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Lagos expects quick ratification / Something smells fishy / Rocketing quarter / Changes in slow motion / Markets trust test for Mr. Lavagna / Cabinet reshuffle / Infant exploitation / Hard to believe

Lagos expects quick ratification
Chilean President Ricardo Lagos said he expects Congressional opposition will understand the importance of the recent association agreement between Chile and the European Union and help with its legislative approval. "This is a historic agreement, what we need is a strong political backing for Chile to compete in the world", indicated President Lagos after meeting with Soledad Alvear, Chile's Foreign Affairs Minister who after arriving from Brussels went directly to meet with the President. Mr. Lagos said he plans to invite this week leaders of all political parties with Congressional representation and the presidents of both Houses so "we can find a way to consider the trade and political association agreement, and consequently a speedy ratification". "I'm sure once Chileans can see exactly the extent of the agreement, it will have a quick congressional process". However Senators have convened the Foreign Affairs and Agriculture committees for a special session to consider the overall agreement and have requested the presence of Mrs. Alvear and her top aides in Foreign Affairs. "It's not enough with the global ideas, we want to see the small writing of the agreement", indicated opposition Senator Sergio Romero. Several Senators said they were particularly concerned about agriculture, particularly, beef, dairy produce and wines. Mrs. Alvear anticipated that in the coming days she will begin a "pedagogic round" so that all those involved and or affected can be informed on the contents and advantages for Chile once the agreement is enforced. "It's the first agreement signed by the European Union in the XXIth century and the partner is Chile. This is a great challenge for us and for the whole of Latinamerica", underscored Mrs. Alvear.

Something smells fishy
Chile's powerful fisheries association Sonapesca considers that the recent agreement reached with the European Union is "deficient and negative", for the fishing industry. "We acknowledge the importance of the overall agreement but we consider we (fisheries) have paid the highest price", indicated Sonapesca. According to the agreement European companies can now purchase 100% of local Chilean fishing companies when previously they were limited to just 49%. "We regret that the important concessions granted by the government in fisheries haven't been fairly compensated", said Sonapesca pointing out that practically no changes have taken place regarding tariffs, since fresh hake which represents 25% of Chilean sales to the European Union remain unaffected by the agreement. European fishing companies will now be able to invest in Chile and have a "satisfactory" access to the Community since 95% of fisheries produce has been liberated. However, fresh hake and tuna fillets have been excluded and will have the same current tariff level. Sonapesca also pointed out that Europe subsidies fishing with 1,3 billion US dollars annually and because of depredatory practices has seen its fisheries in the North and South Atlantic depleted, plus bilateral agreements with Morocco and Argentina terminated. A fishery was one of the stumbling issues in the Chilean-European Union talks that have been ongoing for over 18 months. Bilateral trade between Chile and the European Union reached 5,4 billion Euros in 2000.

Rocketing quarter
The US economy boosted by consumer spending, had an unexpectedly high first quarter growth of 5,8%, one point ahead of all private estimates. The latest US Commerce Department report indicates that the US economy is rapidly recovering from one of its mildest recessions. However it also points out that the drastic reduction in company's inventories is expected to slow down in the coming months and therefore growth will become more moderate. The strong expansion in the first quarter of 2002 follows a 1,7% growth in the last 2001 quarter and negative 1,3% in the third quarter. Inventories in the US have been dropping for the last five quarters and experience indicates production begins to pick up when companies depend much less on their existing inventories to satisfy demand. Company's inventories dropped 36 billion in the first 2002 quarter compared to 120 billion US dollars in the last 2001 quarter. Consumer consumption grew 3,5% in the period. President Bush has requested Congress to move ahead with the tax reduction scheme and to approve the Trade Promotion Authority, TPA, which enables the White House to negotiate international trade agreements. "Growth was encouraging but we can do better; the more money people have in their pockets the more they will spend it", said President Bush adding the TPA was needed "to open foreign markets to American goods".

