000 by the end of his mandate. It can't be bad politics to ramp up to some big targets toward the end of his first term. It remains to be seen if these back-end-loaded promises can be delivered, but a lot of Brazilians will be a lot better off if he succeeds.

If not for a copy left behind by a visiting friend, I would have missed this little tidbit from the front page of the November 12th Independent (UK) (and evidently the NY Times), archived on the Truthout website, about the UK's reduction in its International Development budget, redirecting the funds from a programme to conserve Brazil's rainforest into their ┬г540m rebuilding effort in Iraq.


Environmentalists fear the Government's decision to review its ┬г16m contribution to the international community's efforts to protect Amazonia could lead to further ecological and cultural devastation.

Britain is one of the leading backers of the G7 Pilot Programme for the Conservation of the Brazilian Rainforests, which helps indigenous peoples to manage the forest in a sustainable way and counter the effects of illegal logging.

[....]

The aid schemes underpin Brazil's own efforts to protect its precious resource, which is vital to prevent further global warming and protect biodiversity. The G7 programme, which is a vital tool in combating global warming, has a total budget of $410m (┬г246m), of which Britain is a major donor, contributing ┬г16m. It funds programmes to stop illegal logging of virgin timber and to help the indigenous Amazonian peoples protect their native environment from loggers.

The British money also pays for local programmes to sustain the Amazon's flood plains and research into how to ensure "sustainable forestry management" in Brazil.


I guess a better sustainable development strategy might be not to go around blowing things up in the first place. At least there'll be plenty of timber around for the reconstruction efforts. Sigh.

Chavez supporters began yesterday to gather signatures requesting the recall of opposition Deputies to the National Assembly. While leaders from Chavez' MVR party are calling it a success, the truth is that very few people are seeing in the polling stations. Some sporadic lines formed yesterday when some polling places run out of the electoral material. I have placed some pictures in my site of polling stations around Caracas on Saturday morning. Next week, from Nov. 28th. to Dec. 1st., the opposition will do the same to gather signatures asking for a recall referendum against President Chavez.

This week's news from latitude zero:

Tension between Ecuador and Colombia continues to mount; Ecuador says FARC rebels are setting up camps inside Ecuadorian terroritory. And Colombia claims Ecuadorian military personnel are selling weapons, via the black market, to Colombian rebels.

Reuters reports that "Ecuador's army destroyed a Colombian rebel base in the dense jungle between the two nations that the guerrilla force had used to rest and hide hostages, the army said on Thursday."

Deforestation is a serious problem in Ecuador. The small Andean nation is renowned for it's biodiversity, but the country "lost its forest cover three times faster than the Latin American region as a whole in the 1990s." So says this article, which outlines a new government initiative to implement a "20-year plan to work with the private sector to plant new trees and protect old forest."

New trouble for Ecuadorian president Lucio Gutierrez: Congress has opened an investigation into his campaign finances in response to reports that his party received money from a questionable source.

Says this article: "The scandal broke after El Comercio newspaper reported, citing an unnamed source, that Gutierrez's political party received a $30,000 campaign contribution from Cesar Fernandez, a formerly prominent politician charged with drug trafficking."

Five Ecuadorians were wounded in Israel when "a gunman trying to infiltrate a border crossing from Jordan fired on a crowd of tourists." More from the AP here.

And, finally, turning to the world of futbol, Ecuador wrapped up a disappointing week of World Cup 2006 qualifying matches. The national team lost to Paraguay 2-1 early in the week. And then another bad result: the squad drew 0-0 with regional rivals Peru.

That's it for this week; adios from your correspondent in Cuenca.

Gray Newman and Luis Arcentales of Morgan-Stanley commented yesterday on Argentina's impressive GDP growth for 2003 and 2004, revising their projections to 7.2% this year and 6.0% in 2004 (higher than their last estimates, while still lower than the Argentine government's). While they, I think, underestimate the political importance of the fiscal income levied out of exports, they make the very interesting point that so far growth in Argentina has been fueled by the output gap left by the drastic contraction at the end of the Menem and de la Rua's administrations, with relatively little investment done.

There is only one point they make that I'm quite certain is basically wrong, and I quote: "While it is difficult to imagine that policy makers or politicians can mistake the bounce-back in 2003 as the beginning of a sustainable growth path (...)". I think that it's great that Morgan-Stanley personnel can keep up their good spirits and optimism after having had a pretty rough week, but in all fairness I have to add that there is little limit to what Argentine policy makers or politicians can mistake a bounce-back for when it's in their political advantage to do so.

Brazil's Environmentalists Crying Foul
By LARRY ROHTER

New York Times, November 21, 2003


BRASILIA - The environmental movement celebrated when Luiz Inacio Lula da Silva was elected Brazil's president in October last year. More than a year later, though, that relationship is in danger of falling apart, with environmentalists talking of betrayal.

On virtually every major issue - from Amazon deforestation and genetically modified food to nuclear power and squatter invasions of national parks - Mr. da Silva has turned his back on them, environmentalists say, in many cases abandoning campaign pledges.

...

"The idea of an integrated policy is something new and has never been done before," Marina Silva, the environmental minister, said in an interview. "You can't expect to have a new paradigm fully in place after barely nine months in power."

...

There has been an anti-FTAA protest in Buenos Aires; given the givens, that's not really unexpected, and the scope of it was hardly massive. While the war with Irak was strongly opposed by a big portion of the Argentine population, the FTAA has (not surprisingly) failed to excite that kind of reaction.

Nonetheless, "the street" in Argentina doesn't want any continent-wide free trade agreement. The government, on the other hand, just doesn't want the specific agreement the U.S. was prepared to sign. So a watered down, meaningless or even aborted agreement in Miami will likely work as a political victory for the exports-dependent government in front of the relatively protectionist masses.



BUENOS AIRES, Argentina (Reuters) -
Argentine police clashed with dozens of
protesters demonstrating against an
Americas-wide free-trade plan Thursday
night, leaving three officers hurt, a police
spokesman said.

Local television showed protesters
throwing rocks and sticks at a building
housing a U.S.-Argentine business
chamber in downtown Buenos Aires.
Several windows were broken before
police cleared the area with tear gas.

(...)

Copyright 2003, Reuters News Service

Protesters Tell a Different Tale of Free Trade
Published on Thursday, November 20, 2003 by the Los Angeles Times
Activists gathered in Miami to counter treaty negotiations by 34 nations warn that Latin American workers face growing misery.

by John-Thor Dahlburg

MIAMI - From Mexican sweatshops and peasant farms in the Amazon to Spanish-speaking neighborhoods of the United States, protesters have come here to warn that plans for hemisphere-wide free trade would lead to greater misery and suffering in Latino communities.

