MercoPress. South Atlantic News Agency

South America News

Headlines: More cattle than sheep; Rich and famous; Argentina justifies hikes; The end of the Washington Consensus; Five Chilean Congressmen disbarred; Fisheries a major employer in Chile; Spanish fisheries closely tied to Argentina...

More cattle than sheep

For the first time in over a century Uruguay has more cattle than sheep, according to the latest census published last week in Montevideo. DICOSE, the organization that keeps track of the number of livestock, reports that last August Uruguay had 11,1 million head of cattle and 11 million sheep, 1,1 million less than a year ago, and a 14 million drop in a decade. What is interesting of the released figures is that the number of cows in breeding age has also increased from 3,8 to 4,1 million head and calves jumped by almost half a million to 2,5 million. The relatively good weather of the two last summers and mild winters have helped with calving, as well as a gradual recovery of prices after the foot and mouth crisis of April 2001. Regarding sheep, the worst seems to be over given the recovery of wool prices. The annual killing of 1,5 million head has dropped to 660,000 and there are 5,6 million breeding ewes. The target for the next season is 4,5 million lambs. However measured in Livestock Units, equivalent to a fully grown steer, the number of LU in 2002 is equivalent to 10,6 million, a modest recovery from two years ago when the total was 10,4 million LU, and quiet distant from 1996, with 12 million LU. With a strong market for wool and the FAM crisis behind analysts believe there's a tendency for both cattle and sheep numbers to increase because the current composition indicates that farmers are expanding stocks. Uruguay has an estimated 16 million hectares of good and excellent grazing land.

Rich and famous

Not only Hollywood star Richard Gere is staying in Punta Arenas, waiting for a jump to Antarctica once his good friend Robert Redford joins him in the extreme south of Chile. Another group of rich and famous anxious of an Antarctic adventure is also visiting the area and they include a former outstanding European Union leader, Latinamerica's richest man and a well known Chilean politician. Mr. Felipe González was for a decade Spain's president and Europe's leading Socialist; Carlos Slim Helú from Mexico has a personal fortune of over 11 billion US dollars, (among other companies he owns Mexico's Telecom) and is considered by Forbes magazine among the 25 richest men in the globe; Fernando Flores is a Socialist Senator, who was the youngest Minister ever to serve in president Salvador Allende cabinet back in the early seventies, and is again in politics with current President Ricardo Lagos after having been in exile in the US lecturing in universities and building a small fortune. The three are very close friends and flew in from Rio do Janeiro in Mr. Slim's private jet. Mr. González praised Chile for its sound political institutions and the management of the economy in spite of world recession. "It's the first time since Second World War Two that the three engines of the world economy, United States, Europe and Japan, have simultaneously slowed down. They represent 75% of the world's GDP and 17,5% of the population, this means the other 80% depend on an only engine, if we imagine the world as a four engine jet", said Mr. González, adding "that's how serious the situation is". However Mr. González admitted politics overall was in crisis, in Europe where there's a general disenchantment towards politicians and the in the United States with president George Bush's contested 2000 election, in spite of his recent sweeping mid term victory. Billionaire Mr. Slim said he was looking forward to visit Antarctica following the steps of one of his sons who had been in the area two years ago. He avoided talking about politics although he did underline the strong standing of the Chilean economy. Senator Flores, a controversial figure in Chilean politics stressed he was proud of having been Economy Minister and Home Secretary with former president Allende deposed in a bloody military uprising in September 1973 led by General Augusto Pinochet, but also admitted Allende's administration committed many mistakes. After spending three years jailed in the island of Dawson, close to Punta Arenas, Mr. Flores and his family left for the University of California. An advocate of permanent education, Senator Flores pointed out that in a globalised world, "people will have to learn several professions or crafts in their life time; in very few fields will people have full dedication to an only activity. As is happening in the industrial world, globalization means constant change and progress". Mr. Flores was also very concerned about the poor English of children leaving school in Chile and the fact that Internet is not sufficiently extended in the country. Regarding his detention in Dawson island, Mr. Flores made it a point to differentiate the Chilean Armed Forces as an institution from "a group of officers who abused of their power". Senator Flores who is just sixty is considered by the Chilean press as a potential successor for President Ricardo Lagos. The party of rich and famous were flown to Antarctica by the Chilean Air Force, while actor Richard Gere, according to the Punta Arenas press has had more than one incident with the local press and has kept mostly to his hotel.

