NotiSur-07/20/01-Argentina, Chile Via NY Transfer News * All the News That Doesn't Fit [This is a private reading copy for your personal use. Our subscription with LADB does not permit redistribution.] ------------------------------------------------------------ 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 27 July 20, 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: GOVERNMENT ANNOUNCES MORE AUSTERITY MEASURES * Austerity measures anger citizens, worry analysts * Political parties finally come on board * Analysts ask if measures are too little, too late * Strikes show growing lack of support for government CHILE: COURT RULES FORMER DICTATOR AUGUSTO PINOCHET WILL NOT HAVE TO STAND TRIAL * Angry reactions from human rights lawyers * Return to Senate unlikely * Decision could be unconstitutional * Chilean decision does not affect cases in other countries ____________________________________________________________ ********************* ARGENTINA ********************* ARGENTINA: GOVERNMENT ANNOUNCES MORE AUSTERITY MEASURES The government of Argentine President Fernando de la Rua is implementing another round of austerity measures, the seventh since the administration took office in December 1999. The new "zero deficit" commitment will cut public employee salaries and pension benefits. After tense negotiations, both the governing Alianza coalition and the opposition Partido Justicialista-peronista (PJ) gave their support, but strongly opposed labor and civic groups called strikes to protest. De la Rua won the election less than two years ago on promises to reactivate the economy, create jobs, and improve the distribution of income, none of which has happened. As the economic downturn nears its fourth year with unemployment standing at 16%, many Argentines complain that the benefits they expected after free-market reforms were implemented in the 1990s have not materialized. Economists say corruption, years of government overspending, and reduced competitiveness in the global marketplace have kept any advances from reaching most Argentines. Faced with mounting problems servicing its debt, the government unveiled the zero deficit plan as the latest effort to put its financial house in order. The impetus came when, at what should have been a routine treasury-bill auction, Argentina was unable to borrow money at less than 14% interest, effectively shutting off international credit. Concerns that Argentina would be forced to default on its debt obligations sent the stock market tumbling and forced Finance Minister Domingo Cavallo on July 11 to announce the harsh and unpopular cuts. He aims to cut public spending to the level of tax revenues to avoid taking on new debt at prohibitive rates from bond markets that have lost confidence in Argentina's ability to meet debt payments. "Zero deficit will begin this month," said Cavallo. "We can reach a balanced budget, and we will reach it with a fight against tax evasion, workers in the underground economy, political spending, and inefficiency." Cavallo's proposed US$1.5 billion in cuts include a reduction in wages for more than 250,000 federal employees and equivalent cuts in pension benefits for retired government workers. He also proposed increasing a financial-transactions tax and new measures to crack down on tax evaders. Government workers will not know what their pay will be until two weeks before their checks are cut. In July, the reduction will be 13% for public employees, and pensioners who receive more than US$300 a month will have their benefits reduced, said Cabinet chief Chrystian Colombo. Just before announcing the cuts, at a ceremony in Tucuman marking Argentina's independence, de la Rua appealed for support for the new belt-tightening. "How can we say we are independent if we have to turn to loans for our children's meals at school or our grandparents' social security?" de la Rua asked. "We can only maintain our spending because every year they loan us US$15 billion that we spend but don't really have, all at the cost of compromising our future. Are we going to wait for the day they decide not to lend to us anymore before we decide to solve our problems?" Austerity measures anger citizens, worry analysts But the new adjustment, which experts say is more drastic than the six previous cuts, had analysts questioning whether the government was blindly careening from one unproven economic approach to another. The plan threatens economic growth by reducing internal consumption, said a report by Morgan Stanley Dean Witter. "Our concern is that the public employees and pensioners will not know the level of their income for the coming month until two weeks before they get paid, which makes it likely that the measures will lead to less consumption." The firm is also concerned that the adjustment is "based on unreal assumptions about the reactivation of economic growth in the fourth quarter of 2001." The report said that, even under the most optimistic scenario in which the economy