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Some headlines: Menem proposes sweeping reforms;Petrobras investments; Brazilian record; Stiglitz blasts IMF; Pressure on the provinces

Pressure on the provinces

Following the Congressional derogation of the "economic subversion bill", President Eduardo Duhalde is pressing provincial governors to agree on drastic deficit cuts, another of the IMF's requisites before approving any financial aid to Argentina. An optimistic Secretary General of the Argentine presidency, Mr. Aníbal Fernández announced that in a very short time the Duhalde administration will be receiving the right "replies" from the IMF as more provinces sign the austerity agreement. Before any financial aid is forthcoming the IMF requested Argentina to modify several bills, --bankruptcy and economic subversion--, and a drastic 60% reduction in the budget deficit of the country's 24 provinces. Argentina desperately needs fresh funds to stabilize the economy and help the country out of a four years recession and a 70% currency depreciation. So far eight of the 24 governors have signed, and among those still pending are the three most important, Buenos Aires, Córdoba and Santa Fe. Cordoba has agreed, Santa Fe is demanding additional funds and Buenos Aires province, where a third of the country's population lives and represents more than 40% of national GDP, a second line IMF team is working to find ways to balance the provincial budget. Actually the main stumbling block are the many "provincial currencies" printed by the local governments to compensate for the lack of liquidity since a high proportion of Argentine bank assets remain frozen to avoid a bank run and further loss of the country's scarce international monetary reserves. Buenos Aires governor Felipe Solá anticipated his willingness to cooperate but he said financial aid must be forthcoming as the local "fiduciary emissions" are withdrawn from circulation. The "economic subversion bill" was finally derogated this week after several previous attempts. However it passed Senate by just one vote 35 to 34. Several Senators of the current ruling Peronist-Radical alliance fear that with the elimination of the bill several bankers accused of helping banks send deposits overseas will have to be set free. Government has promised that the Attorney General will bring other "white collar" crime charges against them. The crucial importance of the vote was illustrated by President Duhalde himself, who said that if the "economic subversion bill" was not derogated he would have resigned. "If this bill was not changed there was no sense in remaining in the presidential office. I would have resigned immediately", revealed President Duhalde, who accused the junior partners of the coalition, Radicales, of not helping with the situation. The Radicales did not vote the derogation but finally ensured the sufficient quorum for the session. Reliable sources in the Duhalde administration believe that in "three weeks time" Argentina will be ready for a positive gesture from the IMF.

Stiglitz blasts IMF

Economy Nobel Prize winner, Joseph Stiglitz blamed the IMF for the Argentine crisis and said that if the country had followed strictly the multilateral organization recommendations, "the current disaster would have occurred earlier and much worse". Mr. Stiglitz blasted the IMF during a conference in Barcelona, Spain where he demanded a new reassessment of international economic policy. Together with other economists Mr. Stiglitz has criticized the current globalization model and particularly the lack of transparency and accountability in IMF's procedures and actions. "It's time the IMF responds for what happened in Indonesia, Brazil, Argentina, since something is not working as it should", said Mr. Stiglitz who was chief economic advisor of the Clinton administration for several years and also worked for the World Bank. Mr. Stiglitz contrary to IMF diagnosis says Argentina's trade deficit at the beginning of the nineties was not worse than that of the United States and in the last two years has cut expenditure by ten points, "a great effort by any democratic standard". Actually if Argentina had followed instructions strictly, "the current disaster would have occurred earlier and much worse", underlined the economist. Mr. Stiglitz blames the Argentine situation to a "failure of the current globalization policies", and if "this country was the show case for so many years, what can be said of the rest and ¿what future awaits those who follow the same IMF indications?" The former Clinton advisor adds that after a decade of economic reforms such as privatization and open markets in Latinamerica, the region's GDP has barely managed to keep up with growth rates of the previous decades, fifties, sixties and seventies. "Really the situation is far worse because only 10% of the population has benefited from these economic policies, while the poor have become poorer", stressed Mr. Stiglitz.

