LATIN AMERICA: ALBA GROWS, WORLD BANK SHRINKS

from Weekly News Update on the Americas

Bolivian president Evo Morales, Nicaraguan president Daniel Ortega and Cuban vice president Carlos Lage joined Venezuelan president Hugo Chavez in Barquisimeto, in the Venezuelan state of Lara, on the weekend of April 28 for a summit of the Bolivarian Alternative for the Americas (ALBA). Haitian president Rene Preval and Ecuadoran foreign minister Maria Fernanda Espinosa attended as observers; delegations from Uruguay, St. Vincent, St. Kitts and Nevis, and Dominica were also present.

Cuba and Venezuela formed ALBA in December 2004 as an alternative to the US-sponsored Free Trade Area of the Americas (FTAA). Bolivia joined in 2006, and Nicaragua joined in January of this year. The high-level delegations from Ecuador and Haiti seemed to be a sign that those countries were committed to joining. "ALBA has consolidated its first stage and is going to continue growing," Chavez told the gathering. "FTAA is dead." As a concrete step, he proposed collecting $1 billion for a "Bond of the South" which would be used for "low-interest credits with easy payment to small producers in Nicaragua, Ecuador and Haiti." He also offered Venezuelan financing for 50% of the bills for oil for Bolivia, Cuba, Haiti and Nicaragua. (Univision, April 28, 29; La Jornada, Mexico, April 29; El Universal, Caracas, April 30; Servicio Informativo "Alai-amlatina," May 7)

According to Brazilian social scientist Emir Sader, Latin America is now divided between countries like Mexico, Chile, Colombia and Peru, which are committed to trade with the US, and those that are committed to regional integration. According to Sader, these include the ALBA members, along with countries like Argentina, Brazil and Uruguay, which continue to follow the neoliberal model but without a strong connection to the US. (Alai-amlatina, May 7)

In a surprise announcement at the summit, three ALBA members, Bolivia, Venezuela, and Nicaragua, agreed to withdraw from the World Bank's International Center for Settlement of Investment Disputes (ICSID), which rules on cases against governments brought by foreign investors. In a joint statement, the three countries' leaders said they "emphatically reject the legal, media and diplomatic pressure of some multinationals that...resist the sovereign rulings of countries, making threats and initiating suits in international arbitration."

Bolivia was the target of an ICSID case brought by US-based Bechtel corporation over a failed water privatization in the city of Cochabamba. Nicaragua was sued by Royal Dutch Shell over a domestic court order on compensation for banana workers made ill by a pesticide in which Shell had a financial interest. Venezuela currently faces four pending ICSID suits. According to an April report by two Washington, DC-based groups, the Institute for Policy Studies (IPS) and Food & Water Watch, about 70% of ICSID disputes involve private investment in public services such as water, electricity and telecommunications, or investments in natural resources such as oil, gas and mining. (IPS and Food & Water Watch press release, April 29)

On April 30 Chavez announced that Venezuela planned to withdraw completely from the World Bank and leave the International Monetary Fund (IMF) as well. "It would be better that we pull out before they come to rob us because they are in crisis," Chavez said. "I've read that they can't even pay their wages."

Center-right former Bolivian president Jorge "Tuto" Quiroga noted that a corruption scandal involving World Bank president Paul Wolfowitz "could not have happened at a worse time. It gives material to Mr. Chavez and his supporters to mock the World Bank and the IMF, and they have a real alternative to offer." On May 2 the British daily Financial Times ran a letter calling for Wolfowitz's resignation; it was signed by five of the most prominent supporters of Washington's neoliberal policies in Latin America: Domingo Cavallo of Argentina, Rubens Ricupero of Brazil, Pedro Aspe of Mexico, Eduardo Aninat of Chile, and Rodrigo Botero of Colombia. (FT, May 3)

Wolfowitz resigned on May 17, four days after a bank investigative committee found that he broke ethical rules in arranging a $63,000 pay raise for his companion, Shaha Ali Riza. (New York Times, May 18)

Dollar Sinks In Latin America

The US dollar, which has fallen against the European Union's euro and the Japanese yen, has also been sliding in trading against local currencies in most of the Latin American countries where it is traded. As of May 16 the dollar had lost 10.88% against the Colombian peso since the beginning of the year. In Brazil, Latin America's largest economy, the dollar went down 7.8% against the real since the beginning of the year; it had fallen by 50.9% since October 2002, when the real was at its lowest point. The Mexican peso gained 5.3% over the dollar in the 11 months preceding May 16. Since the beginning of the year, the dollar fell by 3.9% in Chile, by 1.8% in Uruguay and by 1.25% in Peru. The dollar was down even in weaker economies: by 3.2% in Paraguay and by 0.74% in Bolivia.

