Wednesday, March 09, 2005

Latin America

Dispatches from the frontline of the ever expanding global village: First, from the Economist, an article about the economic turnaround Brazil is experiencing strikes a cautionary tone-government outlay shouldn’t be increased to the detriment of international investors:

Non-financial spending by the federal government rose by 11% in real terms last year, with big rises in areas that do nothing to strengthen long-term growth prospects. Lula added workers to the federal payroll, one reason why spending on personnel rose by 5% last year. Keeping an old promise, he will raise the official minimum wage by 8% to 300 reais ($115) a month, which will push up the cost of publicly financed pensions and benefits by 4 billion reais a year, says Raul Velloso, a budget expert in Brasília.


Yet some Brazilians [which ones?-ed.] worry about what would happen if investors lose their current appetite for risk. They reckon the government should be moving to cut its debt more swiftly, allowing interest rates to fall. In a rare comment on budget policy, the central bank recently said that “reductions in public spending [would] reinforce monetary policy in controlling inflation.” The latest data suggest that the economy is already slowing, which may mean that the bank can soon stop raising rates.

The sagacious benevolence of the IMF is eternal. From the article-- which is entitled The dangers of tax and spend-- is this infectiously cute cartoon of Brazil’'s president Luiz Inácio Lula da Silva:

Over in Bolivia, President Carlos Mesa has stepped down as a result of the electorate-70% of which is constituted by indigenous, native Indians-agitating for economic and political recognition. From the Independent:

Faced with a national strike aimed at forcing international energy companies to pay much higher taxes, Mr. Mesa made what was seen as last-ditch effort to get his opponents to back down.


The former historian pointed the finger of blame for the crisis at Evo Morales, a coca farmer and leader of the populist Movement to Socialism (MAS), who he accused of turning the landlocked nation of 8 million into a "country of ultimatums".

Mr. Morales has led calls for a blockade stretching to every corner of the remote and isolated Andean country unless the government raises taxes on foreign energy companies exporting oil and gas to 50 per cent. The President has rejected the demand, saying foreign multinationals would take Bolivia to court, with disastrous consequences.


A regional analyst, Mark Schneider, from the International Crisis Group, said Bolivia was facing its "greatest crisis" in years. "The current issue may be drugs, gas or pipelines but the core is [respective] governments' failure to incorporate the majority of people into political life and it is coming back to haunt them," he said.

Globalization'’s discontents register their appeal.

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