NotiSur-05/03/02-Venezuela, Paraguay, Economy Via NY Transfer News * All the News That Doesn't Fit [Reminder: This is a private reading copy for your personal use only. It may not be redistributed under the terms of our subscription with LADB. Thanks -- 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 12, Number 16 May 3, 2002 ------------------------------------------------------------ Copyright 2002, 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: VENEZUELA: PRESIDENT HUGO CHAVEZ MAKES CABINET CHANGES & AUTHORIZES INVESTIGATION OF COUP ATTEMPT * Investigations examine recent violence * Questions about US role continue * Criticism is directed at Bush's Latin American team. PARAGUAY: FORMER PRESIDENT JUAN CARLOS WASMOSY FOUND GUILTY OF FRAUD * State money went to bail out private bank LATIN AMERICA: WHO'S MINDING THE PURSE STRINGS? ____________________________________________________________ ********************* VENEZUELA ********************* VENEZUELA: PRESIDENT HUGO CHAVEZ MAKES CABINET CHANGES & AUTHORIZES INVESTIGATION OF COUP ATTEMPT Venezuelan President Hugo Chavez has begun making Cabinet changes and taking other steps aimed at building bridges with the opposition, which has shown little receptivity to his efforts. Meanwhile, more evidence is implicating the US in the failed attempt on April 11 to oust Chavez. On April 28, Chavez named Jose Vicente Rangel as vice president. Rangel, who had been defense minister, will replace Diosdado Cabello, who will remain in the Cabinet in another job, the president said. Chavez said this was the first of a series of Cabinet changes. Some people close to Chavez say Rangel is the only person who has the president's complete trust to act independently in building alliances and dialogue with the opposition and other sectors of society. Rangel is described as approachable, open to dialogue, and able to establish political ties with opponents. "He covers all the weak flanks," said Movimiento V Republica (MVR) legislator Calixto Ortega. "He has broad knowledge of the military, strong ties with civil society, community groups, and political parties, good relations with agents outside of power, while being valued by the Chavistas." Chavez also appointed Ali Rodriguez Araque to head Petroleos de Venezuela (PDVSA). Rodriguez was secretary general of the Organization of Petroleum Exporting Countries (OPEC). Several new board members were also named. "We have to analyze the errors made by both sides...but there is political willingness to resolve the problems, and there will be no retaliations," Rodriguez said, adding that 23 company executives fired or sent into early retirement by Chavez will be rehired (see NotiSur, 2002-03-22, 2002-04-12). "This board is a very good sign," said Horacio Medina, one of the leaders of the dissident executives. "Our objections have been heard and meritocracy respected." On April 25, Chavez met with Cardinals Baltasar Porras, Jose Luis Azuaje, and Ignacio Velasco, archbishop of Caracas. The prelates said the most pressing needs in Venezuela today are dialogue, peace, and "strict respect for human rights." Grassroots groups have criticized Velasco because on April 12 he witnessed the act by which Pedro Carmona ordered the dissolution of parliament and the Supreme Court. Chavez set up a commission (Comision del Dialogo Nacional) to improve relations with his political opponents, while warning that some were still seeking his ouster. "We must acknowledge that there are still disruptive elements," Chavez said after convening the panel of economists, business people, labor leaders, journalists, and church leaders. "There are actors still seeking an unconstitutional way" of deposing the government. Most opposition parties have dismissed Chavez's conciliatory gestures. Some deputies say they will sponsor legislation to amend the Constitution to shorten the presidential term and convoke elections as soon as December. Investigations examine recent violence One of the main tasks in the wake of the failed attempt to oust Chavez will be determining who was responsible for the more than 40 deaths that occurred between April 11 and April 14. Chavez sent a letter to Attorney General Isaias Rodriguez on April 22 ordering an inquiry into the killings. He said he would cooperate fully with the investigation. "Those responsible for the deaths of Venezuelans, wherever they are, must be identified and punished with the full force of the law," Chavez said in the letter. "I request, Mr. Attorney-General, that you open and pursue the most exhaustive and impartial investigation." On April 23, the Asamblea Nacional (AN) set up a truth commission (Comision de la Verdad) to support and monitor government investigations into the violence. The nine-member panel will include three legislators and representatives of human rights organizations, people from the public and private universities, and church representatives. One aspect of the investigations will be the role of military and police agencies in the violence. On April 24, a reporter released an