"I can tell you that if Mexican workers aren't already slaves of the multinational corporations, we're 99.9% there," said Israel Monroy of the Coalition for Justice in the Maquiladoras, a group dedicated to the special factories created in Mexico to assemble export goods.

"Family farmers everywhere, from north to south, not just Brazil, are living in crisis," said Maria de Fatima, a representative of Brazil's Landless Rural Workers Movement, which seeks agrarian reform. "As we import cheap, poor-quality foodstuffs, the multinational companies that invade our countries open the doors for the bankruptcy of thousands of farmers. During the past six years, 2.4 million farmers were expelled from the land."

In stark counterpoint to the official negotiations in Miami this week among the United States and 33 other countries on creating a Free Trade Area of the Americas, a project President Bush has embraced as a "great vision," a motley collection of activists, academics and private citizens has assembled on the other side of the police barricades to describe the painful costs of foreign investment and trade liberalization on the people of Latin America. ...

Diputados (the "lower house" of the Argentine legislative body), gave half sanction to the 2004 national budget. The budget foresees expenditures for 59.708 million pesos out of 62.000 million pesos of income (assuming a 4% GDP growth rate and annual inflation between 9 and 11%). It also gives the executive branch plenty of flexibility to allocate resources, and a high degree of control over the all-important social assistance plans. The Senate is expected to pass the law tomorrow.

Also expected to be approved tomorrow is the extension of Duhalde's 2002 Economic Emergency Law, giving the President and his ministers extraordinary powers to modify or sidestep existing financial and legal regulations.

The government announced during the week that it was about to rescind the concession of the privatized national postal service, as the managing group hasn't paid the agreed canon (103 million pesos a year) since 1999. The move was put in effect today.

Last Friday security forces moved in force into "La Cava", "Carlos Gardel" and "Fuerte Apache", some of the most dangerous villas in the Buenos Aires zone. Their plan calls for a month of strengthened presence in these hot spots.

US Department of State

Press Statement
Richard Boucher, Spokesman
Washington, DC
November 17, 2003


The United States Government has completed the 2003 annual estimates of coca
cultivation in Peru and Bolivia. The estimates -- produced with survey-sampling
techniques and satellite imagery -- indicate that overall coca cultivation
levels continue to be lower for Peru and Bolivia than in the past - between
50,000 and 60,000 hectares (or 123,500 and 148,200 acres), compared to 163,900
hectares (406,470 acres) in 1995. Even with sustained eradication efforts in
Colombia there has not been an increase in cultivation in the other two major
coca cultivation countries.

In Peru, survey figures show a net 15% decrease in coca cultivation in 2003.
Overall, net coca cultivation dropped from 36,000 hectares in 2002 to 31,150
hectares in 2003. Nevertheless, cultivation in the Apurimac-Ene and Monzon
valleys -- traditional growing areas where plantation-style plots can be found
-- remained steady. These areas represent 67% of the illicit coca produced in
Peru.

In Bolivia, there was an overall increase of over 4,000 hectares (10,900 acres)
to 28,450 hectares (70,300 acres) of coca cultivation, or 17% above 2002 s
estimate. While cultivation in the Chapare region, the historic illicit coca
cultivation zone, fell by 15%, cultivation in the Yungas, grew by 26%. This is
the challenge that faces Bolivia, as coca in excess of what is needed for the
legal, traditional market ends up feeding the illegal cocaine market.

It is important to note that eradication is only part of our bilateral
counter-drug strategy in Peru and Bolivia. Together we are making major
progress in both the interdiction of drugs and providing effective alternative
development. We will continue to work with the governments of Bolivia and Peru
on the continued challenges faced to fight the production and flow of drugs.

In a move that I'm still trying to wrap my head around, even if intellectually I know the reasons for, the U.S. will set quotas limiting the growth of certain Chinese textile exports to the country.

This isn't properly a news item related to Latin America, except that it illustrates what chance the southern countries ever had of getting any sort of meaningful concessions from the USA in the FTAA talks: none to speak of.

Luz para todos - The Brazilian government announced last Tuesday the launch of a new program designed to bring electricity to the 2.5 million Brazilian homes (5% of all homes) currently without. The ambitious goal is to complete this task by 2008. I say ambitious because the majority of these households are in the very rural Amazon and Northeast regions, with a half million in Bahia state alone. The minister of Mines and Energy, Dilma Rousseff, put some scale to the task by noting that this was bringing electricity to a population the size of Chile.

Pension Fraud - The government put some numbers to its contention of benefit claim fraud amongst the oldest segments of the population (I noted last week the uproar the initial decision to suspend payments pending verification had created). The census estimates 24,579 pensioners over 100, but pays 99,986 claims. From 95-99 the difference is 56,198 in the population and 123,294 pensions paid, and from 90-94, 180,426 citizens and 323,759 claims. It seems like a pretty open secret that if you didn't tell the social security office, they would have no idea that the claimant had died.

Favela Living - An editorial in O Globo condemned the steady rise in the number of people living in favelas throughout Brazil over the period from 1991 to 2001. The article points out that, far from being a "trademark of Rio", where they are more prominent for their location on the city's hillsides, every major city in Brazil has its own favelas or irregular housing units. 23% of all municipalities have favelas, and nationwide there are about 16,000 such neighbourhoods. The number of favela homes increased from 921,000 in 1991 to 2,362,000 in 2001. Rio itself has about 700 favela neighbourhoods, with 149 of these identified within the last four years. Many of these new favelas are sprouting up alongside settled lower-income areas, which already have transport links and some infrastructure. The government's attempt to regularise the favelas, Favela-Bairro targets reaching 550,000 people in 141 communities by the end of 2004.

More Punishment, Please! - Two judges who were convicted of selling reduced sentences for drug dealers were "sentenced to retirement", gaining criticisms from the government and the people over the Brazilian judiciary's soft treatment of their own in matters of corruption. The judges, husband and wife, were compelled to retire with their pensions of R$15000 and R$6800 intact, causing some to wonder what kind of punishment this represents.

Sao Paulo Shorts - Sao Paulo was found by a survey to be more violent than Colombia. In the past year, 20% of paulistanos will have suffered some kind of violence. One in two can expect to be the victim of some violence during their lifetimes. The week's news was dominated by the murder of a teenage couple who had gone camping at a remote sitio in Sao Paulo state without telling their parents. Sao Paulo's archbishop added his name to the growing calls to lower the age of criminal responsibility from 18 to 16.

And in Rio - the chief of the region's Superintendencia Municipal de Transportes Urbanos was gunned down by a pair of assassins on a motorbike. The crime was being blamed on Rio's "transport mafias," understood to be upset with a recent crackdown on illegal transport practices, such as using tourism buses for urban transport. It is estimated that there are 12,000 illegal public transport vehicles (buses, vans) in Rio and that the practice is worth about US$1 million per day in illegal profits.

