www.guardian.co.uk Evangelical zeal won't make pill popping cheaper Does OFT ruling serve consumers? Saturday January 18, 2003 The Guardian

Just in case anybody thought supermarkets might not be an attractive business to get into, the office of fair trading tipped the scales again yesterday.

Its long-awaited report into the provision of pharmacy services has come to the expected conclusion: full liberalisation of the market.

The government is being asked to sweep away all the present restrictions that limit entry into the industry; instead any registered chemist with a qualified pharmacist will be able to dispense NHS prescriptions.

So we should stand by for new pill counters springing up in every supermarket across the land.

Local chemists will be decimated, while Boots is facing an ever-tightening competitive squeeze.

This is cold, clinical deregulation imposed in the name of the great British consumer - who the OFT reckons is at present being ripped off to the tune of £30m a year. The number of pharmacies across the country has remained just about static, at 12,250, since the current set of industry regulations were introduced 15 years ago.

This, it is argued, has denied shoppers access to cheap over the counter medicines which the big grocery chains could so easily provide with their huge buying power and adherence to cut-throat competition.

Which is all so run of the mill. The British consumer has already abandoned butchers, bakers, fishmongers and most other traditional high street fixtures in favour of identikit supermarket sheds. The OFT does not think they should be forced to make special local journeys for their regular prescriptions, paying more for their trouble.

Yet its findings simply feel too cold and clinical.

"Empirical modelling of a variety of entry and exit scenarios shows that there would only be a limited reduction in local access, even in an extreme scenario where pharmacies are opened in all medium to large supermarkets and, for each new entrant, the two nearest community pharmacies close as a result," declares yesterday's report.

That is a huge and glib assumption. In fact, there are about 2,000 major supermarkets in Britain. If each puts two existing pharmacies out of business, deregulation will result in a third of all local chemists disappearing.

Similarly, the OFT trumpets the fact that consumers are overpaying to the tune of £30m. Yet the industry - the bulk of which is NHS - turns over £8.6bn, so profiteering is running at about 0.4%.

Free markets are all very well. But given the disruption and the clear risks, these proposals feel like deregulation borne of evangelical zeal rather than sensible reforms benefiting society.

Brazilian flip

International investors spent much of last year keeping a wary eye on Brazil as South America's sleepy giant moved towards electing Luis Inacio Lula da Silva - a former leftwing firebrand - as its new president.

Dire warnings were sounded that the former trade union leader would be incapable of tackling Brazil's economic problems and would quickly default on the government's debt. Corus used the uncertainty as a reason to call off its planned merger with Brazilian steelmaker CSN.

Yet the sky failed to fall in when Lula, as he is known, took the reins on January 1. The result has been "a shock of credibility", according to one member of Lula's cabinet. In little more than a fortnight the new administration has calmed market fears with talk of strong measures - to the extent that Brazilian companies are now back in business on the capital markets.

In the past two weeks Brazilian banks have raised nearly $1bn in international bond issues. Domestic investor confidence is up, as is consumer spending. Brazil's currency, the real, has strengthened by 16% over the last month, and the risk premium international investors demand for holding Brazilian assets has halved since Lula's election. As a result, the government is projecting growth of 3% this year.

The contrast with Brazil's opposite number in the northern hemisphere of the Americas couldn't be more marked. There, a conservative president hands out huge tax cuts to the rich, using a policy his own father famously dubbed "voodoo economics". American presi dents - north or south - never quite turn out as expected.

France farce

In order to help France Télécom pay off its record debt a new financial instrument has been created, "the mop". That's not as in multi-option programme, though Télécom needs all the flexibility it can get. It's "the mop" as in bucket. A group of Télécom workers, concerned by headlines about the need to tackle the €70bn burden, have bought a batch of the said cleaning implement and started selling them to colleagues to raise cash.

That suggests other instruments: "the sponge" to soak up the shareholder value that has leaked out of Télécom; "the umbrella" for corporate rainy days. Not that the mop has had a huge impact. According to the union, the Confédération Générale du Travail, sales so far number 10 at one euro apiece. So that leaves just €69,999,999,990 to go.

abcnews.go.com — By Patrick Markey

CARACAS, Venezuela (Reuters) - Venezuelan troops seized control of a bottling affiliate of Coca-Cola Co. and raided a beer warehouse on Friday as President Hugo Chavez made good on his threat to get tough with a six-week opposition strike that has disrupted fuel and food supplies.

National Guard troops wielding metal batons and firing tear gas clashed with a small group of protesters who tried to block the entrance to Venezuela's largest bottling plant -- Panamco's water and soft drinks facility -- in Valencia, about 100 miles west of Caracas.

Troops drove away several Coke trucks and seized crates of drinks. They later forced their way into a warehouse of the beer and food maker Empresas Polar, Venezuela's largest private company, after shoving managers into the street.