Changes in slow motion
Venezuelan president Hugo Chaves named this Sunday veteran political leader and former Defence Minister José Vicente Rangel as his new vicepresident, a vital post in the government structure. Mr. Rangel replaces Mr. Diosdado Cabello a former paratrooper and controversial figure, rejected by the opposition and accused of arming the "Chavistas" mobs during the recent violent protests which ousted Mr. Chaves for a couple of days and left 50 dead and over 300 wounded. As the first civilian Venezuelan Minister of Defence in 72 years, Mr. Rangel since January actually was the only government representative considered "reliable" and holding talks with the growing opposition to the populist regime of Mr. Chaves. The nomination of Mr. Rangel is seen as another step to comply with the "sincere dialogue" President Chaves promised after he was restored in office following a 48 hours disappearance, apparently detained in a military compound, after armed mobs surrounding the Presidential palace opened fire killing several civilians peacefully protesting during a general strike. In spite of strong support from the poorest segments of Venezuela, President Chaves faces not only general discontent to questionable political and social reforms, (such as non compensated land and property distribution), but also a faltering economy and military fears that the country could end in an armed confrontation among civilians. Mr. Chaves, who considers himself an admirer of Fidel Castro, suffered a big setback when a few weeks ago he tried to name a new Board in Petróleos de Venezuela, the country's largest company in oil rich Venezuela, and responsible for most of its exports and tax revenues. Since it's Venezuela' main income earner, there's a general consensus in the country that the company is out of bounds for politics. The company's professional management with union backing rejected Mr. Chaves nomination and organized a national strike that ended with bloody rioting and Mr. Chaves two days ousting. On his return to office Mr. Chaves promised a "sincere dialogue" with the opposition, named a professional board in PvdeSA with Alí Rodríguez, OPEC's Secretary General as president, and changes in his cabinet. Most South American countries supported President Chaves and Venezuelan democracy during the political crisis and insisted in his reinstatement to office condemning what was described as "mob rule". However the situation is still fragile because Mr. Chaves support in Congress has weakened and the Army is very fearsome of an armed conflict since the Venezuelan society seems irreconcilably split in half.

Markets trust test for Mr. Lavagna
Incoming Argentine Minister of Economy Roberto Lavagna confirmed a floating currency, no price controls and a clear willingness to follow and comply with the reforms demanded by the International Monetary Fund, IMF, according to interviews in Buenos Aires Sunday newspapers. "It's a full opening, we must give oxygen to the economic activity of the country", said Mr. Lavagna dispelling all fears about the continuation of the eight days compulsory banking and exchange holiday. "No fixed exchange rate, while I'm in command, free markets", insisted the sixth Argentine Economy Minister in just over four months. Mr. Lavagna said he was not frightened about how the foreign exchange market will react this Monday in Buenos Aires financial district. "I believe there's been an overreaction of the market, and the US dollar should remain in range of the closing exchange rate of April 19th, that is 3,15 pesos in bank trading and 3,28 pesos in street trading", stressed Mr. Lavagna. Last January sixth the incoming Duhalde administration ended the eleven years pegged exchange rate of 1 peso to 1 US dollar, creating havoc in financial markets and further infuriating Argentines by converting US dollars deposited in banks into pesos. Mr. Lavagna also underlined that there will be no price control in spite of the fact that April's inflation is expected to rocket 10%. "Our aim must be to calm markets and offer reference points, which now are absent", added the new Economy Minister. Mr. Lavagna revealed he's already had contacts with IMF officials and the US Treasury Under Secretary John Taylor. "An agreement with the IMF is the quality, reliability certification Argentina needs to recover international credibility and trust. President Duhalde has agreed this will be official policy, which also has the backing of the political leadership supporting the current coalition", indicated Mr. Lavagna. Last week the Argentine Congress approved a bill effectively curtailing the "leakage" of frozen bank assets which threatened with a complete collapse of the financial and banking system of the country. Mr. Lavagna, is an economist educated in Buenos Aires and Belgium with a long experience in government posts, both with Peronist and Radical governments, (Argentina's two main political forces). He was currently Argentina's Ambassador before the European Union in Brussels and is considered an expert in international trade affairs. He recently managed an extension of the EU Hilton beef quota for Argentina and the lifting of the ban on Argentine beef. During the first Argentine democratic government in the eighties he was instrumental in the founding of Mercosur and advisor to the Inter-american Development Bank. Mr. Lavagna has taught in several universities, was a researcher in Harvard University and is a member of CARI, Argentine Council of Foreign Relations.