In the Money - Brazil's biggest companies are having their best financial results since 1998. A study of 181 banks and non-financial institutions conducted by Economatica showed that for the 9 months ending in September, these firms reported net profits of nearly R$30 billion, the best-ever result since the survey started in 1998. The strong performance was credited to a lowering of Brazil's central bank interest rate (which may be lowered further this week), and the recovery of the national currency, the real, versus the dollar. The real, which currently trades at about R$2.9 to the US$, traded as high as 4.0 in the uncertainty leading up to last year's presidential election.

Bureaucracy and business growth - the International Finance Corporation released a study called Doing Business comparing the ease of doing business in many countries around the world. Brazil fared poorly in the results, owing to its complex laws and bureaucracy. Average time to complete a contract was cited as 380 days (the US was cited as 363, which surprised me). To open a business takes 152 days in Brazil (Latin American average was 72 days, USA 4). The only place where Brazil was reported to have shone was in the cost of completing a contract, at 2.4% of per capita income (the article doesn't explain exactly what this means), versus US of 0.4% and a Latin American average of 38%.

Futebol - club football took a break this week while the Brazilian national selection competed in the South American eliminations for the next World Cup. Brazil started the weekend at the top of the league, but after a 1-1 draw with Peru in Lima on Sunday, they now have an identical record with Argentina, who lead the region on goal difference. Brazil's next match is on Thursday versus Uruguay in my former stomping grounds of Curitiba. President Lula criticised the team's performance on Sunday and was respectfully advised by the team's coach to mind his own business.

(note: giving credit where it is due, most of this information is digested from the hardcopy daily O Globo, although I add to it from what I've heard or read elsewhere, including the radio, the BBC Brasil website and Yahoo News).

It's been less than a month since Gonzalo Sanchez de Losada (aka Goni) resigned as Bolivia's president. Things went back to normal; Mesa was given a honeymoon period to try to govern and appease the myriad of social demands (such as the issue of gas exports) that drove Goni from office. That honeymoon clearly ended last week.

Despite Mesa's efforts to negotiate w/ (and even his praise for) some of the social forces that led the October protests, the usual syndicate leaders have only radicalized their positions. On Friday, Felipe Quispa (aka Mallku) disrupted a dialogue meeting between syndicate dirigentes and ministers — who were agreeing to almost all his demands — and stormed out shortly after publicly calling them "bitches" who were only in office because he put them there.

The main opposition groups are the same: Confederaci├│n Syndical Unica de Trabajadores Campesinos de Bolivia (CSUTCB), the Movimiento Sin Tierra (MST), the Movimiento al Socialismo (MAS), and the Central Obrera Boliviana (COB). The MST is a rather new group; the main leaders are still Mallku (CSUTCB), Evo Morales (MAS), and Jaime Solares (COB). Last week they announced publicly and clearly that their goal is to topple Mesa and seize power.

Among their demands — most of which Mesa has tried to meet — they've now added that they want a new constitution that specifically excludes political parties. Ironic, of course, since Evo and Mallku both lead political parties that have significant representation in parliament (MAS and MIP). Also, no one seems to understand how national politics would function if political parties were deliberately forbidden. Or would it all depend on the syndicates?

The dirigentes are bitter that Mesa's not giving in to all of "society's" demands tout court. Never mind that the three represent only a section of the entire Bolivian population, most of which finds the majority of the COB-CSUTCB-MAS demands extremely radical. Goni's popularity upon his downfall was below 20%, which is still slightly higher than all the polls for Evo and Mallku.

Mesa's also beginning to feel pressure in the legislature. Of course, Mesa's a president w/ no political party. The "logic of presidentialism" sets in. The senators and deputies elected into parliament have their own agendas, and are able to craft coalitions that pass legislation that might not be exactly what Mesa wants. Bolivians may've been to quick to bury "pacted democracy" (essentially a parliamentary system), which guaranteed the president a parliamentary majority.

There's also much opposition in the legislature for the lack of an economic plan to pull Bolivia out of the crisis — and it was, essentially, and economic crisis fueled the malcontent that fed the anti-Goni protests in October. If Mesa wants to avoid Goni's fate, he'll have to figure out something to solve Bolivia's economic problems, which were only made worse after the October uprisings. He was successful in getting foreign aid to ensure the government can meet its bureaucratic payroll through December.

Mesa's also being criticized for not yet visiting Tarija. This small, southern Bolivian department (state) is where 85% of the nation's gas reserves are found (most of the rest are in Santa Cruz). Despite the "┬бel gas no se vende!" rhetoric of the October protests in La Paz, Tarija has insisted that A) the gas must be exported or B) they secede (possibly along w/ Santa Cruz and Beni). Mesa's spent much political capital courting Mallku, Evo, and Solares — and to no gain. He'd better start courting the Eastern regions of Bolivia, and soon.

Meanwhile, cocaleros loyal to Evo killed one soldier and wounded two other in Yungas w/ a landmine. It's become common for armed cocaleros to ambush soldiers and police who are controlling illegal coca fields in Yungas and Chapare. Of coures, no one expects any of the vocal human rights groups in the city to voice concern for the safety and right to life of the poor conscripts who're just doing their job.

There's also a referendum in the works for revisions to the Ley de Hidrocarburos (the law that regulates the gas/oil industry). Interestingly, it's not being done as a public referendum, but rather 229 civic organizations (including the COB, CSUTCB, MAS, etc.) were invited to write position papers on the issue. They have 15 days to send them to the Ministry of Government. I'm curious to see if Evo, Mallku, or Solares even turn in position papers or how they react if most of the other groups decide against their position. We'll have to waint and see.

-Venezuela's Electoral Board (CNE) decided by a vote of three to two, that Venezuelans abroad will not be able to participe in the petition drive to ask for a recall referendum for Hugo Chavez' mandate. The Board said that there was not enough time to set the petition drive abroad with sufficient supervision, leaving many wondering what good are the country's Embassies and Consulates abroad.

-Separately, the CNE approved regulation severely limiting advertising for the petition drives as well as any broadcast of any unofficial results past the third day of the petition drives. there will be two petition drives. Staring tomorrow and for the next four days, pro-Chavez supporters will attempt to gather sigantures to recall the oppositions Deputies in the National Assembly. On Nov. 28th. the opposition will attempt to obtain the 2.4 million signatures required to have a recall referendum on Chavez' mandate.

-The Venezuelan Ministry of Finnace succesfully placed US$ 1 billion of a bond with 2018 maturity and 7% coupon. The issue was sold at par in local currency but it is dollar denominated, thus the effective yield will be around 11.6% once it starts trading. (It was trading already today in the informal "when and if" market at 67% for an implicit exchange rate of Bs. 2388 per US$)

-MSCI announced that it will no longer be using the official exchange rate in its Venezuela index. Starting next week, it will use the rate obtained from te arbitrage between the stock of the country's largest telephone company CANTV traded locally and that traded in the US. The arbitrage gives a rate of roughly Bs. 2600 per US$ versus the official rate of Bs. 1600 per US$.

