NotiSur - 02/22/02 - Venezuela, Brazil 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 7 February 22, 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. 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In This Issue: VENEZUELA: PRESIDENT HUGO CHAVEZ INTRODUCES ECONOMIC CHANGES * Business sector supports floating bolivar * Inflation worries Venezuelans * Chavez says policies are not from the IMF * US continues pressure VENEZUELA: MILITARY OFFICERS CALL FOR PRESIDENT TO STEP DOWN * Chavez says media behind officers * Vice admiral joins dissidents BRAZIL: PORTO ALEGRE HOSTS SECOND WORLD SOCIAL FORUM * PT receives much of the political-party spotlight * Calls for peace dominate the event * A place for organizing campaigns, not for direct actions * Old divisions within the left resurface at Porto Alegre ____________________________________________________________ ********************* VENEZUELA ********************* VENEZUELA: PRESIDENT HUGO CHAVEZ INTRODUCES ECONOMIC CHANGES On Feb. 12, the second day of the national pre-Lenten carnival holiday, Venezuelan President Hugo Chavez surprised supporters and opponents by announcing new economic measures that included allowing the national currency, the bolivar, to float. The plan, effective the following day, also included a tax hike and a cut in public spending. During the last five years, the bolivar had devalued gradually, controlled by a variable band of minimum and maximum prices established by the government. But the Venezuelan economy, the fourth-largest in Latin America, has been under pressure from falling oil prices and investor concerns about growing political unrest (see other article in this edition). Banco Central de Venezuela (BCV) director Domingo Maza Zavala had insisted on the need to cut public spending by 20% to confront the US$4 billion deficit in this year's budget and to offset the impact of the low prices for petroleum exports, a major source of revenue. Chavez met Feb. 7 with his economy ministers and directors of the BCV to decide on a course of action. The following day, the BCV said it had spent more than US$3 billion to prop up the bolivar since November. Venezuela's foreign reserves have dropped from US$19 billion in November to US$13 billion, both from spending to support the bolivar against the dollar and from capital flight, which last year cost the country an estimated US$10 billion. On Feb. 12, Chavez announced a drastic 22% budget cut-- from US$33 billion to US$25 billion. The US$25 billion budget is based on an average oil price of US$16 a barrel, instead of the US$18.50 a barrel used when drafting the earlier budget. Venezuela loses US$1 billion in income for each US$1 drop in the price of oil. Chavez said the state oil company Petroleos de Venezuela (PDVSA) would cut its 2002 budget by 28%. Chavez said he would cut government spending by 7%, with the cuts aimed mostly at administrative costs at the federal, state, and local levels. He said no social programs would be cut. "We will not touch social investment," he said. The president said the government expects to take in US$1.7 billion this year from a new tax on bank transactions, and another US$1.3 billion from a sales-tax increase. He said the administration would seek "to curb the impacts" of the new taxes through "social-investment spending," with US$2.5 billion from the Macroeconomic Stabilization Fund, which is fed by oil revenues. Business sector supports floating bolivar Chavez asked for "patience" and "cooperation" from Venezuelans and foreign investors. He said the measures were necessary because of low oil prices, capital flight, and investor nervousness about Latin America after Argentina's financial crisis and the slowdown in the global economy since the Sept. 11 attacks in the US. Francisco Rodriguez, head the National Assembly's economic assessment office, said a devaluation could help the government "close the fiscal gap" through an increase in income from export revenues. The overvaluation of the bolivar was making the country's exports more expensive while encouraging imports, he said. Many business leaders have been calling for allowing the bolivar to float. Pedro Carmona, president of the business association Fedecamaras agreed that the change would help Venezuelan industry regain competitiveness on the international market and rationalize imports. But Carmona, who led a successful general strike against Chavez on Dec. 10, also had advice for the president. Chavez must "generate [investor] confidence in a climate of calm debate and abandon the hostile conflict of recent months," said Carmona. Inflation worries Venezuelans In floating the bolivar, the administration anticipated a sharp devaluation in the currency. Maza Zavala said on Feb. 13 that the bank would not sacrifice its reserves to defend the bolivar but would intervene if needed to stop a free-fall. Currency turmoil was likely to ease in a few days, he said. After initially fluctuating wildly, the bolivar has seemed to stabilize but is down about 16% since Feb. 15. While a