Argentina justifies hikes

Argentine Production Minister Aníbal Fernández justified the coming increase in public utility rates arguing that they are "indispensable" so the companies can ensure adequate "investment levels, plus recovery and improvement of the system", avoiding a drop in service quality. Mr. Fernández statement follow last Sunday's massive blackout that left 13 million Argentines in the dark, and the growing controversy in Argentine public opinion that foreign public utility companies are pressing the government for a greater hike than the average 9% anticipated. "As far as we know, the cause of the blackout was technical, and has nothing to do with an alleged sabotage or anything like it. In the coming hours we will have a final independent report on what actually happened", stressed Mr. Fernández adding that the Argentine government will apply the full force of the contract to the foreign electricity distributors. "Companies involved in the distribution mishap will be fined, a fine that is directly proportional to the clients who suffered the consequences of the blackout", said Mr. Fernández. According to analysts the fine could reach the equivalent to 800,000 US dollars. The blackout extended to the whole of Buenos Aires City, most of Buenos Aires province, and partially Jujuy, Formosa, Catamarca, Tucumán, Corrientes, Cordoba, Santa Fe, La Pampa, Mendoza and Rio Negro. Consumers associations however have warned that they will be demanding Transener, the main electricity distributor for all the damages caused to individual clients. The blackout also helped to put the Argentine public utilities rates controversy in the full light of the world. Economy Minister Roberto Lavagna is currently in a European tour trying to convince the governments of France, Germany, Italy and Spain to grant political support to Argentina in its request for financial assistance from the IMF, a discussion that has been ongoing for almost eleven months. Coincidently investors from these countries are directly involved in the controversy since they manage the privatized public utility services and have been demanding up to a 50% hike in rates to keep their investments productive. The Duhalde administration has argued insistently that such an increase would lead to social upheaval plus a dramatic drop in clients and add fuel to a popular movement to repossess privatized utilities. The IMF has suggested, --and is demanding to grant financial assistance--, a 30% increase while Mr. Lavagna believes that in the present circumstances a 9% is "reasonable". "It covers operational costs, not necessarily profits on investments?" To make things more climatic last Sunday a decisive match of the Argentine Premier League was played, Boca vs Independiente and many followers were counting on reviewing the match in the evening. A more pragmatic Ruben Manusovich, president of the Federation of Chambers of Commerce recalls that the public utility companies "warned that if rates are not increased the quality of the service will necessarily have to fall".

The end of the Washington Consensus

World Bank president James D. Wolfensohn during a visit to Peru said he was optimistic about Latinamerica, both financially and politically, stressing that Peru and Brazil are in the correct road. "Far from been negative, I'm quiet optimistic", said Mr. Wolfensohn who in the last week also spent some time in Brazil. Mr. Wolfensohn revealed he had a long interview with Brazilian elected president Luiz Inacio Lula da Silva and his team, "and perceived a strong feeling of fiscal responsibility". Regarding Peru the president of the World Bank underlined that in spite of a strong political debate in the country, "economic policies are sound, and macro-economic indicators so far seem positive". According to official statistics the Peruvian economy grew 7,3% in September while inflation in the last twelve months reached 1,35%. The World Bank president following what seems the new emphasis of the multilateral credit organization held several meetings with Indian associations from Peru and other neighboring countries, and formally committed the bank's support to a multi party Peruvian National Agreement that has targeted halving poverty in the country by 2015, taking it from the current 58% to 27%. With this new attitude Mr. Wolfensohn also surprised some of the conservative participants of the World Economic Forum that held its annual session in Brazil. "Orthodox liberalism is dead, the Washington Consensus is over", indicated Mr. Wolfensohn in direct reference to the liberal market oriented policies sponsored by the United States in the nineties and articulated by the IMF and the World Bank. "Countries can't be judged by numbers, rather by their social, cultural sides and their own vision of themselves. Each country must be considered independently and we must rescue those in difficulty casting doubts over their neighbors". Regarding Argentina Mr. Wolfensohn said he was optimistic about an agreement with the IMF, "quiet soon with neither side loosing money or position". In an open manifestation of support to elected president Lula, the head of the World Bank said "no revolution has taken place in Brazil, rather an election where an elected president will be succeeding a great president". However Mr. Wolfensohn also pointed out that since the terrorist attacks of September 11 in the United States, "there are situations in the developing world that are banging on the doors of developed countries, such as education, poverty, health and terrorism". Further on he said that the growing gap between rich and poor in Latinamerica is a risk that endangers the development of a sound economy and therefore the private sector must have more social responsibility, "which doesn't necessarily mean forgetting profits". Finally Mr. Wolfensohn recalled that in the nineties Latinamerican underwent a disproportionate dependence of foreign capital, that today have gone to Asia, "where there's a greater commitment with education and health". Foreign investments between 1997 and 2002 in Latinamerica dropped dramatically from 300 to 140 billion US dollars, "this helps to explain much of the recession".