audiotape on which Chavez is heard ordering the military to implement Plan Avila, an emergency security plan that sends troops and tanks into the streets. The opposition claims the tape backs their charge that Chavez ordered the military to fire on civilians, which was then used by dissident military to justify the short-lived coup. Gen. Lucas Rincon defended Chavez's order, saying Plan Avila "isn't to mistreat and repress the population. No, it's to guarantee security." He said the operation is designed to respond to situations of public chaos. When the president decided to implement the plan, he said, there were "strong indications that a coup attempt" was underway. Chavez said he activated the plan because police and national guards were overwhelmed trying to prevent opposition marchers from clashing with government supporters. On the night of April 11, local television stations repeatedly showed edited footage of Chavez supporters on a bridge supposedly firing at unarmed civilian anti-Chavez demonstrators (see NotiSur, 2000-04-19). New evidence seems to indicate that the men on the bridge were exchanging gunfire with other armed people. The evidence suggests that many people were firing weapons--uniformed and civilian, pro- and anti-Chavez. In a fuller version of the tape, the men on the bridge appear to be exchanging shots with others a block away at a hotel. One of the men on the bridge, who remains at large, said in a telephone interview that people from the hotel and on the street shot toward the bridge, prompting those on the bridge to shoot back. Interviews with investigators, police officers, and witnesses suggest that a gunfight took place across three blocks of a street crowded with unarmed protesters. At the same time, sharpshooters fired down from at least three tall buildings, hitting most victims in the head and upper body. "There were people who knew how to shoot long-range weapons," said one investigator. "It is not easy to fire from 50 to 100 meters and hit someone in the head." To date, three civilians have been arrested in connection with the violence, the Chavez supporters who were videotaped firing from the bridge. On April 25, the Tribunal Supremo de Justicia (TSJ) granted four military officers involved in the attempted coup conditional liberty. The men, who had been under house arrest, were former head of the army Gen. Efrain Vasquez Velasco, Vice Adm. Hector Ramirez Perez; Rear Adm. Daniel Comisso Urdaneta, and Brig. Gen. Pedro Pereira. The four may not leave the Caracas area without TSJ permission, must register in court once a week, and may not take part in political activities. The TSJ maintained the house arrest for retired Rear Adm. Carlos Molina Tamayo. Ten Venezuelan military who fled to the Bolivian Embassy in Caracas after the coup failed have gone to a third country, a Bolivian government official said, but the official did not say to which country they had gone. Two Venezuelan businessmen allegedly involved in the coup attempt have sought refuge in Miami because they fear retaliation, friends said. Isaac Perez Recao, 32, identified in Venezuelan media reports as a key financial and political backer of efforts to topple Chavez, and Roberto Carmona Borjas, 35, who helped draft some of the decrees issued by Carmona, are both in the Miami area. Questions about US role continue Evidence suggests that the US had a hand in the coup, although Washington continues to deny it. Whatever the exact role of President George W. Bush's administration, it is widely assumed in Europe and Latin America that it was extensive, and it has damaged US credibility as a supporter of democracy. Gary Younge, columnist for The Guardian of London, wrote, "When the coup crumbled, Chavez emerged not to warm support but a stern warning from Bush that he 'hoped Chavez had learned his lesson.' The lesson is clear, if double-edged. America supports democracy when democracy supports America.... The sticking point is not whether citizens of all nations have the right to choose their leaders, but whether leaders, freely elected or not, of any nation have the right to choose a course which runs against whatever the US perceives its interests to be at a given moment." On April 24, The New York Times reported that, in the past year, the US, through the National Endowment for Democracy (NED), a nonprofit agency created and financed by Congress, channeled hundreds of thousands of dollars in grants to US and Venezuelan groups opposed to Chavez, including the Confederacion de Trabajadores de Venezuela (CTV), which led the protests in April. As tensions increased in Venezuela, the NED stepped up its assistance, quadrupling its budget for Venezuela to more than US$877,000. Wayne Madsen, a former US Navy intelligence officer, claimed on April 28 that the US had been considering a coup since last June. Madsen told The Guardian that US military attaches had been in touch with members of the Venezuelan military to examine the possibility of a coup. He said he understood that the Navy, which was in the area for operations