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Latinamerica News

Tuesday, December 10th 2002 - 20:00 UTC
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Headlines: Close friend of Wall Street in Argentina's Central Bank; Highest unemployment in two decades; Free trade talks remain locked; Chavez willing to talk elections; Mr. Lula in the White House.

Close friend of Wall Street in Argentina's Central Bank

A former financial advisor for the American JP Morgan investment bank, economist Alfonso Prat Gay was named this Monday president of Argentina's Central Bank. This is the fourth president in just over twelve months, a clear indicator of the serious turmoil facing the country since it defaulted last January closing all access to private credit. Apparently Mr. Prat Gay, 37, demanded two conditions to accept the job: one that his name is confirmed by the Senate and secondly that Pedro Lacoste is named his Deputy. Both belong to a new generation of Argentine economists with experience in the private sector and overseas education. The new Central Bank president after graduating in Buenos Aires completed his education in Pennsylvania University. Although much is not known about his public experience, Mr. Prat Gay was originally mentioned during former Economy Minister Domingo Cavallo's time early last year. He's catalogued as a rather orthodox economist although with strong admiration for Keynes. However his contacts are mainly in Wall Street and market investors. Mr. Prat Gay replaces Aldo Pignatelli, an industrialist and close associate of President Eduardo Duhalde, who lately had increasingly clashed with Economy Minister Roberto Lavagna regarding repayment of World Bank and IMF loans. Mr. Lavagna refuses to let Argentina's international reserves drop below the crucial 9 billion threshold agreed with the IMF , while Mr. Pignatelli favoured repaying loans and avoid the threat of defaulting with multilateral credit organizations. Mr. Pignatelli was preceded in the Central Bank by Mario Blejer a former IMF economist and Roque Maccarone. Argentina this week faces another crucial deadline with the IMF on December 14th, when it must fully repay a World Bank credit. A month ago Argentina claimed it was unable to reimburse an 820 million US dollar loan and simply repaid interests. The Argentine government trusts that the new nominee will help ratify Duhalde's administration monetary and exchange policies".

Highest unemployment in two decades

Urban unemployment in Latinamerica and the Caribbean reached new records with 17 million people jobless, equivalent to 9,2%, the highest in the region in the last twenty two years according to a release this week from the World Labour Organization, WLO. The "Labour Report 2002" officially presented in Lima, Peru, is previous to a WLO meeting that begins this week with delegations from 35 different countries that will be addressing the impact of globalization on employment conditions. According to the report, the current situation is worse than in 1983 when Latinamerica suffered the foreign debt crisis; than in 1994 when the Mexican economy collapsed and in 1997 with the Asian crisis. Taking into account September 2001 and the same month in 2002, unemployment in Argentina soared from 16,4% to 21,5%; in Brazil from 6,2% to7,3%; Costa Rica, 6,1% to 6,8%; Uruguay from 15,4% to 16,5%; Mexico 2,4 to 2,8% and Venezuela 13,9 to 15,5%. The report states that the drop in employment and real income originated in the general slowing down of economic activity and the strong recession in several of the area's countries. An estimated 93 million Latin-Americans lack a "decent job", a category that includes unemployed and those in low paid jobs with no social security safety net. Almost half of the region's active population, 47%, work for the informal sector and two thirds have no health of pension coverage. Average labour productivity in the area in the last twelve months decreased 1,7% and the purchasing power of minimum wages dropped for the first time since 1996. Urban juvenile unemployment increased during the first nine months of 2002 in nine countries, with one minor in of five out of a job in Argentina, Chile, Uruguay, Colombia and Venezuela. Looking into the future the unemployment rate in the area could end the current year at 9,3%, but should begin to recover during 2003 and could fall to 8,6%, according to the latest economic forecasts.

Free trade talks remain locked

The latest round of free trade talks between United States and Chilean representatives remain locked after several hours of frustrating discussions in Washington. Chilean Finance Minister Nicolás Eyzaguirre and Foreign Affairs María Soledad Alvear remarked that there's "no closed deal" yet, and therefore there's no guarantee an agreement can be reached. However in spite of the strong standing of both countries representatives, "a final effort to bring positions closer, even if it means staying awake all night", was agreed by the Chilean delegation and US Trade Representative Ambassador Robert Zoellick. Chileans complained about the US intransigence regarding agriculture, flow of investments, intellectual property, environment and employment.

Chavez willing to talk elections

Venezuelan President Hugo Chavez administration expressed Monday night its willingness to consider with the opposition an early election timetable that should help find a way out for the country's serious political crisis said Cesar Gaviria, Chairman of the Organization of American States, OAS. Mr. Gaviria reported that the Democratic Coordinating group, the umbrella organization of opposition parties that has taken Venezuela to a virtual standstill after ten days of general strike, will look into the proposal adding that the timetable "must anticipate elections for the first quarter of the coming year". The strike has also brought to a standstill Venezuela's oil production and exports, (three million barrels per day) severely damaging the economy. Venezuela is the world's fifth oil exporter and oil is an overwhelming source of revenue for the government. Since Monday National Guard troops took control of oil and fuel distribution centres as well as gasoline stations where long queues of people waited to fill their cars. Mr. Chavez and his cabinet remain holed up in government buildings, while the opposition has taken over a public square (Plaza Francia) from where they've planned civil disobedience measures to force the resignation of the former parachutist whose policies have virtually split Venezuela's public opinion in half.

Mr. Lula in the White House

Relations between Brazil and the United States must improve said elected Brazilian president Luiz Inacio Lula da Silva who is scheduled this Tuesday mid day to meet president George Bush in the White House. "I'm looking forward to the meeting, and I expect the most out of it. I will also make it clear to President Bush that I will defend Brazilian interests in the same way United States defends its own interests", indicated Mr. Lula. "Possible trade divergences should not be an impediment for good relations between both countries", said Brazilian Ambassador in Washington Rubens Barbosa who also underlined the rare invitation privilege extended to an elected president by the White House. "The elected president is in no position to discuss anything but the meeting will help both Mr. Lula and Mr. Bush to get to know each other and establish a direct relation", said Ambassador Barbosa. After a private meeting, both presidents will be joined by their closest aides. On the American side: Secretary of State Colin Powell; Condoleeza Rice National Security Advisor; Treasury Under Secretary John Taylor; US representative before the World Trade Organization Peter Allgeier; Latinamerican Affairs Advisor John Maisto and the American Ambassador in Brazil Donna Hrinak. On the Brazilian side, Ambassador Barbosa; the coordinator of the transition team Antonio Palocci; Deputy Aloizio Mercadante; Sao Paulo Mayor Marta Suplicy and the spokesperson André Singer. Mr. Mercadante pointed out that bilateral trade between Brazil and United States "is insignificant, just 30 billion US dollars; we're planning 100 billion US dollars for the coming four years.

Categories: Mercosur.

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