MercoPress. South Atlantic News Agency

Santander Bank blames rich countries

Other headlines:
USA Deeper in the red; Poverty in Argentina

Santander Bank blames rich countries Santander Bank CEO for Latinamerican operations said the IMF and rich countries are partly to blame for the financial crisis in the region. However Mr. Francisco Luzón underscored that Spain's main bank will continue operating in Latinamerica. Mr. Luzón made his strong public remarks during a seminar "Ibero America and Spanish companies" emphasizing that it has taken the IMF eight months to reach an agreement with Argentina, and requested multilateral organizations to search for "mechanisms that ensure an efficient way out, and with lesser suffering, of the crisis that regularly affect emerging economies". Another lecturer at the conference, a Board member of Spain's main telecommunications consortium Telefónica, Mr. Fernando Abril also argued in similar lines stating the company will remain in Latinamerica since they have confidence in long term results. Telefónica has investments totalling 33 billion US dollars in Latinamerica and Santander Bank, 16 billion. Admitting that Latinamerica is going through a critical stage, Mr. Luzón stated that announcing to market forces that the region will be operating without the safety net of the IMF, World Bank and Inter American Development Bank, "was what else but an invitation for a full contagion of the area". "What sense does it make to estimate assets and dividends from the region if the recurrent crisis stopped servicing of sovereign debts", asked Mr. Luzón. The banker also criticized protectionist policies of the rich countries, particularly the G7, since United States, Japan and Europe farm subsidies more than double all foreign capital going into emerging countries. "United States specifically knows the strategic importance of Latinamerica, something we Europeans many times forget", stressed Mr. Luzón, who also expressed his dissatisfaction with the treatment that "markets supposedly so knowledgeable", are giving these countries and particularly Brazil. "Sometimes I wonder if the rich countries are not aware we can easily turn Latinamerica into a second Africa". When asked if Latinamerican investments were responsible for the negative impact of Santander bank's shares in Madrid's stock exchange, Mr. Luzón replied that "Latinamerica is only responsible in so far investments in the area have made Spanish companies global, and we are determined to work for a future global financial system".

Deeper in the red

The United States government recorded last July its sixth monthly budget deficit in the current financial year. With July included, 29,1 billion US dollars, the cumulative deficit so far this year has reached 147 billion US dollars compared to the 171,7 billion US dollars surplus of a year ago. In July 2001 US government finances recorded a 2,82 billion US dollars budget surplus. This financial year, ending next September, US will post its first budget since 1997. In July the Bush administration estimated the total financial year deficit in 165 billion. The Bush administration argues that higher spending in anti terrorist activities plus the slowdown of the US economy are the main causes for the sharp drop in revenue. For example individual income tax receipts, the main source of government revenue, decreased almost 18% in the last ten months. However Democrats blame President Bush for having pushed through Congress last year a massive tax cut that has deteriorated revenue.

Poverty in Argentina

Over half the Argentine population are living in poverty conditions and indigents make up 8 of the 36 million inhabitants, according to the latest figures from the Argentine Statistics and Census Institute, INDEC. The economic crisis that worsened in the last quarter of 2001, plus the previous four years of deep recession have pushed the number of Argentines with basic needs unsatisfied to 18 and a half million. That represents 53% of the whole population. Similarly the number of indigents, those with insufficient income to pay for the basic food basket, doubled since October 2001 from 4 million to 8,7 million. This means that in the last six months the crisis forced 5,2 million people into poverty and 4 million into indigence, according to INDEC. INDEC actually defines poverty line those families whose income is below 420 pesos (equivalent to 116 US dollars) per month, insufficient to acquire a basic basket of 625 pesos (equivalent to 173 US dollars). Indigents are those with income below 145 pesos (40 US dollars), since the basic family food basket costs the equivalent of 73 US dollars. Financial and/or social support for those families below the poverty line is very scarce in Argentina since unemployment insurance is virtually non existent and the food stamps and minimum jobs programs are limited and very much politically conditioned.