Cabinet reshuffle
Argentine president Eduardo Duhalde said this week he will be officially announcing the new economic policy, plus a possible reshuffle of the cabinet following the designation of Roberto Lavagna as Economy Minister and the fourteen points agreement reached with provincial Governors which shows a willingness to comply with the main IMF requests. "Monday, Tuesday, possibly we'll be ready to announce the new economic program", said President Duhalde over the weekend, adding that the new Minister of Economy has taken office "with the full support of the main political parties, (Peronists and Radicales)". However Mr. Duhalde avoided talking about the frozen assets in banks of savers and depositors who are in permanent protest demanding the return, in many cases, of their life savings. "We need to find a definitive solution to the "corralito"(frozen assets)", indicated President Duhalde, who nevertheless refused to talk about a plan to exchange savings and deposits for long term government and possibly bank bonds. President Duhalde also mentioned that some cabinet members are leaving and once "we have all the names, we will make it official, probably this week". Last week when the previous Economy Minister Jorge Remes Lenicov returned from a meeting with the IMF in Washington with empty hands, and Congress refused to vote legislation converting bank assets into bonds, Mr. Duhalde convened an urgent meeting of political leaders and provincial governors, where after mentioning the possibility of his resignation, Mr. Duhalde managed a 14 points agreement that includes many of IMF requests, if Argentina is to receive much needed financial aid to help recover from international default and a four years recession. But if the agreement's fourteen promises don't become effective soon, and Mr. Lavagna is not successful in inspiring confidence to the economy, some Argentine local analysts believe the time "election bomb" will begin ticking again, and faster.

Infant exploitation
Almost 120,000 Chilean children between the age of four and twelve are forced to work eight hours per day for an average meager 100 US dollars a month, indicates the latest UNICEF report released in Santiago. According to a poll included in the report children working in farms must labor from sunrise to sunset for an average 90 US dollars per month, while those working in city markets make seven US dollars a day and in menial domestic jobs five US dollars per day. However even exploited, many of the children indicate they are satisfied they can help their families (usually handing half their income), that they have a reasonable degree of autonomy and Chilean researchers indicate that "work keeps them away from crime, vagrancy and drugs". The report indicates that a child that abandons school to help the family will become an unqualified laborer "conditioning his prospects and future to poverty". In Chile according to UNICEF 23,2 % of the population is below the poverty line and 1,620,000 of them are minors. The 1996 Chilean national census identified 428,000 indigent minors.

Hard to believe
US Undersecretary for Latinamerican Affairs Otto Reich defended US policy towards Venezuela and insisted the Bush administration was not involved in the attempt to oust president Hugo Chaves. "Under the circumstances, president Bush did the right thing", underlined Mr. Reich, adding that the US does not support breaking constitutional rule and what really happened was not a coup d'etat. "Mr. Chaves was ousted but nobody effectively occupied his post, there was a power vacuum", indicated Mr. Reich who has been accused by the American press of contacts with the Venezuelan civilians and military who wanted to take power. "I did not talk to Mr. Carmona, (Venezuela's 48 hours president), it was the Embassy in Caracas that insisted he should not dissolve the National Assembly", said Mr. Reich. However Washington is accused of keeping silent during Mr. Chaves 48 hours disappearance, when most South American countries rejected the new Venezuelan authorities. "During the 48 hours we were completely out of contact, we had no military personnel so we hadn't an idea of what was happening", stated Mr. Reich adding the US was among the first members of the Organization of American States to request a strong position in defence of constitutional stability and the democratic process. "We are against any altering of constitutional rule in Venezuela and in any of the other Latinamerican countries", stressed Mr. Reich.