US economy recovers

The United States economy boosted by strong car sales and government spending grew at an annual 4% rate in the third quarter, well above the original Commerce Department estimate of 3,1%. In the second quarter the economy barely managed 1,3%. The good news received a further thrust from the consumer confidence index that rebounded after five months of decline. The Consumer Confidence Index jumped in November to 84,1 points from 79,6 in October, anticipating a good holiday spending season. Consumer spending represents two thirds of US activity. Another significant factor in consumer confidence has been the Federal Reserve consistent interest cutting policy, the latest at the beginning of the month, reaching a forty years low of 1,25%, that has prompted car and new home sales. However as Federal Reserve president Alan Greenspan pointed out, the US economy still has a "current soft spot", and the National Association of Business Economics, in spite of the third quarter recovery, predict that the economy will slow down again in the last three months. The organization supports the statement with slower car sales in October and weakness in manufacturing. Besides the United States is running a 400 billion US dollars trade deficit. Furthermore a recent New York Times poll showed growing anxiety among the US working force, 70% said the economy was worse than two years ago; 39% fear it will get worse and only 13% believed it would improve.

Five Chilean Congressmen disbarred

The Chilean ruling coalition received a full blow this week when five Congressmen were stripped of their legislative privileges by an Appeals Court investigating graft and corruption claims. The five now have five working days to appeal to the Supreme Court, but in the meantime they are banned from all legislative activity. If finally condemned, besides heavy fines, the five could end in jail. In their unanimous ruling the three judges indicated that there was sufficient evidence to merit the disbarment of five of the six Congressmen originally accused. The five, and several jailed officials from the Ministry of Public Works, supposedly received money in exchange for awarding vehicle inspection licences and other favors to private businessmen. The decision not only affects the integrity and standing of the coalition that has ruled Chile since recovering democracy in 1990, but has left the government with a one vote majority in Congress (58/57), when several bills are pending consideration. According to Chilean legislation the five former Congressmen are now under Court jurisdiction and if the Judge in charge of the investigation finds them guilty, they could be jailed for up to three years. The backlog of legislation in Congress, and that should be considered before the summer recess, includes an Amendment to the Fisheries Bill to extend current conditions and licensing for another ten years that was rejected in a first vote; budget and stimuli measures to prop the economy plus the drafting of political and electoral reforms for discussion in the following legislature. The corruption claims and investigation have strengthened the Conservative opposition that has publicly questioned the transparency of the Lagos administration and is contrary to further stimuli to the economy, favoring tax cuts. However the incident has exposed the close links of the whole Chilean political system with private money, and the lack of legislation regarding political parties and campaign financing. Chief Minister of the Chilean cabinet Heraldo Muñóz described the situation as "complicated", but "hopefully pending bills will be approved on their merits and not following partisan sides".

Fisheries a major employer in Chile

Despite a significant drop in catch volumes and a fall in prices on international markets, the industrial fishing sector remains one of Chile's main sources of employment and added value, according to a study advising the government to focus on encouraging growth in this sector. The report, by consultants AGH Estratégica, says fisheries plays a very important role in exports, which between 1998 and 2001 reached an annual average of USD 1,650 million. AGH head of Economic Research Juan Carlos Camacho says Chile's fishery sector remains as one of the most dynamic sectors of the economy. Despite the decrease in activity and lower prices, between 1998 and 2001 Chilean fisheries grew at an average rate of 5.7%, while the country's economy grew 2.1% during the same period. The sustained growth of fisheries has given employment a boost, even when coastal fishing has been developing more slowly. According to the study, of the 92,189 people currently working in fisheries, 56,598 are employed in the industrial sector and 37,592 in coastal fishing. "It is not a matter of establishing a dichotomy between industrial and coastal fishing," Camacho told El Area, "but rather to provide relevant information on the situation and the chain values that each sector generates, with the aim of offering some important assessment tools at the time of regulating these activities." However Mr. Camacho stressed the need for the State to implement policies to encourage greater development in the industrial fishery sector, given its impact on the country's economy. He said the Chilean government faced the difficult challenge of assisting the coastal sector without adversely affecting the nature of industrial fishing. "Authorities need a "pro-active attitude" towards this sector, the right incentives and appropriate regulations to guarantee a dynamic effect on the country's economy", said Mr. Camacho. But it isn't all gloom and doom for the coastal sector as the reports indicates; even when the value of industrial production dropped 830,765 million Chilean pesos in 1996 to an estimated CLP 660,276 million this year, the coastal sector has grown from CLP 123,220 million to CLP 170,860 million during the same period. (FIS/MP).