The measures were the first major action against food and beverage plants after Chavez threatened to ease shortages by sending troops to seize manufacturing facilities withholding products during the strike that aims to force him to resign.

The move against private property rattled opposition leaders who accuse the leftist leader of ruling like a dictator and fear he wants to install Cuba-style communism in Venezuela, the world's fifth-largest oil exporter.

"We are distributing this product to the population because collective rights come above individual rights," National Guard Gen. Luis Felipe Acosta Carles said at the Panamco plant.

Outraged opposition leaders said the takeover was illegal. But it was unclear whether the troops maintained control of the plant after hauling away products.

The opposition strike, started on Dec. 2, has cut off Venezuela's economic lifeline by slashing its vital oil exports to a fifth of normal levels, rattling global markets and causing long lines for scarce gasoline supplies.

Strike leaders, including political parties, unions, business groups and rebel managers at state oil firm PDVSA, have vowed to strike until Chavez quits and calls elections.

World oil prices hit fresh two-year highs, with U.S. futures briefly touching $34 a barrel as the Venezuelan crisis compounded fears of a U.S.-led war in Iraq. Venezuela's bolivar currency, battered by economic uncertainty, dipped 2.3 percent as it extended its slide.

CHAVEZ DEFIANT, U.S. WORRIED

In a "state of the nation" speech on Friday at the National Assembly, Chavez denounced his foes and kept up his staunch rejection of their calls for early elections.

"What you have here is a democratic government fighting fascists, terrorists and coup-mongers," Chavez said. "There can be no dialogue and there will be no dialogue."

Chavez, a former paratrooper who survived a coup in April, has ordered the military to take over oil installations as he fights to defeat the shutdown. He has also threatened to take over schools, banks and factories that join the protest, which he says is an illegal attempt to oust him.

His tough comments came one day after he met with U.N. Secretary-General Kofi Annan in New York for talks on breaking the deadlock. A group of six nations, including the United States and Brazil, agreed on Wednesday to back negotiations between the government and the opposition.

Chavez was due to travel to Brazil later on Friday for a meeting with Brazilian President Luiz Inacio Lula da Silva, who first proposed the so-called "group of friends" initiative.

In Venezuela, talks brokered by the Organization of American States were suspended until Monday because of tensions between the government and the opposition, mediators said.

U.S. Ambassador Charles Shapiro said he had called the government to express his concern over U.S. commercial interests and the legality of the Panamco takeover.

"Of course, this strains our relations. Apparently, and I hope I am wrong about this, these officials did not act within the law," he told local television.

The Venezuelan leader's relations with Washington have been tested by his fierce anti-capitalist rhetoric and his close ties with American foes such as Cuba and Libya.

COCA-COLA, RAMBO AND COUP PLOTS

Local television images of the Panamco plant showed troops standing inside warehouses filled with crates of bottled products. Acosta, a staunch Chavez ally dubbed "Rambo" by the local media, said he was carrying out the president's orders to ensure basic food supplies.

"What I see here is hoarding and we are going to move these products," said Acosta, after swigging from a bottle of malt drink and burping loudly at television cameras.

Chavez last week called Venezuelan tycoon Gustavo Cisneros, who is based in the United States and listed as a member of Panamco's board of directors, a "fascist coup-plotter."

Miami-based Panamco, or Panamerican Beverages Inc., is Latin America's largest soft drink bottler and one of the world's three largest bottlers of Coca-Cola. The Valencia plant distributes to about 30 percent of the Venezuelan market.

Rodrigo Calderon, a spokesman in Mexico for Coca-Cola Latin America, said the plant had been closed since Dec. 1 due to security concerns and gasoline shortages. "There is no agreement specifically that they can take the products and the trucks. We are analyzing the situation at our plants in Venezuela," Calderon told Reuters by telephone.

abcnews.go.com Venezuela's Chavez Says 'Friends' Group Must Recognize Legitimacy of His Government, Vows Oil Will Be Restored The Associated Press CARACAS, Venezuela Jan. 17 —

President Hugo Chavez welcomed foreign help to end a crippling seven-week strike but said Friday his government won't be forced into negotiating with what he called a "coup-plotting, fascist" opposition.

Several countries, including the United States, Mexico, Brazil and Spain, agreed to create a "Group of Friends of Venezuela" this week to seek solutions to the work stoppage that has brought the country's economy to a standstill.

Chavez cautioned, however, that his government "won't accept any restrictions from the Friends" group and warned other nations not to legitimize the opposition.

"Each country must make a great effort to understand what is happening in Venezuela," Chavez said in his annual state of the nation address to Congress. "This is a democratic government, a democratic republic, confronting fascists, confronting terrorists, confronting coup plotters."