weaker bolivar helps competitiveness, pleasing the business sector, many Venezuelans were angry, saying it would bring inflation and stop economic growth. Analysts warn the devaluation could send annual inflation beyond 20%. Inflation was about 10% in 2001, and the government had aimed for the same rate this year. The political repercussions for Chavez could be significant, as Venezuelans blame the president for their economic woes. The 80% of the country who are poor would suffer the most from drastic price increases, and they form Chavez's core constituency. "The poor...are going to lose at least 25% of their purchasing power," said Michael Rowan, an independent political analyst. "Chavez is letting down the only people who have been with him through thick and thin. Although he didn't really have a choice." Chavez has recently extended an olive branch to his domestic opponents, asking them to help him "sheathe his sword" and cooperate to find common ground. Business leaders reacted warily. "It all depends on whether the government will comply with all these measures. We've heard a lot of government plans before that were never implemented," said Fedecamaras vice president Albis Munoz. Chavez says policies are not from the IMF International Monetary Fund (IMF) spokesperson Thomas Dawson praised Venezuela's decision to abandon exchange controls as a step "in the right direction." But some opponents said Chavez's measures are the same IMF-recommended orthodox fiscal-adjustment moves that the president has repeatedly called "savage neoliberalism." In his radio broadcast Feb. 17, Chavez accused the media of staging "media shows" to give the impression the economy was falling into chaos. He said his measures were an economic strategy, "a tactical decision," that would leave intact the strategy of integral development of the productive sector of the economy, a policy that is diversified, humanist, competitive." He said that what differentiates the new policies from those of the IMF is that "they are just measures, necessary and opportune, that deal with the budget, and have nothing in common with the neoliberal policies of previous administrations." Chavez said that on Feb. 26, he would unveil measures to promote employment and to mitigate the effects of the devaluation on the poor. He said they would demonstrate "the difference with orthodox neoliberal measures and would promote employment and salaries." Nevertheless, union leaders, longtime Chavez opponents, were skeptical. The Confederacion de Trabajadores de Venezuela (CTV) said it would organize a demonstration for Feb. 27. In addition, the Federacion Unica de Empleados Publicos (Fedeunep) said it would notify the Labor Ministry of its intent to strike on March 1. US continues pressure Chavez's increasingly visible opposition at home is bolstered by US antagonism toward his government. On Feb. 5, Secretary of State Colin Powell criticized Chavez's ideas on democracy, his relationships with US enemies, and his questioning of some aspects of the war on terrorism. Chavez has said he believes in democracy and does not back terrorism. "I am not a communist," said Chavez in the city of Maracay on Feb. 6. "I am very clear about which direction my country is going." But Chavez also firmly defended his government's right to follow the policies it chooses "because this is a sovereign and independent nation." [Sources: Notimex, 02/12/02, 02/13/02; La Opinion (Los Angeles), 02/17/02, 02/18/02; The Miami Herald, 02/13/02, 02/19/02; Inter Press Service, 02/08/02, 02/13/02, 02/20/02; Associated Press, 02/12/02, 02/14/02, 02/19/02, 02/20/02 Reuters, 02/07/02, 02/17/02, 02/21/02] VENEZUELA: MILITARY OFFICERS CALL FOR PRESIDENT TO STEP DOWN During the past two weeks, three military officers have publicly called on Venezuelan President Hugo Chavez to resign. Whether they represent significant discontent in the armed forces or a personal alliance with the increasingly vocal upper-class opposition to Chavez is unclear. Few analysts, however, see any likelihood of a military takeover. At a forum on freedom of expression Feb. 7, Air Force Col. Pedro Soto called for Chavez's resignation, accusing the president of using the armed forces for political ends. He claimed his opinion was shared by most military officers. The 1999 Constitution gave the military the right to vote and removed limits on expressing political opinions. The government accused Soto of aiding news-media owners at the press forum to stage a "show" to coincide with an Organization of American States (OAS) inspection of press freedoms in Venezuela. Soto became an instant hero for Chavez opponents who have had trouble finding a leader who offers any viable challenge to the president. During an anti-Chavez protest the following day, police reportedly tried to detain Soto but were stopped by the crowd. "We are here to tell the president that freedom of expression is one of the most important things...and no one is going to take it away from us," Soto said at the rally. "The president cannot think we elected him