Spanish fisheries closely tied to Argentina

Producers are requesting the European Commission and the Spanish government to abandon, or at least delay, EU plans to remove Argentina from the list of countries benefiting from the General System of Preferences (GSP) so as to protect the fish processing industry. The Spanish National Association of Canned Fish and Shellfish Producers (Anfaco) supports the advantageous tariff conditions that the EU has granted Argentina and believes that the GSP status guarantees raw material supply at reasonable prices for the EU fish processing industry. In an official statement, Anfaco says it wants the EU to make an exception to the regulations for the period 1 January 2003 to 31 December 2004, taking into account Argentina's critical economic and social situation. Argentina supplies fish products to the EU for direct consumption and for processing. Therefore, says the association, excluding Argentina from GSP " would leave European companies at a disadvantage," reports El Correo Gallego. Galicia industry representatives echo this argument. Argentina's loss of GSP status would create an enormous disadvantage for the Spanish processing and commercializing industry, and could even "jeopardize the supply of hake and shrimp products" which are highly valued by European consumers. Besides the fact that companies with investments in Argentina would be left in a serious situation if Argentina loses GSP status, as the price of exports to the continent would increase. The alternative, insists Anfaco, is to delay the change of status for one year to allow these companies time to develop other strategies. The GSP was designed to allow industrialized countries to grant non-reciprocal tariff reductions to developing countries, so the exports from developing countries would be competitive on developed countries' markets. The EU was the first to implement its own GSP in 1971 giving preferential access to 90 developing countries and to transition economies, mainly in Asia. The current GSP scheme is effective from 1 January 2002 through 31 December 2004 and the latest regulations are the first to cover all products and systems. (FIS/MP).-

Setback for Chilean government in Congress

Although the Chilean government was convinced legislators would approve the "short fishery law" project without objections, the Congressional Fisheries Commission passed a completely different law, proposing a one year extension instead of the ten years proposal in the Executive branch project. The news was welcomed by coastal fishermen who only wanted a 12-month extension of the law, believing that a 10-year extension favored industrial fishing, writes the newspaper Lider de San Antonio. However over 20,000 industrial fishery workers supported the government's choice of a 10-year extension, claiming it offered stability, more employment and enable Chile to be more competitive in world markets. Teresa Lizana, president of fisheries plant workers, said the current temporary law which is in force had been beneficial and that in the last two years alone, four new processing plants had opened. Ms. Lizana said the "Maximum Catch Limit by Fleet Owner" system has generated an adequate structure, guaranteeing jobs year-round and greater specialization of tasks. Both coastal and industrial sector representatives are calling on officials and legislators not to take sides or follow party lines, but rather make a decision considering what's best for the country. (FIS/MP).-

Poaching in Argentine waters

Argentina's Coast Guard Service (PNA) detected this week eight Mar del Plata-based fresh fish vessels operating in a banned zone off the Rawson coast in Chubut province. Don Natalio, Franca, Don Nicola, San Antonio, Nuevos Vientos, Mercea C and San Pascual were immediately instructed to return to their port of origin and now face heavy fines and possible suspension of licences. The head of Mar del Plata's PNA delegation, Ramón Rignoni, said that when contact was lost with the vessels a PNA patrol plane left Comodoro Rivadavia in the south of the country and spotted the vessels fishing in the exclusion zone. The vessels were instructed to return to port and the situation was reported to the Department of Agriculture, Livestock, Fisheries and Food, which will decide upon sanctions once the investigation is completed. (FIS/MP).-

Uruguay's plan to revamp sector

Six months after the presentation of the consultancy firm Infopesca International "Fisheries Sector Development Project," the authorities are preparing to receive a World Bank delegation to start implementing the programme. The main aim of the project - to be coordinated by Uruguay's Budget and Planning Office and financed by the World Bank - is to provide a strategy and policy for the sustainable development and optimal exploitation of the country's fisheries sector and marine resources. Other goals include the formation and training of fisheries personnel, at all levels, from officials to fishermen. According to Infopesca report, the National Directorate of Fisheries Resources (Dinara) should not come under the umbrella of the inistry of Livestock, Agriculture and Fisheries. Instead, Infpoesca recommends a non government public company "National Institute of Marine Resources" with contracted staff subject to private law. The new institute would be formed by Executive branch delegates and representatives of fleet owners and processing companies, Infopesca suggests. The project also encompasses the implementation of Individual Transferable Quotas (ITQs) in Uruguay's main fisheries. However crewmen trade unions are opposed to this. In short, Infopesca says that in order to improve fisheries management and develop the sector, there should be training for sector personnel, appropriate inspection services, accredited official labs, satellite monitoring, protected marine areas and more focus on aquaculture. The World Bank financed project will extend for three years with an investment of USD 12.5 million. (FIS/MP).-