NotiSur-Ecuador, Chile-07/27/01 Via NY Transfer News * All the News That Doesn't Fit [this is a private reading copy for your personal use only. Redistribution of this newsletter is prohibited 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 28 July 27, 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: ECUADOR: PRESIDENT GUSTAVO NOBOA FACES STRIKES & BANK CRISIS * Doctors and public employees strike * CONAIE breaks off dialogue * Government closes nation's largest bank * Poverty increases CHILE: LEGISLATIVE ELECTIONS COULD BRING SURPRISES * List of candidates shows friction within alliances * Error prompts change of election date * PS deal with PC threatens Concertacion * Support for Lagos has dropped ____________________________________________________________ ********************* ECUADOR ********************* ECUADOR: PRESIDENT GUSTAVO NOBOA FACES STRIKES & BANK CRISIS Growing social unrest and an impasse in talks with indigenous groups awaited Ecuadoran President Gustavo Noboa in mid-July when he returned from a trip to Spain, where he went looking for money and an agreement on the status of Ecuadoran immigrants in Spain. In addition, Noboa found it necessary to close the nation's largest bank, state-controlled Filanbanco, because of a lack of liquidity. On July 6, lawmakers voted to raise their salaries by US$600 to US$2,100 a month, although Congress president Jose Cordero conditioned the raise on implementation of controls to ensure lawmakers' attendance at both plenary and committee sessions. The raise angered citizens, especially health workers who have been on strike for more than three weeks demanding higher wages and a larger budget for the public health system. The government has insisted that there is no money in the budget to raise salaries. Doctors and public employees strike The strike by 26,000 doctors, nurses, and other health professionals began July 3. Doctors with the public health system earn between US$56 and US$300 per month. In the past three years, dollarization and ongoing high inflation (91% in 2000) have hurt many workers, including health professionals, and brought demands for substantial wage increases. "Some of us have more than 17 years in this work and the salary we receive is barely US$46 a month," said Rosa Santamaria, president of the Federacion de Enfermeras. The strike has forced state hospitals to suspend consultations and nonemergency surgery. Strikers want to deal directly with Noboa, since they are convinced that the solution to the labor conflict depends on the political will of the president. On July 16, Noboa called a Cabinet meeting to discuss the growing unrest, after 45,000 employees in the Education, Health, and Labor and Social Welfare Ministries voted for a work stoppage to demand higher wages. The public-sector employees called for an indefinite strike starting July 17. "We are asking for salaries to be raised so they cover 75% of the basic basket of goods," said Hector Teran, president of the Confederacion Nacional de Servidores Publicos (CONSEP). Teran said that with an additional US$40 million-- about 10% of what it cost the government to capitalize two state-controlled banks earlier this year--state workers could earn a decent salary. State workers earn between US$30 and US$120 a month. CONSEP secretary general Bolivar Vacaycela said strikers would show up for work, but stay at their work places "with their arms crossed." In Ecuador, strikes are prohibited in places that provide public services so workers are resorting to this "strike while on duty" to press their demands. Vice President Pedro Pinto said that the government's response to CONSEP is the same as it was to the striking public health workers. "If we do not have [resources] for the doctors, much less will we have them for public servants," he said. The government said that meeting the demands for higher salaries for public employees would mean not carrying out the fiscal discipline necessary to meet fiscal-deficit goal, set by the International Monetary Fund (IMF), of 1.3% of GDP for this year. The government considers fiscal discipline key for making dollarization work. On July 25, the Federacion de Medicos de Ecuador said it would hold a "great national march" that would be concentrated in Quito the following day. CONAIE breaks off dialogue Meanwhile, on July 9, Marcelo Santos, minister secretary- general of the presidency, announced the imminent promulgation of several decrees aimed at satisfying the demands of indigenous organizations, which included a review of public transportation fares, the sale of household gas in communities, Plan Colombia policies, land titles for campesinos, capitalization of the Banco Nacional de Fomento (BNF), and support for emigres who went to Spain. A dialogue between the government and the indigenous groups began in April, the result of an agreement signed by Noboa in February to end a massive protest by the Indians that had paralyzed the country (see NotiSur, 2001-02-09). Santos said the government was willing to continue the dialogue with the Indians regarding an additional 25 demands that had not yet been resolved. But, on July 17, the government postponed indefinitely the date for signing the decrees, and Santos said it was because the Indians objected to the text of some of the decrees. On