-Venezuela, a baseball-centric country, was excited this week with the victories in the qualifying round for the World Cup of its team against Colombia (in Colombia) and Bolivia (in Venezuela). Venezuela has never even come close to qualifying for the Cup.

From the helpful Expats site in Rio, too much information about the theft of a US consular car at an intersection in Rio:

According to the police report Leslie was robbed of her diplomatic ID badge, credit card, cellular, a leather lamp cover, leather wallet, and the keys to her apartment. Mary also had her house keys, cellular, her aboriginal collection, among rugs and ceramics valued at R$ 1,260 all stolen. As for Virginia the thieves had taken the car documents, ceramic pieces, 50 CDs, an umbrella, and two impermeable coats, valued at R$ 1,200. Walid Afif, had his Consular badge, four credit cards, drivers license, watch, and Arab studies books stolen. In money, 350 and 200 dollars had been stolen (about R$ 592).

I take the Red Line to work every day. I feel sorry for my fellow countrymen, to be sure, but what were they doing with all that crap in the car?

Interesting how in the space of one month three different publications: The Wall Street Journal, The Economist and Spain' El Pais (unfortunately, all by subscription only), devote articles to the family that created Kola Real. Kola Real was created by the Anano family in Peru during the worst times of the Shining Path guerrilla movement. The family had to flee its farm and moved to the city of Ayacucho, where they noted the lack of soft drinks as major bottlers of Coke and Pepsi, refused to send trucks over to their city. The family put together US$ 30,000 and started making a low cost soda named Kola Real which is now sold in Peru, Ecuador, Mexico and Venezuela. The Wall Street Journal estimates the company has revenues of US$ 300 million.

Kola Real's strategy is simply to undercut the competition by spending less on advertising and using a low budget approach to everything. In Mexico, Kola Real has forced Pepsi to cut prices twice and has accused Coke of ant-monopolistic tactics. The company is now getting ready to introduce other flavors to compete with the big multinational giants. Thus, Pepsi and Coke face a threat from where they least expected it.

In the article in El Pais, written by famous Peruvian writer Mario Vargas Losa, he closes by saying: "Not many have the success of the Ananos. But many more would have it if in Latin America we had more policies, that instead of discouraging or being hostile, would promote individual initiatives and would celebrate the success of a company, of an entrepreneur, as being the success of the whole of the citizens, with benefits towards all citizens, instead of assuming it with mistrust, rancor and envy....Now that here and there, the sadly remembered populism of tragic credentials is once again sprouting in Latin American lands -with Venezuela at the lead- it is worth spreading around the Continent the story of the Ananos family, as a reminder of what Latin America could be if, muck like those daring Ayacuchanos, they set themselves to do it."

The Venezuelan Central Bank (BCV) reported that the Venezuelan economy shrank by 7.1% in the third quarter 2003. For the year the Venezuelan economy has shrank by a total of 14.7%. Quarter to quarter there was a slight improvement from -9.4% in the second quarter. The report by the central bank indicates that the oil sector shrank by 9% during the quarter, while the non-oil economy shrank by 6%, demonstrating that PDVSAтАЩs activities are not up to full speed as the Government claims. In fact, the report by the BCV explicitly states that the oil public sector shrank by 12.2% with respect to the same quarter in 2002, but private sector oil activities increased by 30.2% through the strategic associations. Thus, it is the private oil sector that has actually saved the day in terms of oil production. In the private sector, manufacturing continued stalled at -9.9% for the quarter, while constriction (up 33.9 %) and commerce (up 10.0 %) did show some signs of revival.

And it's a generally optimistic one, pointing out that Peru seems to have weathered well the problems that have affected the rest of the region, and that "the near-term outlook remains favorable, but medium-term growth prospects could be dampened by the political environment".

The full PDF report can be downloaded here
http://www.imf.org/external/pubs/ft/scr/2003/cr03355.pdf

As we anticipated yesterday, the Congress has approved the extension of the Economic Emergency Law until December 2004. Besides fixing the ground rules for the painful post-convertibility transition (which played havoc with the banking system and savings), the law gives President Kirchner powers to renegotiate the contracts of the privatized utility companies. I don't think they are feeling very serene right now, after the government rescinded yesterday Grupo Macri's contract to run the postal service (it's expected to find another buyer for the concession in 180 days).

Economic emergency aside, the macro news are in fact quite good. The government announced a primary budget surplus of 8.118 millions of pesos, well above the goals accorded with the IMF, while year-to-year GDP growth measured in September was 9.4%.

In more anecdotal news, Argentina and Colombia's soccer teams tied 1-1 in a match leading to the next World Cup.

Also, an interesting observation by a friend of mine who lives near villas La Cava and Fuerte Apache: The roads around them tend to be in a much better condition than elsewhere. The reason? People from neighbooring zones know better than to drive there, so traffic is lighter.

I imagine that this was, more or less, the gist of the trade talks:

(Outside the negotiation room people chant: "We don't want free trade! We don't want free trade!" Inside, the delegates from Brazil and the US are sitting stiffly in front of each other, while the rest of the delegates look at them.)

US: Those people outside are being silly. We want free trade.
Brazil: We certainly do. Trade is part of the way to prosperity.
US: The thing is, you've got to start pushing harder to protect Intellectual Property rights, and give our companies more chances to bid for state contracts.
Brazil: No problem. After you stop subsidizing your farmers.
US: Sorry, can't. Politics.
Brazil: Ditto.

(Both delegates relax. A companionable silence sets for a while between them.)

US: We knew that this would happen, didn't we?
Brazil: Yeah. It could have been worse.
US: I know. Thanks for not bailing out like last time.
Brazil: Don't mention it. We can't keep walking out of these things. Brazil needs more trade, you know? Anyway, do we sign the dummy accord now or wait until Friday?
US: Let's do that now and go back to our homes. See you around in Geneva?
Brazil: Most likely. Good luck with the Chinese and the Europeans, though. They are not a happy bunch.
US: I know, I know. But what can I do? It's (all delegates together, with a semi-amused, semi-exasperated rolling of their eyes) Politics, we know!


If you don't buy this version of the talks, just meditate on the following quote from Robert Zoellick, the U.S. Trade Representative: "Economies are different in the early 2000s than they were in the 1990s. We each have our own politics to deal with."

Understatement, so it seems, is still the heart of diplomacy.