Chavez announced he was traveling to Brazil late Friday to meet with Brazilian President Luiz Inacio Lula da Silva to discuss the "Friends" initiative.

Opposition leaders accuse Chavez of amassing too much power and ruining the economy. They called the strike Dec. 2 to urge Chavez to back a nonbinding referendum on his presidency Feb. 2.

Chavez says Venezuela's constitution allows only a binding referendum halfway into a six-year presidential term. In Chavez's case, that will be in August.

Chavez said if a majority of Venezuelans vote to shorten his presidential term in August, he will respect the outcome.

The strike has punished Venezuela's oil industry, cost the nation at least $4 billion and led to food and gasoline shortages. Chavez called the strike leaders were "cruel" for inflicting pain on Venezuelans.

He insisted his government was reviving petroleum production in what was the world's fifth-largest oil exporter and the No. 4 crude exporter to the United States.

Venezuela produced 3 million barrels a day of crude before the strike.

The country's crude oil output was 512,000 barrels Friday, up from 484,000 barrels Thursday, according to striking employees of the state-owned oil monopoly Petroleos de Venezuela S.A.

However, Energy and Mines Minister Rafael Ramirez has said daily crude production stands at 890,000 barrels. About 35,000 oil workers, including executives, have joined the strike.

Domestic gasoline supply still depends mostly on imports because only one refinery is operating. Motorists wait hours in line to fill up.

The Paris-based International Energy Agency said it could take months before Venezuela returns to its pre-strike production. The crisis has caused international prices to rise. In the United States, gasoline prices have risen to an average $1.50 a gallon.

Venezuela's central bank reported the currency closed Friday at a record low of 1,756.75 to the dollar. The bolivar has lost more than 20 percent of its value this year, and thousands of Venezuelans lined up Friday at banks to withdraw deposits and purchase dollars.

"The dollars I'm going to buy will be worth much more," said Seferino Guitian, a 39-year-old store clerk.

Chavez accused the news media of conspiring to oust him, something he said they failed to do during a brief April coup. Again, he threatened to yank broadcast licenses of stations broadcasting "propaganda" against his government, he said.

He referred to four opposition TV stations as "the four horsemen of the Apocalypse."

In eastern Caracas, Venezuela's opposition staged an anti-Chavez rally and awaited a strategy from the "Friends of Venezuela."

"We have to wait (to see) what the plan of action this group is going to put together," a key opposition negotiator, Timoteo Zambrano, told Union Radio.

news.ft.com By Andy Webb-Vidal in Caracas Published: January 17 2003 4:00 | Last Updated: January 17 2003 4:00

Hopes for progress in ending Venezuela's political impasse rose yesterday following the creation of a group of countries aimed at helping to find a solution to the tense deadlock between the government of President Hugo Chávez and opposition groups.

César Gaviria, secretary general of the Organisation of American States (OAS), who is trying to broker a settlement in Caracas, said late on Wednesday in Quito, the Ecuadorean capital, that a "group of friendly countries" would formally back the OAS mission.

The nascent group, initially proposed by Luiz Inácio Lula da Silva, Brazil's president, at the request of Mr Chávez, will include Chile, Mexico, Portugal, Spain and the US.

Analysts were yesterday attempting to establish how, if at all, the group would be able to reinvigorate the OAS's efforts to bring together the two sides before rising levels of political violence tear them further apart.

Miguel Diaz, director of the South America Project at the Washington-based Center for Strategic and International Studies, said Brazil might be able to put pressure on Mr Chávez, while the US could influence elements in the opposition.

"The international community is in a race against time," said Mr Diaz. "If during the next few weeks there is additional violence in the streets it could undermine this diplomatic initiative."

A non-binding referendum on whether Mr Chávez should step down, which opinion polls suggest would win the support of as many as 70 per cent of voters, is due to be held on February 2.

Local analysts expect that in the coming days the supreme court will declare the question unconstitutional, increasing the chances of violent demonstrations against Mr Chávez.

Diplomats said a consensus appeared to have been reached in Quito over the need to lobby for early elections as the only solution to recovering governability in Venezuela.

Any solution will also have to find a way of ending a six-week strike by opposition-aligned workers at PDVSA, the state oil company, which has crippled oil production and is raising the prospect of domestic economic chaos and deeper social unrest.

Foreign ministers from the "group of friends" are likely to act as emissaries from heads of state in visits backing the OAS mission, an ambassador to Caracas said.

www.brazzil.com Brazzil Politics February 2003

President Luiz Inácio Lula da Silva should skip the Davos Forum. If he is serious about defending human values he should take a more positive approach to the Free Trade Area of the Americas (FTAA). He should also stop trying to revive the virtually moribund Mercosur.