The dollar is not traded on the open market in Cuba and Venezuela, which maintain currency controls, and in Ecuador and Panama, which officially use the dollar as currency. Except for these economies and the Central American countries, which are especially dependent on the US economy, Argentina is the only Latin American country where the dollar has gone up this year--by 0.65%. This is because Argentina's Central Bank has been buying dollars to keep the local currency down and to accumulate foreign reserves. (El Diario-La Prensa, May 17 from EFE)

Bush, Congress Make a Deal on Trade Pacts

On May 10 the administration of President George W. Bush and the leaders of the House of Representatives announced a bipartisan consensus on trade policy which is expected to result in congressional approval for bilateral "free trade" agreements (FTAs) which the administration has signed with Panama and Peru. Analysts think a "strong minority" of Democrats in Congress will now join with legislators from Bush's Republican Party to get the pacts approved. The consensus also increases the chances of approval for trade pacts with Colombia and South Korea.

After six months of negotiations between the Bush administration US trade representative, Susan Schwab, and House Ways and Means Committee chair Rep. Charles Rangel (D-NY), the Democratic leadership agreed to back the Peru and Panama FTAs in exchange for provisions requiring US trading partners to ban child and forced labor, and to protect workers' right to unionize and bargain collectively. John Sweeney, president of the AFL-CIO, the largest US labor federation, gave his support to the agreement on May 11, the day after the consensus was announced. He praised Rangel for "the substantial progress made in improving workers' rights and environmental standards" in the two agreements.

But Sweeney said the AFL-CIO would "vigorously oppose" the pacts the Bush administration negotiated with Colombia and South Korea and any extension of the president's "fast-track" authority, which expires next month. Fast track gives the administration the power to negotiate trade pacts without oversight or changes from Congress, which can only vote to approve or reject the measures once they have been negotiated. (Washington Post, May 12)

Trade pacts have been unpopular with the US public ever since the implementation of the North American Free Trade Agreement (NAFTA) in 1994. The Washington, DC-based nonprofit Global Trade Watch (GTW) sharply criticized the new bipartisan consensus, noting that "[u]nions, environmental groups, small businesses and (most outrageously) most members of the US Congress were excluded from the negotiations."

The group said the new labor requirements in the Peru and Panama FTAs still didn't include compliance with International Labor Organization (ILO) Conventions. "[T]he agriculture rules," the group said, "...will foreseeably result in the displacement of millions of peasant farmers--increasing hunger, social unrest, desperate migration." The Peruvian FTA has "provisions that would allow Citibank, or other US investors providing 'private retirement accounts,' to sue Peruvian taxpayers if Peru tries to reverse its failed social security privatization." Global Trade Watch is calling on people in the US to contact their senators and representatives and urge them to reject the FTAs. (GTW urgent alert, May 11)

Opposition in Peru, Colombia

The FTAs also face strong opposition in Latin American, where they are known by their Spanish initials, TLC. In Peru, the government of President Alan Garcia has been moving to oust seven TLC opponents from Congress and one from the Andean Parliament, which consists of representatives from the Andean Community of Nations (CAN). In the first week of May, the Supreme Court asked Congress to lift the opponents' immunity as legislators so that they could be tried for participating in a protest during a June 27, 2006 session of Congress that was debating the TLC. Congressional deputy Nancy Obregon and Andean Parliament deputy Elsa Malpartida, then deputies elect, tried to disrupt the session, while the six other deputies held up signs supporting the protest. [The demonstration delayed the debate for a half hour; Congress approved the TLC the next day.]

Malpartida and Obregon belong to the opposition Nationalist Party of Peru (PNP) of defeated 2006 presidential candidate Ollanta Humala, as do five of the other deputies; the remaining two belong to the centrist Union for Peru (UPP). The deputies have threatened to hold a hunger strike in the Congress chamber if the government proceeds with the case. (Prensa Latina, May 12, 16, 17)

In Colombia, the National Liberation Army (ELN), the smaller of the country's two main guerrilla organizations, said it would consider a ceasefire if the government agreed to suspend approval of the FTA with the US. The group, which is in its sixth round of talks with the government since April, said it supported holding a plebiscite on the issue. (El Diario-La Prensa, NY, May 23 from AP)

From Weekly News Update on the Americas, May 27

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Weekly News Update on the Americas
http://home.earthlink.net/~nicadlw/wnuhome.html

RESOURCES:

Global Trade Watch on the campaign against the FTAs http://action.citizen.org/campaign.jsp?campaign_KEY=11354.