Things are changing on the globalisation front, and fast. Yesterday Marcelo was pointing out just how the post default export profile of Argentina has been changing. Today MSNBC looks forward to the next FTAA round, and asks some of the right questions. After Cancun, just where is globalisation heading? Are we going to see a series of bilateral arrangements? If the US drives home an agreement with Brazil, will this de facto set the table for the rest of LA? In an election year what can be done about agricultural subsidies? Is the US really as interested in globalisation as it used to be? Is LA seen as a strategic economic buffer, given the strength of the Asian 'arrival'. For the answers to these, and a number of other tightly interrelated, questions, it seems like we may not have to long to wait: things could get interesting in Miami.

In the minds of security personnel, the upcoming trade block negotiations in Miami will be a success if there are peaceful protests and minimal impact on residents and property. But in the business arena - the key focus of the talks - success will be achieved if two key players, Brazil and the United States, start talking again on some controversial issues.

The two largest economies in Americas must come back to the negotiating table before the Free Trade Area of the Americas (FTAA) can be completed by the self-imposed deadline of January 2005. The sweeping pact would, as proposed, eliminate quotas and tariffs on exports and imports. It would allow a free flow of goods and services across the Americas, except in Cuba. But there are opposing opinions about agricultural subsidies, one of the many controversial issues that must be resolved for the creation of the trade zone.

Those subsidies are at the root of the contention between the United States and Brazil. Their inability to reach consensus brought a September World Trade Organization (WTO) meeting in Canc├║n to an abrupt end. The WTO Ministerial Conference there crumbled before any talks began. As wealthy countries balked at a more equitable trade deal, developing countries, represented by Brazil, walked out of the talks. "They never had a chance to sit down and discuss agriculture to see if any compromise could be reached," said Jeffrey Schott, a senior fellow with the Institute for International Econom-ics, a think tank based in Washington, D.C..

Brazil says the United States is trying to exclude discussions on agricultural subsidies from the FTAA negotiations, said Carl Cira, director of the Summit of the Americas Center at Florida International University in Miami. The United States wants to negotiate the subsidy issue at the WTO level. In return, Brazil is threatening to leave some issues dear to the United States off the bargaining table, Cira said. "Brazil said 'if you can't do anything for us in the agricultural field, then, we can't do anything for you on intellectual property rights, services and government procurement,'" he said His group has been monitoring the FTAA talks since they began about eight years ago. The FTAA process began in December 1994 during the first Summit of the Americas in Miami.

The Organisation for Economic Co-operation and Development has released its white paper about Corporate Governance in Latin America. As recent and not so recent experience indicates, good corporate governance is a difficult issue, even for developed countries.

ORGANIZATION FOR ECONOMIC COOPERATION AND DEVELOPMENT (OECD)
November 2003

Latin American White Paper on Corporate Governance
Plan for Latin American Corporate Governance Reform Issued)

Corporate governance experts from Latin America, the Organization for Economic Cooperation and Development (OECD) and International Finance Corporation (IFC) unveiled an action plan for corporate governance reform in the region -- the White Paper on Corporate Governance in Latin America.

The White Paper, setting out consensus-based priorities for the region, was developed in cooperation with the World Bank Group through a series of meetings of the Latin American Roundtable on Corporate Governance, an initiative involving senior regulators, policy-makers, investors, business groups and NGOs from countries throughout Latin America, as well as participants from the OECD and a range of other international organizations. The White Paper was developed through discussions over the course of four Roundtable meetings held in Brazil, Argentina, Mexico and Chile between 2000 and 2003. The OECD and IFC serve as Secretariat for the Roundtable, which also receives support from the Global Corporate Governance Forum and the Inter-American Development Bank.

Among the key priorities for action identified in the White Paper are taking voting rights seriously; treating shareholders fairly during changes in corporate control and de-listings; insuring the integrity of financial reporting and improving disclosure; developing effective boards of directors; improving the quality, effectiveness and predictability of the legal and regulatory framework; and continuing regional cooperation.

The White Paper was developed using the OECD Principles of Corporate
Governance as the reference for discussions, and has been adapted to
address the conditions and circumstances particular to Latin America. The region's distinguishing characteristics include the important role that industrial and sometimes financial conglomerates play in the development of privately-owned industry, combined with highly concentrated and often family-based ownership. Such characteristics suggest that particular attention is needed to ensure transparency of transactions, independent and effective board management and protection of minority shareholder rights and interests.

The White Paper can be downloaded in PDF format from this web address:
http://www.oecd.org/dataoecd/25/2/18976210.pdf

Brazil believes that free software is an excellent tool for the
democratization of knowledge, foreign currency savings, and
the optimization of institutional investments and costs. The
model also offers perspectives for Brazilian industries to research,
create, and develop new free software programs. - BRAZZIL

this link was found on WorldChanging.com

If you don't know the music of Brasil's Minister of Culture, Soy Loco Por Ti America is as good as any place to start. Gilberto Gil was exiled from his country by the Brazilian dictatorship in the 60's, and in exile he wrote the beautiful celebration of Rio de Janeiro's beauty, "Aquele Abraco", which starts off this record.

He has made it his mission to develop lesser known cultural communities throughout Brasil, as explained in this CNN.com article.

There is a nice photo portrait of the Minister/Pop Star here.

The Argentine chancellor Rafael Bielsa, together with representatives of Argentina's biggest companies, will begin in a couple of weeks a business tour through China and Japan.

A few years ago this might have been a trip to "exotic markets" looking for new opportunities, but nowadays Asia is the main destination for Argentine exports. And keep in mind that since the devaluation of the peso, and driven in part by Chinese demand for raw agricultural materials, exports have been the fiscal lifeline of the government, which in turns allows it to finance its social and political projects.

Still, Argentina isn't as oriented towards international commerce as some zones of China itself. According to this article mentioning the visit of Chinese businessmen to Argentina yesterday, the Guangdong province alone has the same GDP as Argentina, but five times its volume of international commerce (which, adding imports and exports, is higher than its own GDP!).

By the way, I can't help but wonder about whether Latin American businessmen, long used to doing business at, let's say, more of a personal than a strictly formal level, might find it easier to relate to unique Chinese relationship patterns like Guanxi than american and european executives coming from a different cultural background.

According to a WHO report, Buenos Aires is the 4th noisiest city in the world and the noisest in Latin America. Worldwide, the top three noisiest cities seem to be Tokyo, Nagasaki and New York.

I'm not really surprised by this report. I'm writing this in saturday mid-morning, and through my apartment balcony I can hear a veritable cacophony of mostly traffic noises. Of course, living near Avenida 9 de Julio might have something to do with that...

Greetings, all. The news from Ecuador this Friday morning:

--The biggest national story to emerge of late has to do with tardiness. Ecuadorians, like many others in Latin America, have a decidedly relaxed view of punctuality.

Meetings start late. Classes start late. People show up late for work. And now a coalition of businesses and civic groups wants to change that. They've launched a campaign to stress the importance of being on time. The Washington Post's Scott Wilson weighs in:

"There is this great informality about time -- things start late and end extremely late,'' said Cesar Montufar, director of Citizen Participation, the civic organization spearheading the campaign. "Democracy depends on respect, and this is very much part of that. This is about complying with our duties and responsibilities."