July 19, the indigenous groups, led by the powerful Confederacion de Nacionalidades Indigenas (CONAIE), suspended the talks with the government, saying they would put the future of the talks in the hands of an international mission, which was acting as mediator of the dialogue. Marco Murillo, president of the Federacion de Indigenas Evangelicos (FEINE), accused the executive of being unwilling to listen to the campesino demands. The government insisted it wanted to continue the dialogue, and it offered to resolve eight of the more than 30 demands that the Indians presented in April. The Indians did not accept the solutions offered by the government and deplored the government's delays in finding solutions to the problems. On July 23, CONAIE and the Coordinadora de Movimientos Sociales (CMS) said they would resume their protests against the government's economic policies, which had been halted when the agreement was reached to hold the dialogue. CMS director Doris Solis said the protest would begin with a march originating in Zamora Chinchipe in the southern Amazon region of the country. It would include sit-ins in government offices and those of international organizations, and would conclude with a march in Quito on August 10, independence day. The protests now include calls for the government to agree to salary increases for the striking state workers, a rejection of the government's plan to privatize electricity- generating companies--scheduled for September, payment of the government's debt to the social security program, and a veto of the recently passed social security reforms. Government closes nation's largest bank CONAIE and the CMS also want Congress to lift the banking-secrecy protection to reveal who is responsible for and who is benefitting from the July 17 closing of state- controlled Filanbanco, the nation's largest bank, because of a lack of liquidity. They said lifting the secrecy protection would make public the names of the large debtors whose unpaid loans are considered the cause of the failure of several banks, including Filanbanco. It would also shed light on what happened to the US$1.4 billion in bailout funds given to state banks Banco del Pacifico and Filanbanco in the past two and a half years. The government announced July 22 that it had reached an agreement to transfer some assets and liabilities from Filanbanco to private banks. The private banks will return US$266 million to Filanbanco's depositors, but as more time passes without details of the deal being made public, depositors are becoming increasingly nervous. The government said the private banks will take over Filanbanco's short-term deposits. Clients with deposits greater than US$300 and those with debts will know which private bank will be handling their accounts in two weeks, the statement said. But private bankers said clients would not be able to withdraw their deposits before August 13. Filanbanco was taken over by the government in 1998 amid a financial crisis that, between 1998 and 2000, saw it and 14 other banks fail. Minister of Government Juan Manrique asked Attorney General Mariana Yepez to carry out a preliminary investigation to see whether charges against bank officials are warranted. On July 23, Noboa said that during the first ten months of his presidency, he was kept in the dark about the magnitude of Filanbanco's difficulties. CONAIE and the CMS called Noboa's action a "confiscation" of depositors' money, and said the result would be that "US$228 million owed by bankers, business people, and the politicians aligned with them" would never be repaid. The state must absorb much of the losses of Filanbanco, since the private banks have reportedly only agreed to assume 35% of the outstanding operations. CONAIE and the CMS contrasted the amount of money the government has poured into failing banks with its resistance to demands for salary increases by state workers. Poverty increases The Instituto Nacional de Estadisticas y Censos (INEC) reported that the basic basket of goods for a family of four costs about US$289 a month, while an Ecuadoran family's average monthly income is US$201. Poverty and inequality have increased in Ecuador in recent years, said World Bank representative McDonald Benjamin on June 23. "During the last five years, and especially the past two, poverty has affected 8.6 million Ecuadorans, of whom 4.2 million are at critical levels of poverty," he said. The gap between rich and poor has widened, with the richest 10% of the population of 12 million now receiving 43% of the nation's income, while the poorest 10% only receives 0.6%. Unemployment now stands at 10.9% of the economically active population (EAP), with another 47.9% underemployed, according to the economic weekly Lideres. And, even apparent good news often is not. A recent slight decline in unemployment does not indicate an increase in jobs, but rather reflects the large number of people who have left the country. [Sources: Associated Press, 07/11/01; El Nuevo Herald (Miami), La Opinion (Los Angeles), 07/16/01; Reuters, 07/17/01, 07/19/01, 07/22/01; Notimex, 06/23/01, 06/28/01, 07/17/01, 07/20/01, 07/23/01; Spanish news service EFE, 07/06/01, 07/09/01, 07/18/01, 07/19/01, 07/25/01] ********************* CHILE ********************* CHILE: LEGISLATIVE ELECTIONS COULD