John Fitzpatrick

According to press reports, President Luiz Inácio Lula da Silva will attend this year's World Economic Forum in Davos, in Switzerland, as well as the alternative event, the World Social Forum, to be held in Porto Alegre in southern Brazil. What he hopes to achieve is a mystery as both meetings are just talking shops, one of which will briefly boost the economy of a town in the Swiss Alps and the other give Porto Alegre its annual 15 minutes of fame. One wonders what Lula will achieve by wandering around Davos shaking hands with politicians and businessmen from around the world.

According to his spokesman he will make a speech on January 24 in Porto Alegre and on January 26 in Davos calling for "globalização solidária". This is a little difficult to translate, but "compassionate globalization" or "sympathetic globalization" conveys the meaning. The spokesman defined this "compassionate globalization" as "a world order in which social concern should be one of the centers of priority of countries."

According to the spokesman: "Lula's speech in Davos will be the expression of the thinking of Porto Alegre, exhorting compassionate globalization, which is the defense of a policy in which human values are above the values of the market." Undoubtedly the audience of fat cats at Davos will applaud as loudly as the tree huggers at Porto Alegre, but whether it will make them change their minds is a different matter.

The message, if there is one, sounds pretty woolly and banal. A complimentary quote on Lula's economic policies from someone like George Soros will make more of an impression on the market than the platitudes Lula will inflict on his captive audience. During his trip to Europe, Lula will make flying visits to Paris and Berlin. Let us hope that during his behind-the-scenes meetings with Chirac and Schroeder, Lula reminds them both of their promises to help Brazil get better trade access to the cartel-like European Union, pledges they made during visits to Brazil.

Circus Davos

The World Economic Forum started about 20 years ago as a small affair at which top politicians, business leaders and opinion formers got together in an Alpine setting to hold informal meetings. It was the kind of exclusive, snobby event, with a preposterous, pretentious name, which the Swiss are good at organizing, despite their egalitarian principles and solidly republican history.

However, the World Economic Forum has become a victim of its own success and now it is a veritable circus, bringing journalists, lobbyists and protestors of all kinds to a not particularly attractive town. The fact that the rival World Social Forum was set up three years ago is actually a tribute to the Davos meeting, although the anti-globalization crowd would hate to admit it, and gives a false impression of the WEF's importance.

The WEF organizers are so inflated with their own importance that the 2002 meeting was held in New York as a self-proclaimed sign of solidarity following the terrorist attacks on the US in September 2001. (No doubt New Yorkers were moved by this sacrifice by the hotelkeepers and restaurant owners of Davos.)

According to the WEF's site, this year's meeting will explore five core themes within the context of "Building Trust:" Corporate Challenges, Global Economy, Global Governance, Security and Geopolitics Trust and Values. This list sounds as though it has been drawn up by a group of first-year college students and one can only pity anyone who has to listen to such turgid fare.

The WEF has achieved little of any concrete value or use. In 1988, just before the meeting, there was a rise in tension between Greece and Turkey over an incident in the Aegean Sea and the WEF subsequently claimed that an informal meeting at Davos between the Greek and Turkish leaders had defused the issue and prevented a war. According to the WEF's web site: "After being on the brink of war, Greek Prime Minister Papandreou and Turkish Prime Minister Ozal signed the "Davos Declaration". This is nonsense as there was no chance of any kind of war breaking out between two NATO allies.

As for the "Davos Declaration", the Greeks and Turks still distrust each other as much as ever and the island of Cyprus is as divided now as it has been since the Turkish army invaded almost 30 years ago. Looking through the achievements the WEF lists on its site there are few which actually stemmed from the Davos meetings, which in general were used as launching pads for announcements. Presumably the WEF organizers have invited George Bush and Saddam Hussein to Davos although it is doubtful that they will come since this year's headlines will be dominated by events in Iraq rather than in a cozy mountain resort.

Davos has now joined the anti-globalization agenda of events to mark in your diary, along with the annual meeting of the International Monetary Fund and World Bank and any kind of G-7 meeting. By attending the Porto Alegre meeting Lula is giving credence to a negative, Luddite-like group which represents many of the issues which the PT has recently jettisoned in its bid to form the Brazilian government.

He should choose one or the other, or even better, ignore them both. If Lula is serious about defending human values he should do so by taking a more positive approach to the Free Trade Area of the Americas (FTAA) instead of seeing it as an American plot to exploit weaker countries. He should also stop trying to revive the virtually moribund Mercosur.

John Fitzpatrick is a Scottish journalist who first visited Brazil in 1987 and has lived in São Paulo since 1995. He writes on politics and finance and runs his own company, Celtic Comunicações—www.celt.com.br , which specializes in editorial and translation services for Brazilian and foreign clients. You can reach him at jf@celt.com.br 

You can also read John Fitzpatrick's articles in Infobrazil, at www.infobrazil.com