Though it's not mentioned in the article, I can share this piece of anecdotal evidence that suggests the new effort may not pay immediate dividends. It was reported in the local papers that several key officials were late in arriving to the ceremony kicking off the campaign in Guayaquil.

In other news:

--UN Secretary-General Kofi Annan recently visited latitude zero and chatted with President Lucio Gutierrez.

--And Newsday reported that last week "authorities detained an Italian man after he tried to board a U.S. airliner headed to Newark, N.J., carrying a backpack containing two homemade pistols and a stick of dynamite..." (Frankly, I was surprised not to read about this in the US media. But it appears the passenger was "incoherent" and has no connections to terrorist groups.)

That's it for now.

The Argentine government's negotiations with privatized utility companies will begin next Nov. 26th, with talks with privatized gas transport and distribution companies. Power companies will be next, beginning Dec. 2nd. Negotiations are expected to last around six months, and with the political and economical clout that both sides (government and multinational-backed companies) can muster, I think it's certain to make headlines along the way (even yesterday the Spanish king, currently visiting the country, touched upon the issue).

Source: Cronica

The LA times had an interesting story about remmitances the other day. The results are striking, one fifth of adults in Mexic are receiving fund from the US. Also note the role of saving in the use of funds. This is a topic I am studying in research into east european migrants in the EU. It is clear that people often make great sacrifices, continue to live in relative poverty, and try to invest in a piece of land or a house back home. This, in its turn, may have distortionating price efects in some villages, driving even more immigrants to leave. That is, speculation isn't only something that happens in the financial markets.

Money sent home from the U.S. to Latin America and the Caribbean totaled about $25 billion last year and should top $30 billion this year. Remittances to Mexico exceed the value of tourism or agriculture as a source of foreign funds, and in El Salvador remittances account for more than 15% of the gross domestic product, according to the Inter-American Development Bank, or IADB. Migration to the U.S. is often described as a safety valve for such countries because it provides an escape for people who cannot find economic opportunity at home.

With remittance flows at these levels, migration is clearly also providing essential income to those who remain behind. If remittances were suddenly cut off, already fragile domestic economies would be imperiled by the drop in internal consumption. There is now a two-way channel тАФ people flowing north, money going south тАФ that has become central to the social stability of many countries in our hemisphere.

To better understand remittance transfers and their consequences, the Pew Hispanic Center and the IADB conducted a series of surveys and other studies in the U.S. and Latin America, drawing information from about 10,000 individuals thus far.

In Mexico, this research found, fully one-fifth of the adults are receiving remittances from relatives in the U.S., and in El Salvador it is nearly a third.

The surveys also show that these funds are reaching every sector of society, not just the poor, and indeed the greatest effect may be in keeping working-class families from slipping into poverty. Though most of the money goes for food and rent, between a quarter and a third of remittance recipients report putting some of it into savings, educational expenses or small investments. Given the size of the flow, these funds far exceed the economic aid and development assistance that wealthy countries like the U.S. are putting into the region.

That is not anything to celebrate. People should not feel obliged to migrate, and those left behind should not be dependent on remittances. Corrupt and inefficient government, populations growing faster than economies, gross inequalities in income distribution and the many other factors that helped create this situation are not going to be remedied soon. Meanwhile, millions of people have created a solution of their own.

Many are like a woman at a focus group conducted in the Mexican city of Puebla. After her husband was laid off at an automotive factory where he had worked for many years, he could not find work that was as steady or as well paid. He eventually joined relatives in the Los Angeles area who helped him find a job and a place to live.

Although he had entered the United States illegally, he was soon sending back $200 every two weeks. Every payday, he goes to a wire-transfer company to send the money, and his wife picks it up the next morning.

"We kept our house," the woman said. "We kept our boys in school. That money allows us to keep our life here except that now he is there."

Their marriage is now conducted primarily over the telephone, with calls at least once a week to discuss spending, homework, friends and all the other subjects that used to be covered around the dinner table. She worries about the distance between them, but for now their household functions almost as before.

This family and many millions more like it are quintessential players in the era of globalization. Like entrepreneurs who seek out markets, capital and labor around the world, they too hop borders in search of competitive advantage тАФ Los Angeles is a good place to earn wages; Puebla is a good place to raise children.

The woman, her husband and their children live in what sociologist Manuel Castells calls the "space of flows." This is a timeless place marked by transnational networks operating beyond traditional institutions and communities. Although the term is more often applied to the very rich, it relates to these much humbler people as well.

Meantime I checked out the Pew Centre mentioned in the article. The report hasn't been posted yet, but the site looks interesting:

The Pew Hispanic Center's mission is to improve understanding of the diverse Hispanic population in the United States and to chronicle Latinos' growing impact on the nation. The Center strives to inform debate on critical issues through dissemination of its research to policymakers, business leaders, academic institutions and the media.

-Chavez asks the Venezuelan Central bank to "give" him a billion dollars for agricultural projects. The Central Bank says as long as the Government has the Bolivars to buy them, there will be no problem, but reminds Chavez that the reserves do not belong to the Government.

-Chavez gets his one billion anyway as the country issues US$ 1 billion in debt via a dollar-denominated 15-year bond sold in local current. (see story below)

-Plans for petition drives for recall referenda for the Deputies in the National Assembly (Nov. 21-24th.) and President Chavez (Nov. 28-Dec. 1st.) continue in earnest. The OAS, UN and the Carter Center will be sending observers to both processes. Secretary General of the OAS, Cesar Gaviria, announced that he will personally attend to be part of the OAS team. As of today, it is not clear whether Venezuelans abroad (mostly anti-Chavez) will be able to sign. Strong disagreements between the opposition and the Government persist on regulations for advertising on the petition drives. The proposed regulations limit the opposition, but not the Government. There is fear of violence during both processes. Stay tuned.....

-The proposed Supreme Court Bill was once again postponed this week, leading to the belief that the Chvaez administration does not have the votes to approve it. The Bill would incresae the number of Supreme Court Justices to 30 from 20. Chavez' MVR party wants to approve the bill with a simple majority arguing that it was a mandate of the new Constitution and thus does not require a two-thirds majority. The opposition intends to fillibuster the Bill, but its discussion has been now cancelled twice by Chavez's party, indicating teher may be internal disagreements over its contents.

This was from my old Blogpsot blog, but I thought it bears repeating:

In August 1999 I was visiting Brazil by myself and staying with my sister-in-law in Belo Horizonte and my brother-in-law in Vitoria. I was at the bus station in Vitoria getting my ticket back to Belo Horizonte when I had the following intriguing chat with the ticket agent while my ticket was being printed:

Agent: "So, are you American or British?