grows 0% in the second half of the year, the government would have to impose additional spending cuts of US$3 billion, double the figure anticipated in this program. As politicians engaged in intense negotiations, many Argentines expressed fears that the measures would only further depress an economy that has not seen sustained growth since July 1998. "I worked for 45 years....They pay me a miserly US$209 a month," said one 87-year-old retiree. "The spending cuts are the country's destruction." Political parties finally come on board The governing Alianza coalition, made up of the Union Civica Radical (UCR) and the Frente del Pais Solidario (FREPASO), initially disagreed with the adjustment measures and demanded that they target the wealthier sectors, not the poor. "We must seek consensus among all parties so that we may immediately draft a set of proposals to confront this political, economic, and social crisis, proposals based on equity so that the effort falls to those with greater economic means," said the Alianza communique. The administration's first success in gaining support for its plan was an agreement with 12 provincial governors under which they would cut their spending by US$650 million by year- end and the federal government would cut its spending by US$150 million. On July 13, UCR leader and former President Raul Alfonsin (1983-1989) came out in support of the spending cuts, but only, he said, if they don't hurt "the most vulnerable" sectors of the population. Alfonsin said that the Alianza would prepare an alternative plan, and he said the president has assured him he would study it. "Argentina is never going to be a colony," said Alfonsin. "We are not going to fall into the clutches of neoliberalism. It is a moral obligation to solve the problems of those who have less, of those who need more. Although the UCR and FREPASO leaders presented de la Rua with alternative proposals, the plan ratified by the president was the original. The same day, de la Rua met with the 14 PJ governors who, late on July 16, agreed to back the plan if they received overdue government funds and if they were allowed to decide their own method to balance their books. The apparent support for the administration masked considerable opposition. Many UCR and FREPASO lawmakers called for revisions to the plan so that more of the burden would fall on the more economically advantaged sectors. On July 18, PJ lawmakers said they would introduce a bill to overturn the presidential decree. Analysts ask if measures are too little, too late Argentina's US$128 billion public debt, which includes US$88 billion in foreign debt, is equal to almost half its GDP, and the government has exceeded its International Monetary Fund (IMF)-set first-quarter deficit target by US$1 billion. The economy has contracted for 10 straight quarters. The Labor Ministry's figures show that unemployment rose from 14.7% of the economically active population (EAP) last October to more than 16% in June. Few economists agree with Cavallo's prediction of 5% growth in the fourth quarter of 2001. ING Barings forecasts the economy will shrink by 0.1% this year. In recent weeks, Wall Street analysts have become increasingly convinced that an Argentine default or a debt restructuring was likely. A currency devaluation, while possible, was considered less likely. Many analysts are skeptical that the new cuts can actually be implemented and question whether they would be enough even if they were carried out. Some say a default on the foreign debt or a devaluation is still possible. "Given the prospects of further recessionary pressures and the political situation, both are fairly likely today," said Jose M. Barrionuevo of BNP Paribas. The financial crisis is becoming so severe that there is no solution, he said. With the sharp rise in interest rates, the recession will deepen and tax revenue will decline, widening the budget- deficit gap. Then the government would not have the money to pay its debt service even if it could implement the new cuts. At the same time, capital flight by worried Argentine and foreign investors could put enough pressure on the peso to force the government to devalue, said Barrionuevo. Strikes show growing lack of support for government De la Rua's approval ratings have dropped to less than 20% of the electorate amid a climate of growing unemployment, social unrest in the provinces, rising crime rates in several cities, and the perception that he lacks leadership. And confidence in Cavallo's ability to improve the economy is also dropping quickly. In a poll by Graciela Romer and Associates, only 32% of respondents believe he can improve the economy, down from 57% in April, a month after he took office. State workers angry over the proposed salary cuts rejected the plan and called for a one-day strike on July 18. Unions called for a one-day general strike on July 19, saying the plan was tantamount to "looting the pockets of public workers." The general strike was