unconnected to the coup, had assisted with communications support to the Venezuelan military as the coup played out, focusing on jamming communications to and from the diplomatic missions in Caracas belonging to Cuba, Libya, Iran, and Iraq. The administration has insisted that it had no role in nor prior knowledge of the planned coup. "Let me now say, categorically, the US did not participate in, inspire, encourage, foment, wink at, nod at, close its eyes to, or in any way leave the impression that it would support a coup of any kind in Venezuela," said deputy assistant secretary for Western Hemisphere affairs Lino Gutierrez. Secretary of State Colin Powell joined in the denials on April 21. "I know of no basis for a report that we were trying to get [Chavez] out," said Powell on ABC's This Week program. "We support democracy, we support the community of democracy that exists in our hemisphere." The Pentagon has ordered a review of its actions during the aborted coup. A Defense Department official said that the Pentagon has no evidence of US involvement, but a review was ordered to ensure that no US officers were encouraging or supporting a coup on their own. On April 30, Notimex reported that the visitor register (registro de guardia) at Venezuelan army general headquarters confirmed that two US military officers were there during the coup. The report contradicts denials in Washington and at the US Embassy in Caracas. Newsweek reported that the Senate Foreign Relations Committee plans to look into what role Bush officials may have played in the aborted coup. Newsweek wrote that among those suspected of financing the plot is Gustavo Cisneros, the Venezuelan media tycoon who is a fishing companion of former President George H.W. Bush. Cisneros has denied any role. The Cisneros Group owns Venevision, one of Venezuela's main networks, and is part owner of the local Direct TV franchise, Caracol Television, and the US Spanish-language network Univision. Otto Reich, Bush appointee as assistant secretary of state for Western Hemisphere affairs, acknowledged he had spoken with Cisneros "two or three times" during the coup, but he said he was only using Cisneros as a source of information. "We had absolutely nothing to do with this," Reich told Newsweek. Yet, somehow the coup makers got a different idea. "The signals were obviously mixed at best," said Bill Spencer, director of the Washington Office on Latin America (WOLA). "And you don't send mixed signals to people who are talking about overthrowing a democratically elected government and then embrace them when they do it." Criticism is directed at Bush's Latin American team. Washington Post columnist Mary McGrory wrote, "The Bush White House insists it had nothing to do with the whole affair, which some considered almost inevitable in view of the recent appointment of Otto Reich to be the State Department's leader on Latin America. Reich is an anti-Castro zealot, and this intrigue on the anniversary of the Bay of Pigs offered a peerless opportunity to get even." The Guardian reporter Duncan Campbell, referring to the coup attempt as "Bush's Bay of Piglets," also lays the blame on "the people Bush has brought back into government from the Reagan-Bush Senior years, some of whom were convicted of illegal activities in the Iran-Contra scandal." They include Reich, John Negroponte, now US ambassador to the UN, Rogelio Pardo-Maurer at the Pentagon, and Elliott Abrams, senior director of the National Security Council for democracy, human rights, and international operations. Abrams was convicted in 1991 of lying to Congress, but was pardoned by Bush senior. Two of the Venezuelan military who supported the coup, Gens. Efrain Vasquez and Eddie Ramirez Poveda, are graduates of the US Army School of the Americas (now called the Western Hemisphere Institute for Security Cooperation) at Fort Benning, Georgia. While many analysts blame the Cold War and the anti-Castro mentality of many Bush appointees, others say what drives the Bush policy is oil. "It would have been a significant change in oil politics and Middle Eastern politics if Chavez had been removed," said Fareed Mohamedi, chief economist of Petroleum Finance, which advises governments and oil companies. [Sources: thegully.com, 04/21/02; Dow Jones Newswires, New York Newsday, 04/23/02; Business Day (South Africa), 04/24/02; The Miami Herald, 04/26/02; The New York Times, 04/23/02, 04/24/02, 04/28/02; Reuters, 04/23/02, 04/28/02; WorkingForChange.org, zmag.org, 04/28/02; The Guardian (London), 04/22/02, 04/24/02, 04/29/02; Financial Times (London), 04/29/02; Inter Press Service, 04/23/02, 04/25/02, 04/29/02, 04/30/02; Spanish news service EFE, 04/23/02, 04/28/02, 04/30/02; Notimex, 04/23/02, 04/30/02; The Boston Globe, 04/25/02, 04/30/02; Associated Press, 04/28/02, 04/30/02] ********************* PARAGUAY ********************* PARAGUAY: FORMER PRESIDENT JUAN CARLOS WASMOSY FOUND GUILTY OF FRAUD Former President Juan Carlos Wasmosy (1993-1998) was convicted of corruption and sentenced to four years in prison. On