NotiSur, 11/16/01: Argentina, Brazil, Paraguay Via NY Transfer News * All the News That Doesn't Fit [Reminder: this is a reading copy for your personal use only. It cannot be redistributed under the terms of our subscription with LADB. -- NY Transfer]. ------------------------------------------------------------ L A T I N A M E R I C A D A T A B A S E NotiSur - South American Political & Economic Affairs ISSN 1060-4189 Volume 11, Number 42 November 16, 2001 ------------------------------------------------------------ Copyright 2001, Latin America Data Base (LADB), Latin American Institute, University of New Mexico Director: Rebecca Reynolds Bannister Editor: Patricia Hynds Staff writers: Carlos Navarro, Robert Sandels LADB ARCHIVES: Back issues are referenced to provide historical background relevant to the articles in this newsletter. These can be accessed with a subscription to the LADB searchable on-line archives at http://ladb.unm.edu/ by clicking on Search Archive. For subscription information, e-mail info@ladb.unm.edu or call 1-800-472-0888. In This Issue: ARGENTINA: OPPOSITION GOVERNORS AGREE TO CUTS * President says provinces must cooperate * Debt swap called tantamount to default * De la Rua visits US to explain swap * Economists disagree on effects of a devaluation BRAZIL: FOUR SENTENCED IN HUMAN RIGHTS CASE * Killing was for amusement * Verdict could help Indians' cause * Wider human rights implications PARAGUAY: AFTER ATTACKS IN THE U.S., POLICE CRACK DOWN ON UNDOCUMENTED WORKERS & IMMIGRANTS ____________________________________________________________ ********************* ARGENTINA ********************* ARGENTINA: OPPOSITION GOVERNORS AGREE TO CUTS Opposition governors from Argentina's largest provinces finally signed a deficit-reduction agreement with the administration of President Fernando de la Rua on Nov. 14. The agreement is seen as crucial to government efforts to avert a default on its debt or a currency devaluation. In August, the government implemented a zero-deficit plan under which the government spends only what it collects in taxes. Because of the recession, now in its fourth year, the government collects less in taxes each month, and the declining expenditures threaten further cuts, which in turn deepen the recession. Tax receipts have fallen by more than 10% in the last two months, and manufacturing and consumer sales have also fallen sharply. Unemployment has reached nearly 20%. Economy Minister Domingo Cavallo says the country is now in a full-blown depression. To avert the total collapse of the country's finances, he wants to restructure US$154 billion in federal and provincial debt to free up resources to restart growth. Administration officials insist the government will pay its debts, but right now it has not paid provinces some US$800 million in revenue sharing, and it has no money to service its foreign debt, issue pension checks, pay suppliers and contractors, or catch up on back pay owed to federal employees. Cavallo has said there is no alternative but to accept the austerity accord and proposed debt swap if Argentina is to have a chance of repeating the growth of 1990s, when the economy expanded by nearly 50%. President says provinces must cooperate The administration trimmed its disbursements to the provinces earlier this year, but many provinces said they could not afford further cutbacks, and some had begun to pay state workers in bonds or let back pay accumulate, triggering near-daily protests by employees. Governors belonging to the governing Alianza coalition came to an agreement with the administration on Nov. 7, but the opposition Partido Justicialista-peronista (PJ) governors, who control 14 of the 23 provinces with 80% of the population, refused to sign on. After frequently stalled negotiations, four influential PJ governors--Buenos Aires Gov. Carlos Ruckauf, Cordoba Gov. Jose de la Sota, Santa Fe Gov. Carlos Reutemann, and La Pampa Gov. Ruben Marin--signed the agreement. Four others from smaller provinces had signed the pact the day before. The few remaining holdouts are expected to come on board in the coming days. "The country is in danger and this might be the government's last chance to end this crisis," said de la Sota. Only days earlier, Ruckauf had threatened to seize federal government property and take it to court if the province's share of tax revenues was not forthcoming. "When the president has the money, tell him to call me," Ruckauf said as he abruptly left a meeting of governors on Nov. 8. The agreement allows the federal government to reduce by 13% the US$1.3 billion in tax revenue it shares with the provinces and the city of Buenos Aires each month. In exchange, de la Rua said the domestic debt swap would save the provinces around US$1 billion each year. It calls for exchanging