to be the owner of Venezuela." During the demonstration, a second dissident, National Guard Capt. Pedro Flores, joined Soto. He accused the president of endangering the country's democratic system through corruption and through attacks on the Catholic Church, the media, and "the rule of law." Armed forces chief Gen. Lucas Rincon said Soto was frustrated because he had been bypassed for promotion to general. Soto has acknowledged he was denied a promotion, but attributed it to his close links with Chavez's enemy, ex- President Carlos Andres Perez (1974-1979, 1989-1993). Perez has called for Chavez's ouster. Those links could also help explain Soto's sudden decision to wage a public campaign against Chavez. Vice President Diosdado Cabello said Soto and Flores, plus another unnamed officer, had met with a television station director before Soto demanded the president's resignation. Cabello noted the extensive coverage of Soto as he demanded Chavez's resignation, was met by police, and then led thousands of protesters in the streets. The government said Soto's freedom to stage his protest shows that freedom of expression exists fully in Venezuela. Meanwhile, OAS press-freedom inspector Santiago Canton said earlier harassment of reporters by Chavez supporters endangered press freedoms, but he also said Chavez's use of a law requiring broadcasters to run his speeches was tolerable as long as it was "reasonable." Chavez says media behind officers Chavez said on Feb. 9 that the government knew opposition media and politicians were planning to have a military officer criticize the government on national television. "Only we didn't know who it would be," Chavez told Chilean television. Chavez accused the media of "spreading a false picture" of growing discontent in Venezuela. "There is no serious opposition, they do not have leadership, they do not have an alternative project," the president said. The armed forces command demanded that Soto and Flores turn themselves in by Feb. 11 to face unspecified "consequences." OAS secretary-general Cesar Gaviria called on the two to obey. "President Hugo Chavez was elected democratically, and thus it is unacceptable for an officer of the armed forces to seek to disregard the rule of law," said Gaviria in Bogota. On Feb. 11, the two officers turned themselves in at their respective bases. After several hours of questioning, they were released. Col. Hidalgo Valero, a lawyer for the officers, said Soto "has committed no crime. No one here is talking about a military uprising." "The National Guard will never support a coup," said National Guard chief Gen. Belisario Landis. He said Flores would not be arrested, but would face a disciplinary committee and could be dismissed. Vice admiral joins dissidents After a few days during which most Venezuelans seemed to set aside politics to celebrate carnival, another officer publicly criticized the president. On Feb. 18, Vice Adm. Carlos Molina Tamayo, ambassador-designate to Greece, urged his colleagues join in demands that Chavez step down. Molina is the highest-ranking officer to publicly demand the president's resignation. At a news conference, Molina, a US-trained electronics warfare expert, accused Chavez of trying to divide the nation and "install an extreme left-wing tyranny." "Venezuelans! For Venezuela, its future and the well- being of our children, we must all demand with a single voice the immediate resignation of President Chavez and his government," Molina said. In statements that echo recent criticisms from US Secretary of State Colin Powell (see other story in this edition), Molina accused Chavez of distancing Venezuela from its traditional allies, such as the US, and damaging its interests by his friendship with Cuba. He demanded that the president end oil sales to Cuba. Molina accused Chavez of "seeking links with nondemocratic governments" and of developing a "proven and dangerous relation...with Colombian terrorist guerrillas." After the press conference, about 2,000 people gathered in Plaza Francia de Altamira, which has become the gathering place for the opposition, to support Molina. The crowd was about half the size of the protests with Soto. Molina, however, dismissed any suggestion of a coup. He met with his superiors Feb. 20 and said the Constitution guarantees his right to public dissent. "My actions were within constitutional norms," Molina said after leaving Navy headquarters in Caracas. None of the three officers has been arrested, though they face disciplinary hearings within their respective branches. Alberto Muller Rojas, a retired general and university professor, told Inter Press Service that the officers' actions come in part because "the armed forces are no longer isolated from the political debate taking place in the country." "Their declarations are not a threat that armed actions could be taken, because the great majority of the troops are not behind either extreme of the polarization that has become so marked in Venezuela," said Muller Rojas. Political analyst Manuel Felipe Sierra said