BRING SURPRISES Chile's legislative elections, scheduled for December, have gotten off to a very shaky start. All 120 seats in the Chamber of Deputies and 18 of the 36 Senate seats are at stake. An error by the Partido Democrata Cristiana (PDC) in registering its candidates has forced the legislature to speedily change the date of the elections. In addition, a decision by the Partido Socialista (PS) to support two Partido Comunista de Chile (PC) candidates has threatened to split the governing Concertacion coalition. The congressional elections are seen as a test of support for the government of President Ricardo Lagos amid an economic slowdown that has kept unemployment rates high. The PDC has dominated the Concertacion during the ten years since civilian rule was restored to the country. But early polling suggests growing support for other parties in the alliance--the Partido Socialista (PS), the Partido por la Democracia (PPD), and the Partido Radical Socialdemocrata (PRSD). A sharp drop in the PDC vote--from the 23% or 24% it has traditionally received to the 12% or 14% some now predict-- would rock the party. The PDC would no longer have more congressional seats than other Concertacion parties, which could bring internal pressure to consider new political alliances, possibly with the rightist Renovacion Nacional (RN). Anselmo Sule, who heads the executive committee of the Concertacion, said he expects the coalition to improve its standing in both houses. "We want to come as close as possible to an absolute majority in the Chamber of Deputies and maintain our relative majority in the Senate," said Sule, who is also president of the PRSD. List of candidates shows friction within alliances After months of intense negotiations, Chile's political parties finalized their candidate lists for the congressional election. Although on the surface the campaign is between the Concertacion and the rightist Alianza por Chile, the rivalries within each alliance could have a greater impact than the campaign between the alliances. If the partners in each alliance support the candidates of the alliance partners, all is well; if not, there is trouble. And trouble seems likely in this election. On July 7, the two rightist parties of the Alianza--the RN and the Union Democrata Independiente (UDI)--separately confirmed their lists of candidates, indicating an inability to come up with a unified slate. The leader of the Alianza, Santiago mayor Joaquin Lavin of the UDI, called on supporters to unify and act with "generosity." Although the RN has traditionally been the stronger of the two rightist parties, the impressive showing by Lavin in last year's presidential election--where he captured 48% of the vote--put the UDI in the leadership position. The UDI confirmed the candidacy of its president Pablo Longueira for the deputy seat in the Conchali, Renca, and Huechuraba district of Santiago, a working-class district that has never elected a deputy from the right. The RN will run its president Sebastian Pinera for the Senate seat in Valparaiso, the second-most-important city in Chile. The RN, now headed by businessman Sebastian Pinera, is downplaying Lavin's leadership role and trying to pave the way for a future Pinera presidential bid. The rivalry deepened when the UDI decided in June to nominate Adm. Jorge Arancibia as its candidate for the same Senate seat Pinera is running for (see NotiSur, 2001-06-22). Error prompts change of election date The legislative election had been scheduled for Dec. 11, and the deadline for registering candidates was July 14. The PDC, which led the coalition government from 1990- 2000, failed to properly register its candidates with electoral authorities by the deadline, effectively eliminating its candidates from the race. Chile's election law (Ley sobre Votaciones Populares y Escrutinios) requires each candidate to personally register their candidacy in a notary's office or designate a legal representative to carry out the process. The discovery on July 16 of the potential ineligibility of PDC candidates sent politicians scrambling for a solution, since the registration period had closed. The government sent an urgent bill to Congress to change the date of the elections from December 11 to December 16, thus extending the registration period for candidates. The bill had the support of the parties in the Concertacion as well as the opposition UDI. "A very unfortunate situation occurred and it had to be resolved, because the majority of Chileans must have a chance to participate in the elections," said Interior Minister Jose Miguel Insulza. Congress passed the proposal to change the election date in a record nine hours on July 17, bringing angry comments from some citizens that other, and perhaps more important, legislation has languished in Congress for years. On July 20, PDC president Ricardo Hormazabal and three other top party leaders resigned as a result of the registration fiasco. The same day, the PDC held an emergency meeting and elected former President Patricio Aylwin (1990- 1994) to head the party. "Don't congratulate me, commiserate with me," said Aylwin after his election as PDC president for the eighth time. "At this stage in my life, I have other things do, and I say quite frankly that I'm not sure whether at my age I'll have what