provincial debt at double-digit interest rates for new bonds at 7%. The long-awaited deal with the provinces also opens the possibility for additional support from foreign governments and the International Monetary Fund (IMF), which made it clear that any further assistance depended on the de la Rua administration getting its internal politics in order. Debt swap called tantamount to default The Emerging Market Creditors Association (EMCA) had become increasingly edgy as Argentina prepared to swap US$60 billion in locally held debt for new securities that would pay less interest over a longer time period. "The international bondholding community is increasingly anxious about being excluded from dialogue with the Argentines regarding the shape of the government's liability management and restructuring process," said Mark Siegel, a board member at EMCA. The Argentine government, which devotes a fifth of its budget to servicing its debt, describes the swap as "voluntary." But some ratings agencies that believe local banks were pressured into it said it is tantamount to default. De la Rua visits US to explain swap President de la Rua and other administration officials made a three-day visit to the US Nov. 9-11 to explain to investors the debt-swap plan and to participate in the UN General Assembly. Economy Minister Domingo Cavallo and Foreign Relations Minister Adalberto Rodriguez Giavarini accompanied the president. De la Rua had hoped to have the agreement with the governors in place before meeting with US President George W. Bush in New York, but that did not happen. De la Rua went before Wall Street investors on Nov. 9 to defend his plan for rescuing the economy, saying the debt swap was the best way to keep Argentina solvent. Although critics see the move as a sign that a default is imminent, de la Rua pledged that Argentina would find a way to pay off its debt and emerge from recession. "Argentina has always honored and will continue to honor its obligations," he said in a speech to about 300 investors and analysts. The Argentine president met with Bush on Nov. 11. A Bush administration official told reporters that the US president had expressed support for IMF efforts to come to Argentina's aid and for efforts to restructure the debt. When he returned to Buenos Aires, de la Rua said the trip had been a success. But some news reports said that Bush warned de la Rua that he must resolve the political problems at home to ensure fulfillment of the zero deficit policy if he wanted further monies from the IMF and the political support of the White House. "Beyond the good wishes, the interest on the part of President Bush, I didn't see anything else," said political analyst Ricardo Rouvier, after watching de la Rua summarize the trip on Argentine television. Economists disagree on effects of a devaluation An Argentine default, still a worry to investors, would be the biggest-ever bond default by a developing country, dwarfing even Russia's 1998 crisis. And de la Rua has said that devaluing Argentina's currency would be disastrous to the economy. But not all economists see a devaluation in such dire terms. US economist Paul Krugman says that the rigidity of Argentina's monetary system, designed to protect against inflation, precludes it from taking actions to fight deflation, such as cutting interest rates or letting the currency depreciate. Instead, he says, Argentina has gone through wave after wave of fiscal austerity, each time with the promise that the newest wage and job cuts would restore confidence and produce economic recovery, and each time the recession has only deepened, increasing social tension and further reducing confidence. Krugman suggests that Argentina let the peso float and do what is necessary to save the economy. In contrast to even 11 months ago, some Argentine industrialists have joined in calling for a devaluation to end the fiction that an Argentine peso has the purchasing power of a US dollar. "It should become clear now that convertibility is the culprit [of the economic problems]," wrote Jorge Born, former president of grain giant Bunge & Born, in The Buenos Aires Herald. "Since the 1=1 dollar peg has to come to an end...then surely the time to do it is when there are still reserves to control the process." Cavallo is due to meet US Treasury Secretary Paul O'Neill on Nov. 19 at a meeting in Ottawa of the Group of 20 finance ministers from industrialized and emerging countries. Argentina's economic crisis and the ongoing efforts to resolve it are expected to be a major topic for discussion. [Sources: The Wall Street Journal, 11/07/01; The New York Times, 11/07/01, 11/09/01; Associated Press, 11/09/01, 11/10/01; Clarin (Argentina), CNN, The Financial Times (London), Spanish news service EFE, 11/11/01; The Miami Herald, 