April 12, Judge Jorge Bogarin found Wasmosy guilty of betraying the public trust and causing harm to the state patrimony. Bogarin's verdict called the crime "damage to public trust," which carries a sentence of between six months and five years. The prosecutor for economic crimes, Jose Casanas, had called for the men to be convicted of a more serious crime that carries a penalty of up to ten years. Casanas had requested that Judge Bogarin sentence Wasmosy to eight years in prison, but the judge rejected that request. Wasmosy is the first former president in Paraguay's history to be sentenced to prison. In the same case, former economy minister Carlos Facetti was sentenced to two-and-a-half years, while former minister of industry and commerce Ubaldo Scavone was exonerated. The sentence was handed down amid tight security. Members of the Ahorristas Estafados en Accion, a group that represents people who lost their savings in the mid-1990s, during the worst banking scandal in the nation's history, had held a vigil for several weeks in front of the courthouse. Judge Bogarin resigned from the bench the day after handing down his verdict, saying he wanted to go back to private law practice. State money went to bail out private bank The judge ruled that, in 1995, Wasmosy illegally authorized the Banco Central de Paraguay (BCP) to provide millions of dollars to the private commercial Banco Desarrollo, which was in serious financial difficulty at the time. Wasmosy had an interest in Banco Desarrollo. Some of the money went to pay contractors for work done at the bank. Wasmosy had a financial interest in the construction projects. Wasmosy authorized the BCP to pay US$20 million to Banco Desarrollo with funds that came from the state social-security agency (Instituto de Prevision Social, IPS). Despite the infusion of funds, the bank went under. Three million clients lost their deposits, which they have not recovered. Defense lawyers argued that there was no damage to the state, since the bank paid its debt with state bonds, which it also acquired with funds from IPS before going into bankruptcy. Wasmosy's lawyers immediately appealed. In the brief, the lawyers asked that their client be freed on bond, and that the sentence be commuted for a fine and house arrest. The Paraguayan penal code allows for the possibility that sentences of less than five years may be changed for a fine and house arrest. On April 15, the prosecutor asked that Wasmosy be jailed during the appeal process. "This office has decided...to request preventive prison for those found guilty in this case because of the flight risk...," said prosecutor Rocio Vallejos. "We have also decided to appeal the length of the sentence imposed and the exoneration of one of the accused." On April 22, Judge Gustavo Gorostiaga, who took over the case when Bogarin retired, turned down the prosecutor's request that Wasmosy and Facetti be jailed pending the outcome of the appeal. Instead, the two must sign in at the local police station each Monday, see the judge once a month, and not leave the country without court authorization. Wasmosy was also required to post a US$830,000 bond, while Facetti had to post a US$520,000 bond. The former president is a wealthy businessman, with extensive construction interests. During Wasmosy's presidency, 38 banks, exchange houses, and savings and loan institutions failed. According to the Contraloria General, US$6 billion, equal to 80% of the nation's GDP, was misappropriated during that time. Wasmosy is accused of opening a secret bank account in the Cayman Islands, which grew from US$7 million when he took office to US$697 million when he left. Wasmosy also faces trial for fraud in the 1997 privatization of a distillery, which also later went bankrupt. [Source: Associated Press, La Tercera (Chile), 04/12/02; Notimex, 03/26/02, 04/12/02, 04/14/02, 04/15/02, 04/22/02; Reuters, 04/12/02, 04/15/02, 04/22/02[ ********************* GENERAL ********************* LATIN AMERICA: WHO'S MINDING THE PURSE STRINGS? [The following article by Barbara J. Fraser is reprinted with the permission of Noticias Aliadas in Lima, Peru. It appeared in the March 25 edition of Latinamerica Press.] Five countries surveyed last year in a study of transparency in national budget formulation and spending received poor marks in areas ranging from citizen participation to accountability and access to information. Chile had the highest transparency score overall, with a ranking of 5.9 on a scale of one to 10. Peru was worst, with a score of 3.7. Brazil and Argentina tied with rankings of 5.1, followed by Mexico, with a score of five. The survey, part of the International Budget Project coordinated by the US-based Center on Budget and Policy Priorities, was carried out between June and November by academic institutions and civil-society organizations. The lowest marks overall were for citizen participation, which measured whether people knew how to and were able to take part in budget formulation and approval, and whether the executive branch provided