Me: "I'm American."

Agent: "What state?"

Me: "New York"

Agent: "New York City?"

Me: "Yes."

Agent: "So, do you think that Hillary is going to run for Senate?"

Me (alternately impressed and taken aback): "It looks that way."

Agent (as my ticket spits out of the printer): "Well, she's going to have a tough time with Giuliani. Have a nice trip!"

Four years later I still love this story. I'll leave it to you to interpret it as you see fit.

The Venezuelan Government will sell US$1 billion in a fifteen year bond in the next couple of weeks. The issue will have a coupon of between 7 and 8% will be sold only to local investors, but will be denominated in US$. Thus, in effect, it becomes a mechanism for the wealthy to purchase foreign currency at a discount. Basically, you buy the bonds at 100% in local currency at the official exchange rate, but they trade at a discount in the secondary market, since the country already has a 2018 bond with a coupon of 13.65%. As an idea, it is quite clever, in this manner you issue the bonds with a low coupon, but raise the funds anyway. However, in the end it turns out to be quite perverse (this is becoming my favorite word when I refer to the Venezuelan economy): Only the wealthy can buy, the debt is in US$, but the Government gets local currency at the official rate and moreover, somebody that wants, let's say, $1,000 does not have access to it. However, this does not stop Chavez from saying (gloating?) publicly that anyone with US$ 1,000 will be able to buy the bond next week. The truth is that since the bonds will only have a secondary market in foreign markets (none in Venezuela because the Government did not take the time and the care to create one), most foreign brokers will only trade them in large lots and, local brokers, as was the case in the 2010 bond issued in August, will only accept orders in minimum lots of $1,000. In the end though, Hugo Chavez gets the US$ 1 billion he asked the Central Bank to "give" him and the country continues to be run by the President' whims.

aaahh... Look at this. When I look at this picture, which I took in February on Salvador, Bahia's Rio Vermelho beach, I really wish I was there now. Instead, I'm preparing for another New York winter. This Brazilian-American will never acclimatize to the unforgiving cold. When I was there, I fell in love about a million times, and I vowed that one day I would own a place in Salvador. It seems to be somewhat of a trend, many musicians up here are looking towards Salvador for "Salvation"... you can buy an apartment for very cheap. Plus, I believe the rest of the world (especially places like New York) need more of that energy (called Axe) that the Baianos carry with them everywhere they go.

Well I hope my dreamy postings will somehow find their place amongst the more serious economic and political observations of this group blog!! I was humbled by the prospect of joining...

Both the Argentine and the Chilean governments were shocked, shocked! when chilean intelligence personnel was found copying classified documents from the Argentine consulate in Punta Arenas. This was treated by both countries as a "regrettable incident", while the chilean government expressed that the agents had been working independently, and dismissed two high-ranked military officers. In the end, the bilateral relationship doesn't seem to have been much damaged by these events, as both governments are probably more interested in trade issues than in this kind of random events (spies getting publicly exposed, I mean; that both countries direct intelligence operations against each other goes, I think, without saying).

President Kirchner admitted having received threats directed at him and his family, which government officers linked to his comments relating the chronic and politically explosive security problems in the Buenos Aires area to corruption or outright criminality in the Buenos Aires state police (the much-feared "Bonaerense"). Today, in what might be seen as another round of this fight, two top-ranked chiefs were displaced.

Argentina's GDP per capita is expected to grow by 10% next year. The number is roughly in agreement with other projections, although you might want to keep in mind that the company that made them was founded by the current minister of economy...

The government announced yesterday a rise on the minimum wage and retirement pay to $350 and $240 respectively (around U$D 120 and U$D 80/month), plus a $50 raise to certain private employees and the payment of the annual "aguinaldo" before this year's holidays. This is being financed by record tax receipts, based to a large measure in high soy prices and rising consumption from China. Of course, if China's demand were to slow down (as the Morgan-Stanley crowd fears) or soy prices fell for any other reason, the fiscal, social and political situation of Argentina could seriously deteriorate. The global market, alas, is a tricky place.

Finally, for those interested in soccer (pretty much the whole population of Latin America, it seems): tournment leader Boca Juniors beat by 2-0 arch-rival River Plate, prompting a political storm in the defeated club that almost, but not quite, lead to the dismissal of coach Pellegrini.

We thought it would be informative if those of us blogging on the ground in Latin America would summarise the news and views from our own areas on an approximately weekly basis. Thus, without further ado, the news around Brazil in the past week, from my own perspective. [I'm dispensing with accents / diacriticals - blogger is making too much of a mess of them].


President Luiz Inacio Lula da Silva visited Africa last week. His trip included visits to the lusophone countries of Angola, Mozambique and Sao Tome and Principe, followed by visits to Namibia and South Africa. Among the agenda items, Brazil and Mozambique signed an accord to build a factory to produce generic AIDS medicines in Mozambique. Technology will be supplied by Brazil.

"The queen of Brazilian literature has died." Rachel de Queiroz, the first woman elected to Brazil's Academia Brasileira de Letras, died last Tuesday at the age of 92.

As noted here last week, Brazil concluded its first agreement with the IMF to extend its loan facility since the current administration took power. Prior to his election as President, Lula was an ardent opponent of the IMF intervening in Brazil. Brazil can now borrow up to US$14.6 billion. Included in that is US$6 billion of newly-earmarked funds. $2.9 billion of this money is already budgeted for sanitation projects (expected to create up to 300,000 jobs). The current government views this as an interim arrangement and would like nothing better than that the first accord be the last.

Narco-violence flared in Sao Paulo, with the crime syndicate PCC (Primeiro Comando da Capital) launching a wave of organised attacks, principally against police targets. Both policemen and gang-bangers were killed in the wave of attacks. A sweep of SP prisons garnered 114 contraband mobile phones in the hands of prison inmates, as well as drugs and weapons. Separately, six convicts were killed trying to escape from a prison in Sao Paulo when the tunnel they were using collapsed. More than 80 prisoners had already escaped through the tunnel; of those, 43 had been recaptured by Sunday.

The government decided to put a freeze on pension payments for those over the age of 90. They argued that 30% of pension claims for those over 90 are fraudulent, and suggested a payment freeze until it could be confirmed that the claimant was still living. After a wave of protest and some none-too-flattering pictures of old folks being wheeled out to the Social Security offices, the government backed down. Claims must still be verified, but the government will check on each case rather than placing the burden of proof on the claimants. Payments resumed on the 10th of November.

Brazil marked the centenary of Ary Barroso, "o mais brasileiro dos brasileiros", the composer of Aquarela do Brasil, better known in English as just "Brazil". O Globo calls the song "the most emblematic Brazilian song", reflecting the "greatness, worth and opulence of our country, enormous by its own nature."