called by the Confederacion General del Trabajo (CGT), el Movimiento de Trabajadores (MTA), and the Central de Trabajadores de Argentina (CTA). "The workers, the retirees aren't the ones who should pay off the deficit," said labor leader Hugo Moyano. "It's the people who've made a lot of money in the last few years who should pay, not a worker who earns US$200 a month." CGT chief Rodolfo Daer echoed Moyano's words, calling the government's measures "shameful." "This is nothing new. Today they cut spending and they tell us it's the last time, but they'll just do it again next month," said taxi driver Oscar Pissiruto in Buenos Aires. [Sources: The Financial Times (London), 07/10/01; Spanish news service EFE, 07/10/01, 07/12/01, 07/14/01; Notimex, 07/09/01, 07/11/01, 07/12/01, 07/15/01, 07/16/01; La Opinion (Los Angeles), 07/12/01, 07/16/01; The Miami Herald, 07/16/01; Inter Press Service, 06/28/01, 07/17/01; The New York Times, 07/08/01, 07/11/01, 07/13-15/01, 07/17/01; Reuters, 07/09/01, 07/11-13/01, 07/15-17/01; Clarin (Argentina), 07/11/01, 07/17/01, 07/18/01; Associated Press, 07/13/01, 07/16-18/01; Pagina 12 (Argentina), 07/18/01] ********************* CHILE ********************* CHILE: COURT RULES FORMER DICTATOR AUGUSTO PINOCHET WILL NOT HAVE TO STAND TRIAL The Santiago Appeals Court ruled on July 9 that former Chilean dictator Augusto Pinochet (1973-1990) would not have to stand trial for his alleged responsibility in the disappearance of 57 people in 1973. Rather than close the case that has dragged on for eleven months, however, the ruling that Pinochet was mentally unfit to stand trial raised more legal questions. Chile's Corte Suprema removed Pinochet's immunity as senator for life on Aug 8, 2000 (see NotiSur, 2000-08-11). On Jan 29, 2001, Judge Juan Guzman charged the former dictator as an accessory in 57 homicides and 18 kidnappings of political opponents. The acts were carried out in October 1973--a month after the Pinochet-led coup that toppled President Salvador Allende (1970-1973)--by a military death squad known as the Caravan of Death (see NotiSur, 2001-02-16). The Appeals Court decision came after more than two weeks of delays and a weekend during which rumors of Pinochet's worsening health, and even imminent death, added to the drama. Chilean police fired water cannons and tear gas at about 500 people who marched through the streets of central Santiago chanting anti-Pinochet slogans to protest the decision. Police detained three people around the Paseo Ahumada. The court said it was "temporarily" suspending legal proceedings against Pinochet. Citing medical reports, the three-judge panel, in a 2 to 1 decision, concluded: "His mental capacity would not allow him to efficiently exercise the judicial guarantees that he must enjoy throughout the legal procedure to have a fair trial." Pinochet's lawyers had argued for the dismissal on the basis of medical testimony that the general suffers from "moderate dementia" that would prevent him from participating in his defense. Chilean law does not allow for dismissal of criminal proceedings for reasons related to physical health, only for insanity, but the law was based on a 19th century penal code enacted when mental illness was little understood. By making the dismissal temporary, legal proceedings could resume if the general's health were to improve, which is unlikely given his age and physical condition. "I think, unfortunately, this is as far as the Pinochet case goes," said prosecution lawyer Juan Bustos after the decision was announced. He said Chile had failed to live up to promises made abroad to try Pinochet for the killings or "disappearances" of more than 3,000 people. "This obviously leaves Chile on an extremely fragile footing with the international community as far as human rights in this country are concerned." More than 200 legal cases have been brought against Pinochet in Chile for human rights abuses during his rule, but legal experts say those cases will now likely melt away. The government would not comment on the ruling. "Court rulings are to be respected, not commented on," President Ricardo Lagos said. "The government is neither satisfied nor dissatisfied." Angry reactions from human rights lawyers Human rights attorneys criticized both the decision and the role played by Chile's government in recent months. "For a person to be declared demented or insane, they must be completely out of their minds," said human rights attorney Eduardo Contreras. "And that is not Pinochet's situation....This ruling is the result of political pressures on the court, but Pinochet will still go down in history as having been indicted on human rights charges." Attorney Hiram Villagra predicted that "Chile's judiciary will soon have to deal with a suddenly reinvigorated Pinochet walking around and greeting people, just as occurred after his release by British authorities three years ago." The New York-based Human Rights Watch (HRW) also condemned the decision. "It's a terrible