11/10/01, 11/12/01; La Opinion (Los Angeles), 11/12/01; Reuters, 11/07/01, 11/09/01, 11/11/01, 11/14/01; Notimex, 11/11/01, 11/12/01, 11/14/01] ********************* BRAZIL ********************* BRAZIL: FOUR SENTENCED IN HUMAN RIGHTS CASE A federal judge sentenced four men to 14 years in prison for setting fire to an Indian leader in 1997 in a widely watched case heavy with racial and class implications. Galdino Jesus dos Santos, a 45-year-old Pataxo Indian leader from the northeastern state of Bahia, was doused with alcohol and set on fire as he slept on a bench at a bus stop in Brasilia on April 20, 1997 (see NotiSur, 1997-05-02). He died less than 24 hours later with burns over 95% of his body. Galdino had been in Brasilia to push for the legal demarcation of his tribe's traditional lands in Bahia. He was sleeping on the bench because he had been locked out of his boarding house. A witness noted the license plate of the car in which the men drove away after the incident, and police arrested them the same day. Killing was for amusement After a four-day trial, the jury voted four to three to convict Max Rogerio Alves, Antonio Novely Cardoso, and Eron Chaves de Oliveira, all 23 years old, and 22-year-old Tomas Oliveira de Almeida of intentional homicide in the death of Galdino. The jury found that the young men, all from prominent and prosperous families, acted "with cruelty, without giving the victim any chance to defend himself, and solely for the amusement of watching someone be burned alive." The defense argued that the defendants, out joyriding after a night partying, set the Indian leader ablaze as an adolescent prank, but did not intend to kill him. However, the jury rejected the defense's arguments and its premise that the crime was one of bodily injury followed by death, a lesser crime. Judge Sandra de Santis of the Federal District Justice Court read the sentence on Nov. 10. She had considered a 15-year sentence for each of the accused, but reduced it to 14 years because the four defendants were under 21 when they committed the crime. A fifth youth who participated in the murder was not tried because he was 17 years old when the crime occurred. In Brazil, people under 18 are not held legally responsible for their criminal acts, but must go through a rehabilitation process. If the crime is serious, they may be temporarily held in special institutions for juvenile offenders. Once the sentence is published in the official gazette, the defense has five days to appeal. The four cannot be released on bail during the appeal process. Because they have no prior criminal record, they can apply for parole after completing two-thirds of their sentence. The four years they have spent in jail since the murder occurred will count toward their sentence. Defense lawyer Raul Livino said the jury's finding was contrary to the evidence, and he said he would appeal. Livino also accused the media of influencing the outcome of the trial. The media gave the trial extensive coverage, especially after prosecutor Maria Jose Miranda dropped the case two weeks earlier claiming she had received threats from family members of the accused and justice officials. Mauricio Miranda then took over prosecution of the case. The media portrayed the trial as pitting one of Brazil's poor minorities against the rich and influential in a country where wealth has often bought impunity. One of the four convicted men is the son of a Brasilia district judge. Verdict could help Indians' cause Members of the indigenous community in court when the sentence was read applauded, and they said later that they considered the verdict and sentence just. Indigenous activists said the case was very important in their struggle for recognition of Indians' rights. Galdino's death brought national outrage and highlighted the plight of Brazil's indigenous groups. After his death, Galdino became a symbol of the indigenous struggle for land. "Many values are at play here, but the fundamental value is that a human life was sacrificed," said Dirceu de Mello, a criminal law professor and head of the law school at the Pontificia Universidade Catolica in Sao Paulo. The case "has helped raise awareness about the Pataxo Hae-hae-hae, whose territory has been invaded by ranchers since 1926," said Roberto Liebgott, assistant secretary of the Conselho Indigenista Missionario (CIMI), an organization of the Catholic Church. The Bahia government encouraged the land takeovers in the 1940s and on through the 1960s because it was interested in expanding the state's cocoa production, Liebgott told Inter Press Service. The battle of the Pataxo to recover their lands intensified in the mid-1980s, and again following Galdino's murder. The Indians have recovered several rural estates, occupying them "in the name of Galdino," said