The chief of the Casa Civil, Jose Dirceu, endorsed military integration of South America, claiming that dealing with regional security issues was essential to preserving sovereignty in the region. He cited the case of Colombia, arguing that if the situation was not controlled, "the United States will occupy Colombia, and if they do, they will never leave."

Talks between Brazil and the USA brought the FTAA (ALCA) closer to reality, although Brazil still wants an opening in US markets, principally in citrus fruits and in sugar, where Brazil could compete favourably if the US market was not subsidised and protected by tariffs. The initial proposals for regional integration look promising, although Brazil's particular concerns are not well-addressed ahead of next week's meetings in Miami, leaving open the possibility that some bilateral or multilateral sub-agreements will complicate the formula for freer trade, with some restrictions preserved intact until 2010 or beyond.

The WTO ruled against the US in maintaining a 30% tariff on steel imports, which opens the way for Brazil's big steel importers, Gerdau and Belgo-Mineira, to increase their exports to the US.

Futebol - Cruzeiro remains at the top of the standings in the Brasileirao, six points clear of defending champion Santos and needing just two more wins to clinch the championship. In the relegation zone, Bahia has the penultimate spot, 3 points ahead of lanterninha, Gremio.

There is clear delight in Brazil this morning after the WTO decision that US tariffs on steel imports are contrary to the rules of the agreement, and the economy pages of the papers are dominated by the news. Brazil's ambassador to the WTO is quoted in O Globo this morning as saying, "It's a great victory. It shows that the system of conflict resolution in the WTO is capable of giving solutions to certain important cases. This is a guarantee for all of us: to have a multilateral trade system that works."

Brazil will likely be the biggest winner in terms of the impact this will have on its steel industry. Even with the tariff, the US constituted 28.4% of Brazil's export market in 2002, worth US$733 million. Relieving the 30% tariff imposed by the US is likely to greatly improve Brazil's export competitiveness. Brazil estimates losses of US$1 bn since the protections came into place, with $300 million lost in 2002 alone.

O Globo notes that other beneficiaries will be China, the UE, South Korea, Japan, Norway, Switzerland and New Zealand.

My own impression (and I'm sure I'm not alone) is that the Bush administration, for all of its po-faced posturing, knew all along it was in the wrong, and was using the WTO process as a tactic to delay facing the inevitable, largely for political purposes. The US is hardly alone in this. However, the EU has promised an immediate punitive tariff of 100% on certain US exports: cigarettes, frozen vegetables and paper products. As O Globo reports, these tariffs will impact hard on key swing election states - a tactic by the EU to win quick compliance with the WTO decision. One can imagine US farm-belters boycotting French products in response. They are unlikely to respond well to sharing the burden of the US's industrial protectionism, although the real architect of their pain should be seen to sit rather closer to home. I'll be interested to see how the US spins this one.

It's been a good weekend for a friend of mine, the Brazilian composer Harry Crowl. On Saturday he and his fianc├йe Rosie were married in their hometown of Curitiba. On Sunday evening, his Aetherus kicked off the opening night of the XV Biennale of Brazilian Contemporary Music (note: .doc format), here in Rio.

You can hear excerpts of Harry's music on his publisher's site. Harry is interested in exploring the tonal range of the instruments for which he composes; you find yourself in different musical landscapes when you listen. I also enjoy his settings of some of the poems of Symbolist poet Cruz e Souza.

Harry knows a lot about Brazilian classical music (I love the term erudita for such music), and I'm hoping he might take a turn as a guest contributor one day. In the meantime, Parabens, Harry! Best wishes to the new bride and groom.

According to local newspaper El Universal, Cuba has converted more than one million hectares of sugar growing land to other crops and the country is no longer producing sufficient sugar for its own consumption. A total of 70 sugar concerns were sutdown as production, which in 2001 and 2002 reached 3.5 and 3.6 million Tons, did not reach the two million Ton mark this year. Reportedly, the country is pondering whether to buy sugar from the US. Curiously, the Chavez Government has been buying plants and equipments from the Cuban Governemnt to "reactivate" the Venezuelan sugar industry. Sugar used to be the largest Cuban export and Castro made the sugar industry emblematic of his revolution in the 60's and 70's, forcing many Cuban citizens to harvest sugar during the harvest or "zafra" season. The industry had been criticized internally for the last few years for its dropping production and inefficiencies.

Today is a critical day for Guatemala's future. It's not just a typical election day; it's also a chance for the citizens of Guatemala to put behind them an absolutely horrific chapter in their recent past. I am not very sanguine about the chances that this will happen, however.

A presidential election is scheduled for Guatemala today. Most of the polls show that neither of the two leading candidates, the right-leaning Oscar Berger, the former mayor of Guatemala City and the center-left candidate, Alvaro Colom will win more than 50% of the vote, necessitating a runoff between them. There is an odious wild-card in the election: Efrain Rios Montt. While the polls show Rios Montt running third, as the New York Times noted today, [free subscription required] the polls are conducted by newspapers via telephone; much of Rios Montt's support is among the poor in the countryside away from easy access to telephones:

"Nobody discounts the possibility that Mr. Rios Montt could win," said Mr. Beteta.

Though there will be hundreds of independent election observers on Sunday, they cannot cover all the governing party's rural strongholds.

"The F.R.G. [Rios Montt's party] can do whatever they want in the absence of security forces, and they control the security forces," Mr. [George] Vickers Latin American director of the Open Society Institute] said. "And if Ri├В┬нos Montt gets into the second round, all bets are off."

Rios Montt should not even be able to run for president. The law forbids anyone who has assumed office via a coup (as Rios Montt did in 1981) from running for president. Rios Montt appealed the decision of the electoral courts to the Supreme Court and managed to have a couple of his cronies packed onto the court, including his former attorney, leaving no doubt as to their ruling. This was also done in the face of street violence clearly orchestrated by the F.R.G.. Subsequent to this, some 21 candidates from parties opposed to the F.R.G. (which currently holds Guatemala's presidency) have been assassinated this election season, to which Rios Montt responded to questions about who is behind these attacks, "I think the passion to be the winner that many supporters have makes certain excesses inevitable, but I see that as normal." It certainly makes one wonder what he envisions as "normal " should he be elected.

If you want to get some insight into the unmitigated brutality that took place during the Guatemalan civil war, read the Guatemala Death Squad Dossier from the report issued by the American Association for the Advancement of Science Human Rights Program. If you want to get the barest and most dramatic thumbnail sketches of the nature of Rios Montt's brutal rule, scroll down to the graph at the end of this post on my blog. Some 10 percent of the 200,000 killings and disappearances that took place in Guatemala's 35 year civil war took place in the less than two years that Rios Montt ruled.

So, while the rest of Central America is moving forward, the largest country in the region is poised to take a giant step backwards. Please pray for Guatemala - even if you're an atheist or agnostic.