detailed reports on spending and information about changes in allocations. In most of these areas, respondents gave their countries scores of three or less on a scale of one to five. Only in Chile did as many as one-third say the government provided detailed information about budget allocations and changes. In Argentina, only 7% of those surveyed said that citizens knew how they could make their opinions known at budget-approval time. That figure was 5% in Mexico and Brazil, 4% in Chile, and only 2% in Peru. Peru's ranking reflects the distrust that marked the end of the government of former President Alberto Fujimori (1990-2000), which collapsed amid a corruption scandal in late 2000 (see NotiSur, 2000-12-08). Eduardo Moron of the economics department at the Universidad del Pacifico in Lima, who coordinated the survey in Peru, said the caretaker government of President Valentin Paniagua (2000-2001) put new transparency mechanisms, such as Web sites, in place, but the administration of President Alejandro Toledo, who took office last July, has not made them a priority. "The Peruvian government has accomplished little in budget transparency," Moron said. "Despite the initiatives and efforts made during the Paniagua government, unfortunately it hasn't been possible to erase the traces of the Fujimori era, when the government kept information about public finance to itself and interfered with oversight agencies." The survey found a lack of accountability in four of the five countries surveyed. The exception was Chile, although even there, only 44% of respondents said that purchase prices were made public for large state expenditures and only 32% said that the executive branch published the information necessary to evaluate progress toward accomplishment of its programs' goals. Accessibility and timeliness of budget information also received low marks in the survey, which polled legislators, academics, journalists, and representatives of civil-society organizations. In Argentina, only 15 of the 154 legislators polled responded to the survey, while 59 specifically said that "they did not want to participate in the survey," according to a report by the International Budget Project, which noted that the survey coincided with congressional elections. "There's a common concern regionwide about corruption and how to avoid it," Moron said. Several countries, including Argentina and Mexico, now make government purchases by Internet in an effort to make the purchasing process more transparent. Some have also shifted more oversight responsibility to Congress. Another common concern, Moron said, is increasing public participation. "There's a lot of debate over that, because there's a fear of letting just anyone sit down at the table at budget time," he said. While public participation in national budgeting is limited, some Latin American cities have made strides, said Claudia Gonzalez del Valle, also of the Universidad del Pacifico's economics department, who worked with Moron on the study. The best-known example in the region may be Porto Alegre, Brazil, which hosted the World Social Forum in early February (see NotiSur, 2002-02-22). The city's residents not only monitor spending but also express opinions about priorities at budget time. A similar effort is under way in Villa El Salvador, a sprawling, low-income district at the southern edge of Lima, where the Flora Tristan Peruvian Women's Center, a nongovernmental organization, is monitoring spending on budget items affecting women. Moron believes more efforts of that sort are needed. "Another important issue in the region is what nongovernmental organizations are doing," he said. "We have tons of nongovernmental organizations that have an erroneous view of their true role in bringing about change through budget initiatives." When the Peruvian researchers tried to find nongovernmental groups to help with the study, they discovered that most lacked the resources and training to analyze the transparency of the national budget in relation to their own goals. "Nongovernmental organizations have always demanded that rights be respected, for example, those of women or children," Gonzalez del Valle said. "But they never bring that down to earth by asking the government specific questions that can be seen in [budget] figures." Like outright corruption, lack of budget transparency comes at a price. "The greatest cost is in the waste of fiscal resources, with all the accompanying consequences of greater social inequality, and macro consequences like a greater budget deficit because governments are spending their resources inefficiently," Moron said. Part of the solution is education, he said, but the political system must also provide more opportunities for citizen participation. "It has to do with something much bigger: how do we want society to participate, and how do we make political parties listen to citizen initiatives?" he said. ================================================================= 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-05.04.02-03:08:47-17635