that "there is tension within the armed forces, but the expressions of discontent are from individuals, they have occurred in isolation." He said that the three officers' political belligerency is related "to the politization of the armed forces and the political involvement the military has had in the Chavez administration." The dissident officers say the military is upset with being forced into nontraditional roles, such as crime fighting and social work, instead of defending the nation. Some officers disagree with the Chavez administration's involvement in peace efforts between the Colombian government and guerrillas, and some object to Chavez's friendship with Cuban President Fidel Castro. The Chavez administration and military leaders must decide how to deal with the dissident officers. They need to address legitimate concerns within the military while still maintaining discipline. They must monitor political activity by active-duty personnel without further antagonizing other officers who disagree with the president's policies. [Sources: Notimex, 02/09/02; The Miami Herald, 02/11/02; Reuters, 02/09-11/02, 02/18/02; Spanish news service EFE, 02/09/02, 02/11/02, 02/18/02; Associated Press, 02/08/02, 02/09/02, 02/11/02, 02/13/02, 02/16/02, 02/18/02, 02/20/02; Inter Press Service, 02/08/02, 02/20/02] ********************* BRAZIL ********************* BRAZIL: PORTO ALEGRE HOSTS SECOND WORLD SOCIAL FORUM By Matthew Flynn [The author writes for the International Weekly Edition of the Gazeta Mercantil, a Sao Paulo-based financial newspaper.] Nobel prize laureates, representatives from nongovernmental organizations, students, and other progressives returned to Porto Alegre, the capital of Rio Grande do Sul, Brazil, to discuss alternatives to corporate- driven globalization. The number of people attending the second World Social Forum (WSF), which coincided with the World Economic Forum or Davos club of the rich and powerful taking place in New York City this year, tripled from the year before. More than 40,000 participants, including 15,000 delegates representing 5,000 organizations from close to 150 countries, came to Porto Alegre to exchange ideas and improve collective actions to promote a more inclusive form of globalization. "The forum is a space for discussion, where various social organizations from around the world exchange information and experiences, make contacts, and leave strengthened," said Chico Whitaker, president of the Comissao Brasileira de Justica e Paz, an association linked to the Conferencia Nacional dos Bispos do Brasil (CNBB) and one of the sponsoring organizations of the event. With such a politically active population present, a number of politicians from several countries were attracted to the event, but the organizing committee did not give them any special attention and even dissuaded a few from coming. "The WSF is not a place for political parties to campaign, rather an event in which social progressives can learn how to better influence governments and parties," said Oded Grajew, president of Instituto Ethos and a member of the WSF organizing committee. When asked why Belgian Prime Minister Guy Verhofstadt, known for his conservative views, and a representative of the World Bank were not allowed to speak at the event, Grajew said that they did not register in time. "I can't just go to a World Bank meeting and demand that I be allowed to speak," he said. This year, the WSF did not have a video-conference debate with members of the World Economic Forum. Last year, an event intended to build bridges between the opposing groups ended in a yelling contest. PT receives much of the political-party spotlight One political group that did receive a lot of attention and was allowed to voice its views was Brazil's Partido dos Trabalhadores (PT). Critics said that Brazil's strongest opposition party was using the event to push its political agenda. And even rival PT politicians from Rio Grande do Sul bickered about who got more air time from the state-controlled television network. But city and state governments, both controlled by the PT, financed the event with US$1.35 million in public funds. The investment is expected to bring a return of US$10 million from the participants. One of the biggest attractions at the WSF was a democratic innovation instituted by the PT at both local and state levels. The "participative budget" allows citizens to decide how to spend public resources. Organizers of the WSF even simulated the participative budget at the global level by holding a World Parliament. Attendees could vote on how they would reallocate the US$600 billion that annually goes to buy armaments. Calls for peace dominate the event Because of the Sept. 11 attacks on the US and the recent bombing campaign in Afghanistan, debates concerning peace and security dominated much of the forum. A march of 40,000 people, shouting "a world without war is possible," kicked off the six-day event. In seminars and plenary sessions, participants discussed politically volatile areas around the world