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Headlines: Mercosur against the war; US economy growth drops abruptly; Seven million undocumented; Brazil targets higher surplus.

Mercosur against the war

Most Latinamerican countries including the non permanent members in the United Nations Security Council, Mexico and Chile, favor the continuation of arm inspections in Iraq and a diplomatic solution to the conflict. "This very serious conflict must be solved without going to war", said the Mexican representative, while Chile insisted that "we must continue to support the work of UN experts". Argentine president Eduardo Duhalde in his regular radio chat that in the event of an armed confrontation between United States and Iraq, "no decision will be adopted that does not have the Security Council consensus. We're not going to participate in anything that smells of war". Brazilian president Luiz Inacio Lula da Silva said that if "democracy is to prevail in the world, no decision can be taken (regarding war without the Security Council consensus". Uruguayan Foreign Affairs Minister Didier Opertti underlined that International Law and peace must prevail, however he said that "we must wait for the results of the arms inspection, the assessment of the 15 Security Council members and the final vote". Mercosur as a block is expected to consider the situation this week in Asunción, Paraguay. A recent Gallup world opinion poll in 41 different countries showed that Argentina and Uruguay are the most contrary to military actions against Iraq under any circumstances, 83% and 79%, respectively. The poll was done during the second half of January interviewing 30,000 people in five continents.

US economy growth drops abruptly

United States economic expansion dropped abruptly during the last quarter of 2002, with consumers containing expenditure and companies holding to their inventories according to the latest figures released by the Department of Commerce. During the 4Q the US economy grew at an annual rate of 0,7%, well below the lowest estimates of 1%, very distant from the 4% of the third quarter and the slowest of the whole year. Fears of growing unemployment and a possible conflict with Iraq contributed to the poor performance. However overall growth for 2002 was 2,4% compared with 0,3% in 2001 when the US economy was declared in recession. In 2000 the economy expanded at an annual rate of 3,8%. Consumer spending which accounts for two thirds of the US economy rose just 1% in the fourth quarter compared with 4,2% in the previous quarter. Last week the US Federal Reserve left its key interest rate unchanged at a 41 year low of 1,25%. Since January 2001 the Fed. has cut interest rates twelve times with the last reduction in November 2002 in an attempt to spur the economy.

Seven million undocumented

Illegal immigrants in United States doubled in the nineties reaching seven million in January 2000 according to the Immigration and Naturalization Service, INS. An INS reports indicates that 69% of illegal immigrants are of Mexican origin with an annual average of 350,000. However in the peak year 1999, the increase in the illegal population was estimated in 968,000 with 63,000 deportations and 152,000 becoming legal immigrants. California is the state with the greatest illegal immigrant population, 2,2 million representing 6,5% of the total population, with Texas following closely with one million, equivalent to more than 5% of the state's total population. Of the seven million illegal immigrants 4,8 million are Mexican; 189,000 from El Salvador; 144,000 from Guatemala; Colombia 141,000 and Honduras 138,000. China is the only non Latin country with 115,000 illegal immigrants in the US. The INS report brought immediate reaction from anti immigration groups. "The most important point of the report is that in the nineties we granted legal status to 1,5 million people who came to this country (US) illegally", said Steve Camarota from the Immigration Studies Center. "We're generously rewarded illegal immigration and if you reward illegal immigration you're sending a very clear signal to those who are attempting to come over. United States has lost control of its borders and this is a national security issue", added Mr. Camarota.

Brazil targets higher surplus

Brazilian Economy Minister Antonio Palocci said that President Lula da Silva administration target was to achieve control over inflation by the end of 2004 so "as not to impede the country's economy from expanding", but simultaneously will ensure investors confidence with a budget surplus of over 4,06% in 2003, "through savings and not expenditure cuts". "We made the option of tolerating a small receding inflation that will reach a desirable level at the end of 2004. This should stimulate the economy because if we increase interest rates to 35/40% to clamp inflation the economy will not grow", said Mr. Palocci. The Economy Minister revealed that another immediate target of the current administration is to bring down the debt/GDP ratio by restoring investors confidence. "Last October (when the presidential election) the country was virtually in a situation of financial insolvency, however between December and January we managed to decrease the ratio from 63% to 56%, by gaining markets respect for our administration". Further on Mr. Palocci said that the 2002 budget surplus had reached 4,06% of GDP, above the IMF target of 3,5%, "but we intend to finish 2003 with an even better record. Our policy is to avoid abrupt, inconsequential exotic measures, and restore confidence and predictability", and warned "look what happened in Argentina". Mr. Palocci finally admitted that last October the outgoing government "lost control over the US dollar exchange rate and the economy, but they preferred to blame it on Lula. Central Bank president Arminino Fraga kept the US dollar from rocketing by "burning" at great cost international reserves". However in January the Lula da Silva administration managed to spend only 150 million US dollars to keep the foreign exchange rate markets stable. Brazil's gigantic debt (almost 280 billion US dollars) is indexed to the US dollar so the country to honor capital and interests can only tolerate a gradual, modest devaluation of its currency, plus a tight budget.