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Headlines: Praise from Wall Street; Crucial FTAA meeting; US record budget deficit; Poverty grows in Latinamerica

Praise from Wall Street

Richard Grasso, president of the New York Stock Exchange praised the management of the Chilean economy, "in spite of different political philosophies", stressing that the economic strategy for the success of a nation and its people "is just one". "If you have a society that keeps to the rules, home stability will ensure the achievement of economic prosperity, and that is good for everybody", stressed Mr. Grasso, adding that he was very impressed by Chilean president Raúl Lagos commitment when he recently visited the New York Stock Exchange. Mr. Grasso in a brief visit to Santiago last week indicated that "I give full credit to the economic management of the Lagos administration, whose perception of world affairs and Chile proved correct". Regarding United States, Mr. Grasso said he trusted in a quick recovery of the economy, based primarily on a "new set of rules for the corporate world". "The storm was perfect: people were deceived by corporations, the terrorist attack of September 11 and now the Iraq regime threat of mass destruction weapons, all contributed to the downfall of stocks". Mr. Grasso admitted that the collapse of the Dow-Jones index, from 11,000 to 8,400 also had a significant component of "bubbles" in the new technologies markets. However Mr. Grasso insisted he was optimistic about the future of the US economy, "this year we'll grow 3%, in 2003, 4% plus the fact there are no signs of inflation and interest rates are the lowest in forty years".

Crucial FTAA meeting

A crucial meeting for the Free Trade Association of the Americas will take place next Thursday when Trade Ministers of the continent gather in Ecuador to launch the final leg of negotiations. Ministers of the 34 participating countries will approve the second draft for the creation of FTAA that should pave the way for its launching in January 2005. However certain issues will still demand further discussion: the most favoured nation principle; agriculture and non tariff protection. A special angle of the Quito, Ecuador meeting is that representatives from different non government groupings, such as business organizations, environmentalists and social leaders will be invited to participate and expose their opinions. "We're going to open the doors to the civil society, and Ministers will have to talk and answer", said Ambassador Roberto Betancourt from Ecuador, the country hosting the meeting and that holds the pro tempore chair of the FTAA discussions. By next February 15th Trade Ministers must have worked out positions regarding market access for commodities and industrial products; government purchasing and investment.

US record budget deficit

United States experienced a record budget deficit in the fiscal year 2002 that ended last September. The historic gap reached 159 billion US dollars and became public just a few days before the mid term election (November 5th) when the Bush administration will be desperately fighting to recover control over the Senate. However the magnitude was not surprising since it reflects a dramatic drop in revenue after the rolling nineties, greater spending in defence and combat on terrorism, plus a recessive economy. But it's really impressive compared to the 127 billion US dollars surplus of just one year ago, the second highest in US history. However Democrats blame the huge deficit to the Republican administration particularly the ten years tax reduction plan involving 1,35 trillion US dollars recently approved by President Bush. "Republicans are responsible for the greatest ever fiscal collapse. In one year they managed to evaporate four years of surplus and 560 billion US dollars", said Thomas Kahn Democrat member of the House of Representatives Budget Committee.

Poverty grows in Latinamerica

Latinamerican countries have 20 million more poor people than five yeas ago as a direct consequence of the slowing of their economies, said Jose Antonio Ocampo, Executive Secretary of the United Nations Economic Commission for Latinamerica, Cepal. With stagnant economies since the Asian crisis of 1997, the population living in poverty conditions has increases from 43 to 44%, "this means an additional 20 million people" stressed Mr. Ocampo during a press conference in Cepal's office in Santiago. Cepal's Executive Secretary indicated that in 1997 Latinamerica had 200 million people who had not benefited from the previous seven years of steady and strong economic growth. "It's not exaggerated to say that the Latinamerican population has suffered directly the negative consequences of the lost half decade", insisted Mr. Ocampo. According to the latest estimates the situation is not expected to improve in the near future. The overall regional growth will drop 0,1% this year, with the greatest falls in Argentina (-10%), Venezuela (-3%), Uruguay (- 4%), and a considerably slower activity in Chile, below 2,5% and Brazil, 1,8%.

Money, power and corruption

The Chilean government will be sending to Congress two bills for urgent consideration that should help prevent corruption in public office, particularly after a week of disclosures involving ministers, congressmen, politicians and private sector money in exchange for favours. The case involves one of the junior parties of President Lagos broad ruling coalition, but the network of graft, patronizing, favours and illegal campaign funds seems to be extending, confirming the Chilean press and public opinion recurrent suspicions about the close link between money and power. The bills refer to funding for political parties, a bill promised by politicians since Chile returned to civil rule in 1990, and a second to a compulsory sworn declaration of assets and income from the top officials, elected and non-elected, of the Chilean government administration, an estimated 4,000 people. The situation that triggered the disclosure was the granting by the Ministry of Public Works of licences to set up Vehicle checking plants, compulsory in Chile, and several tens of thousands of US dollars in IOUs from the beneficiary, a businessman with close political links. The IOUs supposedly were destined to finance electoral campaigns but the funds never reached the party's treasury. Other businessmen have also come up revealing similar offers of "successful" bidding in exchange for money. President Ricardo Lagos promised full legal punishment for all those who have violated public trust and the Executive Office spokesperson Heraldo Muñoz pointed out that "there's an obscure relation between money and politics in Chile. We spend nine more times per person in political campaigning than in Britain and even more than in Japan, where does all that money come from?" . "We must safeguard our institutions because internationally we're considered among the less corrupt countries in the world", underlined Mr. Muñoz. A third initiative is sponsored by the coalition congressmen and involves strict regulations for lobbying. "Lobbies act openly and with impunity in all branches of government, including the Judiciary. Actually in Congress we're considering vital legislation such as the Water Code, Fisheries Bill, Divorce, Energy Deregulation and we are continually exposed to lobbies pressures and influences", indicated Socialist Deputy Alejandro Navarro. However the situation is far from over: the main suspect of receiving the funds denies the charges and has taken over as president of his party, junior partner of the ruling coalition. Privatization flops in Punta Arenas Chile's Government Companies System, SEP, declared deserted the bids to privatize under a concession regime, Magallanes waterworks and sewage, ESMAG, and a similar company in Aisén Region. Regarding ESMAG, that supplies drinking water and runs the sewage system in Punta Arenas, only two consortiums out of nine interested finally bid and both amounts were considered insufficient by SEP authorities. "Nobody is satisfied when you don't achieve your goal, but the company's operations won't be affected at all. Our development program is fully financed and there's nothing to fear", said Francisco Bernasconi, president of ESMAG's board. Apparently both bidders offered in the range of 31 to 33 million US dollars. "Bids were really very low. We are committed to hand government assets to the private sector, but not to give them away", explained Carlos Mladinic, SEP's president and responsible for the concession process. Mr. Mladinic added that the offers were equivalent to four years of the company's benefits, "when the concession was going to be for thirty years". However Mr. Mladinic insisted the company will continue to work normally since it has "competent managers, staff, long term investments, so there should be no problem". The bidding flop was hailed by the company's union that was adamantly against the concession of the service. "This is great news for the workers of Magallanes, and is similar to what happened in Temuco. However we'll be vigilant, closely watching to see what next move is being prepared, and we'll continue to collect signatures to reject giving the public utility to the private sector", said Julio Antisoly, president of Esmag's union, adding that the union already has 25,000 support signatures.