Liebgott. Wider human rights implications Some human rights activists said the sentences handed the four youths are "too light." They said the outcome could strengthen the Indian's position in fighting for land rights, but they doubt it will help protect the homeless, who frequently face similar attacks in the streets of Brazil. Human rights workers said the case is just one example of the violence frequently committed by middle-class youths in large Brazilian cities against homeless people living on the streets. The authorities often ignore such acts, and the general population has often seemed indifferent. The murder is a symptom of the "culture of violence" prevalent in Brazil, a phenomenon in which "the marginalized can be burned alive," said Romeu Olmar, head of the Movimento Nacional dos Direitos Humanos. Olmar said the men who murdered Galdino would likely have gone unpunished if the victim had been a street person. In the frequent attacks against homeless people in Brazil, most assailants are never brought to trial. Society "legitimizes violence against street people, who are considered bothersome and disposable," Olmar said. An indication of the predominant social attitudes toward the homeless population is that the young men said in their defense that they "thought he was a street person," and that they were unaware that their victim was an indigenous man. Olmar said he is concerned that the court's ruling only shows the "bad luck" of young men who did not realize they were setting on fire an indigenous leader who was known for defending the rights of his people. [Sources: Reuters, 11/09/01; Associated Press, Notimex, 11/10/01; Inter Press Service, 11/12/01] ********************* PARAGUAY ********************* PARAGUAY: AFTER ATTACKS IN THE U.S., POLICE CRACK DOWN ON UNDOCUMENTED WORKERS & IMMIGRANTS [The following article by Mike Ceaser is reprinted with the permission of Noticias Aliadas in Lima, Peru. It first appeared in the Nov. 4 edition of Latinamerica Press.] Unbridled commerce and the free mixing of peoples have long characterized Ciudad del Este, a bustling town on the Parana River. On streets crowded with contraband stereos, cameras, and clothing, people of Arabic, European, African, and Korean backgrounds blend in a babble of tongues where the common language is business. But in recent weeks, Ciudad del Este's experiment in coexistence has been threatened by two government crackdowns that some say are justified and others call xenophobic persecution. Some of the tension has been building for years as the local economy has slumped in the wake of the devaluation of the real, Brazil's currency, and increasing competition from Sao Paulo, Brazil. In early September, Paraguayans blocked the Puente de la Amistad, the bridge that links Paraguay and Brazil, demanding that the government take steps to reactivate the city's economy by establishing a duty-free zone and attracting maquiladora industries, the assembly plants common in Central America and on the US-Mexican border. The Paraguayan government responded with a crackdown on the many undocumented Brazilians working in Paraguay. A Sept. 19 police roundup resulted in 28 detentions, although the number of undocumented Brazilians working in Ciudad del Este is estimated to be in the thousands. Angry Brazilians responded with 10 more days of blockades on their end of the bridge. "There are many Brazilians working here, and many Paraguayans are left without jobs," said Tufik Mohsem, a Lebanese immigrant who owns a stereo shop in Ciudad del Este. The Brazilians finally lifted the blockade Sept. 26, when the Paraguayan government gave undocumented workers 30 days to regularize their status. While some Paraguayans demand that 70% of Ciudad del Este's jobs be reserved for Paraguayans, across the bridge Brazilians consider the area a single community whose members have the right to work in either country. "Brazilians work there and Paraguayans work here," said Brazilian Adelmo de Borda, who has lived and worked on the Paraguayan side and now makes his living as a "sacoleiro," crossing the bridge to purchase products for resale. "We all have to work in order to eat." De Borda complained that obtaining Paraguayan residency documents costs hundreds of dollars. The protests further hurt already slumping businesses on both ends of the bridge. Even before the protests, fewer customers were browsing, and vendors in the city--which is legendary for freewheeling capitalism facilitated by corruption, smuggling, and lack of border controls--worry that the conditions that made Ciudad del Este possible are disappearing. During the 1990s, the town flourished primarily on the business of Brazilians who crossed the bridge to buy inexpensive goods. During the past few years, however, Brazil has loosened