it takes to efficiently lead the party." PS deal with PC threatens Concertacion Rumors that the PS might back some PC candidates had been circulating for weeks. In late June, the PS called on its Concertacion allies to have "a degree of comprehension" and accept the decision by the PS to support PC candidates in two districts. The alliance would boost the Concertacion's electoral chances, the PS said. In the last election, the PC received 6% of the vote, but the complicated and restrictive binominal electoral system makes it almost impossible for a smaller party to win a congressional seat. Through its agreement with the PS, the party hopes to have representation in Congress for the first time since the return to democracy in 1990. The electoral system provides for the election of two representatives from each district--60 for deputies and 19 for senators. However, for one coalition to secure both seats it must capture twice as many votes as its nearest rival. The PS-PC pact affects five districts where PC support could enable the Concertacion to double the right's votes and secure two seats. In exchange, the PS support for PC candidates in the Santiago Pudahuel district and the northern Region IV Illapel district could give the party one or both seats. The PS's confirmation on July 21 of its support for PC candidates in the two districts threatened to split the governing coalition. PS president Camilo Escalona said the party wanted to end the PC's exclusion from the parliamentary system and at the same time increase the chance of electing more Concertacion candidates. "This agreement will allow the party to regain a legitimate presence in the parliament, which is long overdue," said PC secretary general Gladys Marin. The agreement drew heated opposition from the PDC and the PPD. PDC deputy Zarko Luksic said the PS decision does not conform to the spirit of the coalition. "The attitude is not convenient and I think it eventually could lead to a rupture in the alliance," said Luksic. PPD president Guido Girardi said the decision "sows mistrust and puts at risk the unity and the future of the Concertacion." The crisis is the most serious within the Concertacion since its formation in 1989. The last major test of the coalition's cohesiveness was in December 1998, two months after former dictator Gen. Augusto Pinochet (1973-1990) was detained in London (see NotiSur, 1999-02-05). At that time, the PS publicly supported Spain's request for Pinochet's extradition to stand trial for human rights abuses. Then President Eduardo Frei of the PDC insisted that Pinochet be returned to Chile, which he was in March 2000 after 503 days of house arrest. Lagos denied that the Concertacion is in crisis. "The Concertacion is enjoying good health, as it always has," said the president. "This is the most successful coalition in the history of Chile; never has a coalition governed for the length of time that the Concertacion has governed. The present issues will be resolved by the leaders of the political parties." In a statement issued July 23, the PS reaffirmed its support for the PC candidates in Pudahuel and Illapel, insisting it was not putting the coalition at risk. "The Partido Socialista will give all its effort to the success of all Concertacion candidates," it said. "The Partido Socialista does not and will not jeopardize the possibilities of any Concertacion parliamentarian," said party president Escalona. On July 25, the Concertacion said the crisis had been resolved. Although the PS maintained its pact with the PC, in a short "public declaration" the four Concertacion parties pledged "to work in a united way, to give mutual support, and to back, with the votes of all party members, all their candidates in every district in the country." Support for Lagos has dropped A recent survey by the Centro de Estudios Publicos (CEP) shows support for Lagos stands at 48%, a drop of 6% since December 2000. Forty-one per cent of respondents approved of the way the Lagos administration is governing, while 35% disapproved. In addition, the majority of Chileans say the country is at a standstill, while 18% consider it in full- blown decline. The CEP, an institute tied to the right, said respondents indicated three areas that the government should pay more attention to: employment, poverty, and health. The institute said, however, that the administration got high marks in its handling of international relations, education issues, and relations with the military. As indicated by the CEP survey, the persistent unemployment--9.6% nationally and 15% in Santiago--could play a significant role in the December elections. The CEP said its survey showed the PDC remains the strongest party with 14% support, followed by the RN and the PPD, each with 9%. The UDI had 8% support and the PS 7%. About 43% did not identify with any party. [Sources: Reuters, 07/17/01; El Nuevo Herald (Miami), 07/18/01; Notimex, 06/27/01, 07/06/01, 07/14/01, 07/16/01, 07/23/01; The Santiago Times (Chile), 07/16/01, 07/17/01, 07/23/01; La Opinion (Los Angeles), 06/26/01, 07/24/01; Spanish news service EFE, 07/04/01, 07/07/01, 07/17/01, 07/20/01, 07/21/01, 07/23/01, 07/25/01] ================================================================= 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-07.27.01-17:45:37-5374