disappointment for Pinochet's thousands of victims that he may never have to face trial," said HRW executive director Jose Miguel Vivanco. "But the fact that he was arrested in England, that he was charged in Chile despite his self-amnesty, and that the truth about his personal involvement in atrocities was revealed, has advanced the cause of justice in Chile and the world." Return to Senate unlikely Andres Zaldivar, president of the Chilean Senate and member of the governing Concertacion coalition, said the Senate's constitution committee would have to decide whether Pinochet could resume his seat as a senator for life. However, on July 10, Sen. Sergio Diez of the rightist Renovacion Nacional (RN) and head of the constitution committee said only the Tribunal Constitucional could make the decision. Given that the dismissal is temporary, not permanent, Diez said it would appear that Pinochet remains barred from the Senate. Sen. Andres Chadwick, a member of the committee, said it was "surreal" to think of Pinochet returning to the Senate, because that would demonstrate his mental capacity and end the temporary dismissal. The decision lets Pinochet go free, but it also removes the chance to prove his innocence, which he claims, or to have the charges against him dismissed. While Pinochet defense lawyer Ambrosio Rodriguez said the legal team would "do their best to prove his innocence," this could only happen if the case were reopened. Decision could be unconstitutional Prosecution lawyers have appealed the ruling. And National Defender Alex Carocca gave prosecutors a boost when he said on July 10 that the decision was partially unconstitutional. "What the court has done is apply norms that are not yet in effect in Santiago and thus would be unconstitutional," said Carocca. On July 11, the Consejo de Defensa del Estado (CDE) filed a motion with the Appeals Court to annul the decision, arguing that norms used from the new Codigo Procesal Penal are not yet in effect in Santiago. The CDE said the judges made a serious legal error in applying them to the Pinochet case. The Appeals Court rejected the CDE motion on July 18, but other motions to annul the decision are still pending. About 100 people jailed on charges including homicide and robbery have asked the courts to use the same standards in their cases as were used for Pinochet. Their lawyers argued that, if the court is allowed to apply guarantees provided by the new code in the case of Pinochet, it must apply them to everyone. Legal experts said as many as 800 people could be in a position to appeal on those grounds. If the appeals fail, it is almost certain that Judge Juan Guzman Tapia, responsible for investigating the majority of human rights cases against Pinochet, will refrain from conducting further investigations into the dictator's crimes and suspend all judicial proceedings involving Pinochet. He will, however, continue prosecuting others indicted for human rights violations, such as the former head of the secret police (Direccion de Inteligencia Nacional, DINA) Manuel Contreras. Chilean decision does not affect cases in other countries Gutierrez urged international justice authorities to pursue the cases against the former dictator in countries like Belgium, France, and Spain, because in Chile, "unfortunately, justice cannot be achieved." In France, judicial authorities said the case against Pinochet would go forward. The Chilean decision "changes nothing, the procedure continues," said Judge Roger Le Loire, who is handling the case involving five French citizens who disappeared in Chile during the dictatorship. In late 1998, the judge filed a request for Pinochet's extradition (see NotiSur, 2001-06-01). On July 10, Spanish Judge Baltasar Garzon, who in 1998 asked Britain to detain and extradite Pinochet, said the international arrest warrant would remain in effect. Argentine Judge Rodolfo Canicoba, who recently ordered former dictator Jorge Videla tried for crimes related to Operation Condor, said on July 11 that he will file an extradition request for Pinochet. "In this court, I have no official verification that Sr. Pinochet is not in full use of his faculties," said Canicoba. To stop the process in Argentina, "they would have to certify in my court that he is insane." Pinochet's extradition has already been requested by another Argentine court in the case of the assassination of former head of the Chilean army Gen. Carlos Prats and his wife Sofia in Buenos Aires in 1974. [Sources: CNN, Inter Press Service, 07/09/01; Tercera Digital (Chile), 07/09/01, 07/10/01; Spanish news service EFE, 07/08-12/01; The Santiago Times (Chile), 07/09/01, 07/10/01, 07/12/01; Notimex, 07/09- 12/01, 07/15/01; Reuters, 07/09/01, 07/10/01, 07/18/01; Associated Press, 07/09/01, 07/18/01; La Opinion (Los Angeles), 07/09/01, 07/11/01, 07/16/01, 07/19/01] ================================================================= 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-07.21.01-05:33:37-4370