Menem proposes sweeping reforms

Former Argentine president Carlos Menem proposed sweeping financial and political reforms to overcome the current crisis including making the US dollar the official Argentine currency, "so people can have real money and recover their life styles". The announcement was made during a gathering of "Menemist" leaders in the province of Buenos Aires and where Mr. Menem reiterated his candidacy for the coming presidential election. "I want an only strong currency, exchangeable in the world and not 24 different worthless papers that are circulating in Argentina", said Mr. Menem in direct reference to the different "fiduciary papers" that are being printed by most of the 24 money strapped provinces. Mr. Menem also proposed converting the current 23 provinces into five regions, "most provinces can barely pay for the light and water", eliminating the Senate and having an amendment system to reform the Argentine Constitution similar to the US system. "The country can easily operate and efficiently with an only House, we don't need the Senate, nor the vice president office", added Mr. Menem. The former president said voting should be voluntary, not compulsory as currently and proposed eliminating the sheet candidate system since the electorate "will never have seen or heard of most of the names on these lists made up by professional politicians". Mr. Menem will be travelling to the United States in the coming days to participate in a world conference of conservative parties, where he expects to meet US president George Bush. However if Mr. Menem is to have another chance to the presidency, particularly if elections are held earlier, Congress must consider former president De la Rúa's mandate officially concluded. Constitutionally Argentine presidents can be reelected once, and must let one mandate pass before trying again. Since president Duhalde was named by the Assembly, and not elected, the current mandate corresponds to Mr. De la Rúa who resigned last December.

Petrobras investments

Brazilian oil company Petrobras is planning to invest 6 billion US dollars in 2002, the greatest effort since 1953 when the government run monopoly was created and time and half last year's earnings of 4,3 billion US dollars. Five billion have been earmarked for exploration and exploitation according to Mr. José Coutinho Barbosa, Production Director of the company. In spite of the magnitude of the investment Petrobras is also estimating 2002 earnings will reach 2,2 billion US dollars, helping the Brazilian federal government finish the current year with a primary budget surplus equivalent to 3,5% of GDP. Actually in the four years extending to 2005, Petrobras is planning to invest in exploration and exploitation 34,5 billion US dollars, according to Mr. Barbosa. The massive investment responds to the Brazilian government determination to reach oil self sufficiency in the shortest time possible. Most of Brazil's oil is off shore and Petrobras has become one of the leading companies in off shore technology of the world. "Petrobras, the leading company in Brazil, has more exploration and production projects ongoing in the world than any other oil company, and we were one of the few companies that managed to increase output during the first quarter of 2002", revealed Mr. Barbosa.

Brazilian record

Brazil has set a new record: the country now leads the world in number of armored cars, overtaking Mexico and Colombia that rank second and third, according to the latest edition of the weekly magazine "Veja". The extremely high crime rate is forcing many people in Brazil to have their cars converted so at to resist possible attacks by robbers and kidnappers. Armoring cars has become an industry and the local Association estimates that 400 cars per month undergo the process of reinforcing windows, doors and making the vehicle strong enough to stand attacks. In Mexico monthly production is 170, and in Colombia 150. The largest number of armored cars circulate in Sao Paulo, the country's most important metropolis where the crime rate is the highest, particularly kidnapping which has become a flourishing industry. Kidnappers tend to attack their victims taking advantage of the painstakingly slow and chaotic traffic of Sao Paulo when cars can get stuck for long periods. Official statistics indicate that in 1996 twelve kidnappings occurred, and 1,200 cars were armored; in 2001 numbers jumped to 307 and 4,200. According to the publication, five years ago armoring a car cost over 60,000 US dollars, but now given the booming market and competition the sum is down to an average 18,000 US dollars. Options also vary from a simple armoring to resists shots from small weapons to those protected against grenades and greater caliber weapons. A satellite tracking system has also become quiet popular in Brazil, particularly for commercial vehicle fleets. An estimated 32,000 have the chip system installed and the number is increasing.