import laws and restricted purchases from Paraguay, prompting dozens of importers to relocate from Ciudad del Este to Sao Paulo, Brazil. Last year's devaluation of the Brazilian real, which made their purchases relatively more expensive, further discouraged Brazilians. The number of Brazilians crossing the bridge daily has plummeted from 40,000 to 6,000, and their purchases have declined by 85% from five years ago, the Paraguayan business paper Dinero y Negocios reported recently. The Brazilian government also limited to US$150 a month the amount of merchandise Brazilians could take home. Ciudad del Este's troubles come amid a general economic deterioration in Paraguay, where the GDP has declined by 9% during the last five years to below the level of the 1980s. Officials have proposed various solutions to the border area's troubles. Paraguayan Foreign Minister Jose Antonio Moreno Ruffinelli called on Brazil and Argentina to help set up joint ventures in Ciudad del Este. But Brazil's ambassador to Paraguay, Luiz Augusto de Castro Neves, responded that for a decade Brazil has offered a market for "legally made" Paraguayan products. "We cannot tolerate an informal situation any longer," he said. Guillermo Stanley, president of the Paraguayan Industrial Union, said Ciudad del Este cannot offer good conditions for investors unless it achieves a degree of stability and cleans up its legal system. So far, only two maquiladora industries, producing dental equipment and fabrics, have established themselves in Ciudad del Este. But Mohsem has faith that the town will recover. "I believe things will improve," he said. "We can't live without hope." The Sept. 11 attacks in the US, which have been tied to Muslim extremist organizations, injected another volatile element into Ciudad del Este. A large community of Arab and Palestinian immigrants lives in the region where Argentina, Brazil, and Paraguay meet, and, in the past, US intelligence services have warned that terrorist organizations take advantage of the region's corruption and porous borders to organize support networks. But when armed police burst into shops in Ciudad del Este and nearby Encarnacion on Sept. 21 and arrested dozens of people of Arab descent, many accused the Paraguayan government of a witch hunt. A Lebanese immigrant who works in an electronics store said police pushed their way into the shop, searched the premises and interrogated employees for hours without offering any evidence or displaying a warrant. "It's unfair to be treated like this, because we are not terrorists. We came here to work," said the man, who asked to remain anonymous. Other Arab immigrants accused police of stealing from their stores and extorting bribes. A Paraguayan immigration official insisted that the operations were not directed against people of any particular ethnic group or national origin. Thirteen of those arrested were being held on immigration charges, but government officials said no evidence of terrorist links was found. At the request of US authorities, 46 bank accounts are also being examined, but no ties to the Sept. 11 attacks have been found. Several suspected or accused terrorists have passed through the triborder region, however. In February 2000, Ali Khali Mehri, a businessman suspected of raising money for Hezbollah, was arrested on intellectual property rights charges. He fled the country after being released on bail. In November, Salah Abdul Karim Yassine, a Palestinian immigrant suspected by US officials of planning attacks on the American and Israeli Embassies in Paraguay, was arrested in Asuncion. He is now serving a four-year prison term on unrelated charges. A third man, Egyptian national El Said Hassan Mokhles, now being held in Uruguay, is wanted by Egyptian authorities for suspected ties to a 1997 massacre of tourists in Luxor, Egypt. Earlier this year, Paraguay's consul in Miami resigned after it was revealed he had issued more than 300 visas, including more than a dozen to Arab nationals, without following established procedures. And, in Buenos Aires, where the trial of those accused of the 1992 and 1994 terrorist attacks on Jewish and Israeli targets recently began (see NotiSur, 2001-09-28), investigators suspect the terrorists did some of their planning in the triborder region. Paraguayan authorities have sent more police to the area and are working to tighten border controls. An anti-terrorism law is also to be presented to Congress. ================================================================= NY Transfer News Collective * A Service of Blythe Systems Since 1985 - Information for the Rest of Us 339 Lafayette St., New York, NY 10012 http://www.blythe.org e-mail: nyt@blythe.org ================================================================= pvtsa-11.18.01-17:16:43-6833