and the impact of the US war on terrorism. "The concept that the US uses to define the war on terrorism describes US actions in other parts of the world," said Noam Chomsky, professor of linguistics at the Massachusetts Institute of Technology (MIT) and long-time critic of US foreign policy. Besides the stronger emphasis on peace and security issues at this year's WSF compared to the year before, the meetings in Porto Alegre also allowed activists to re-emerge after the attacks. "The Sept. 11 attacks temporarily stopped the anti- globalization movement but also that of the pro-globalizers," said John Cavanagh, director of the Institute for Policy Studies in Washington, DC. "The social movement has continued but off the camera." Most leading anti-globalization advocates stressed that campaigns and protests would continue, especially with another round of World Trade Organization (WTO) negotiations and the Free Trade Area of the Americas (FTAA) talks underway. A place for organizing campaigns, not for direct actions This year WSF organizers wanted to avoid any criminal acts of protest. Last year, the forum's organizers and the state of Rio Grande do Sul were put in a difficult situation when Jose Bove, the French peasant activist, joined the Movimento dos Trabalhadores Sem Terra (MST) in a protest invasion of a farm owned by US-based biotech giant Monsanto, which tests genetically modified seeds (see NotiSur, 2001-02- 02). "I only joined the MST action because they invited me," explained Bove, who was present at the forum this year. "I believe all direct-action protests should be carried out locally." This year Bove only visited striking factory workers and a building invaded by the Movimento dos Trabalhadores Sem Teto (Homeless Workers Movement). Along with strengthening their campaigns against global economic organizations like the International Monetary Fund (IMF), the World Bank, and the WTO, participants strategized on fighting for debt forgiveness of the poorest countries and promoting a tax on foreign-currency speculation. The activists are also promising a new wave of campaigns aimed at multinational corporations. The collapse of Enron has energized activists to work toward curbing the power and unaccountability of corporations. "There is such a wealth of corporate targets," Gerd Leipold, executive director of Greenpeace International, told participants. "Exxon is the biggest corporate target. It is going to be a tough nut, and we will not be successful unless many of your organizations join in." Old divisions within the left resurface at Porto Alegre While making progress toward increased networking among individuals, groups, and organizations fighting to make another world possible, the WSF was not without disagreements and divisions. The organizers emphasized the plurality of people and philosophies who can come together and discuss the issues facing progressives, but more radical elements also voiced their dismay with what they considered the reformist thrust of the forum. "We are against the forum and believe that capitalism needs to be abolished through violent means," said a representative from the Troskyist student organization from Argentina. While extremist positions will always be present, divisions among the more representative social movements are of more concern as they could hamper the construction of a powerful global social movement. Union leaders, for example, argue that reforms such as the Tobin tax (see NotiSur, 2002- 02-01) on speculative flows of capital do not go far enough to attack the problems of global capitalism. "Capitalist globalization has destroyed nations, democracies, and the sovereignty of poor peoples. It cannot be 'humanized,'" read a letter signed by 20 union leaders who decided to boycott all the panels, workshops, and official sessions of the WSF. Peter Evans, a sociologist from the University of California, Berkeley, nevertheless believes that "the next challenge and obstacle for the progressive forces to become a stronger political force will be the rebirth of a labor movement between the North and South." He said that the WSF was the place in which the seeds of such a new international labor organization were sown. Despite the challenge of constructing unity without unanimity, the participants at the WSF demonstrated the growing awareness of a need to change the current path the world is on. While the forum did not produce any binding statements, organizers and participants defined themselves as "a global solidarity movement, united in our determination to fight against the concentration of wealth, the proliferation of poverty and inequalities, and the destruction of our Earth." Although an effort was made to move the forum to another location next year, organizers and participants agreed to hold it in Porto Alegre again because of time constraints. In following years, the WSF will be held in Asia and Africa. ================================================================= 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-02.23.02-07:23:41-21686