www.nytimes.com By TONY SMITH

ÃO PAULO, Brazil, Feb. 6 — Brazil's limping flagship airline said today that it would merge with its largest rival to form a single airline with $4 billion in annual revenue and 70 percent of the domestic market.

At a joint news conference, the presidents of Viação Aérea Rio- Grandense, known as Varig, and TAM Linhas Aéreas, the No. 2 carrier, said they had signed a letter of intent to combine the two airlines.

They said their airlines would continue to operate separately for at least six more months while they work out the specifics. The combination would be Latin America's largest carrier by far, transporting 29 million passengers a year.

"There's nothing better for the sustainability of both companies than working toward improving costs and operations," Manuel Guedes, Varig's president, told reporters. He promised that the merger process would be "as transparent as possible."

With $900 million in debts, Varig has been losing money since 1997 and is barely bringing in enough cash to stay in operation. Last week, a Varig jet was impounded in Paris because a lease payment on it was overdue. The company, founded in 1927, has been wrangling for months with its creditors and its pilots over a financial rescue plan. Mr. Guedes is its third president in three months.

TAM, a much younger company, has stronger finances and little debt, but it has suffered as much as rivals have from the global slump in travel and the sharp fall in the value of the Brazilian real. It is spending $500 million a month on aircraft leases and its fuel costs have soared. Analysts said the airlines could cut costs significantly in a merger.

The deal was widely seen by both analysts and the government as the best hope for resuscitating the ailing industry. "We need to make the civil aviation sector sustainable, with a competitive model and efficient management," said Brazil's defense minister, José Viegas, who was appointed by President Luiz Inácio Lula da Silva to oversee the talks between the airlines.

Analysts welcomed the deal. "It's a huge step forward" said Carlos Albano of Unibanco in São Paulo. "Brazil needs one carrier that is strong, large scale and competitive."

A Varig-TAM merger had long been the dream of Rolim Amaro, TAM's founder, who was killed in a helicopter crash in 2001. The two airlines set up a joint travel Web site in the mid-1990's.

A merger will mean, however, that both Mr. Amaro's family and the Ruben Berta Foundation, a workers' association that is Varig's main shareholder, will have to cede control, something analysts said might prove to be an obstacle.

The deal will also have implications for the two main builders of passenger jets, Boeing and Airbus Industrie. Varig uses Boeing jets, while TAM largely operates Airbuses; eventually, analysts said, the 218-plane combined fleet would be re-equipped with just one maker's jets.

"Logically, they will have to opt for Boeing or Airbus," Mr. Albano said. "That means it will be big business for one of them."

www.nytimes.com By TONY SMITH

ÃO PAULO, Brazil, Feb. 6 — Brazil's limping flagship airline said today that it would merge with its largest rival to form a single airline with $4 billion in annual revenue and 70 percent of the domestic market.

At a joint news conference, the presidents of Viação Aérea Rio- Grandense, known as Varig, and TAM Linhas Aéreas, the No. 2 carrier, said they had signed a letter of intent to combine the two airlines.

They said their airlines would continue to operate separately for at least six more months while they work out the specifics. The combination would be Latin America's largest carrier by far, transporting 29 million passengers a year.

"There's nothing better for the sustainability of both companies than working toward improving costs and operations," Manuel Guedes, Varig's president, told reporters. He promised that the merger process would be "as transparent as possible."

With $900 million in debts, Varig has been losing money since 1997 and is barely bringing in enough cash to stay in operation. Last week, a Varig jet was impounded in Paris because a lease payment on it was overdue. The company, founded in 1927, has been wrangling for months with its creditors and its pilots over a financial rescue plan. Mr. Guedes is its third president in three months.

TAM, a much younger company, has stronger finances and little debt, but it has suffered as much as rivals have from the global slump in travel and the sharp fall in the value of the Brazilian real. It is spending $500 million a month on aircraft leases and its fuel costs have soared. Analysts said the airlines could cut costs significantly in a merger.

The deal was widely seen by both analysts and the government as the best hope for resuscitating the ailing industry. "We need to make the civil aviation sector sustainable, with a competitive model and efficient management," said Brazil's defense minister, José Viegas, who was appointed by President Luiz Inácio Lula da Silva to oversee the talks between the airlines.

Analysts welcomed the deal. "It's a huge step forward" said Carlos Albano of Unibanco in São Paulo. "Brazil needs one carrier that is strong, large scale and competitive."

A Varig-TAM merger had long been the dream of Rolim Amaro, TAM's founder, who was killed in a helicopter crash in 2001. The two airlines set up a joint travel Web site in the mid-1990's.

A merger will mean, however, that both Mr. Amaro's family and the Ruben Berta Foundation, a workers' association that is Varig's main shareholder, will have to cede control, something analysts said might prove to be an obstacle.

The deal will also have implications for the two main builders of passenger jets, Boeing and Airbus Industrie. Varig uses Boeing jets, while TAM largely operates Airbuses; eventually, analysts said, the 218-plane combined fleet would be re-equipped with just one maker's jets.

"Logically, they will have to opt for Boeing or Airbus," Mr. Albano said. "That means it will be big business for one of them."

sf.indymedia.org by Pablo Ortellado Thursday February 06, 2003 at 02:52 AM pablo@riseup.net

I guess it was on year 2000, while organizing for the S26 protests when I first heard about the World Social Forum (WSF). The idea was to have a permanent counter forum to the annual meeting of the World Economic Forum (WEF), the meeting of corporations' CEOs, governments' officials and academic leaders to discuss global policies for the world. This counter forum, designed to oppose the economic forum, was structured however on the very same basis: a meeting of global leaders to discuss global agendas - but instead of banks, corporations and governments, representatives from unions, NGOs and social movements.

Since the very beginning, this bureaucratic and elitist structure clashed with the new forms of organization brought by the new movement against capitalist globalization. The World Social Forum never aimed at being just a summit meeting of the bureaucratic left, but being a large convergence space for debate, including both the "new" and the "old" left and actually using the momentum and energy brought by the new part of the movement to make something large and with big political impact. So, despite the WSF having core activities that literally duplicated the WEF structure, more open and free spaces for debates and workshops were set.

Since the very first WSF, the tension between the more open spaces and the core activities was permanent. For the organizing committee - made of the Brazilian PT (Worker's Party), French Organization ATTAC, Brazilian leftist union CUT, the MST (Brazilian Landless Workers' Movement) and the Catholic Church (among a few others) - most of the political significance of the Forum rested in its "core" activities: a set of debates, panels and meetings, which they decided were the important ones and over which they fought among themselves to have control. Those core activities were the ones really publicized by the WSF press office and the only ones to get any coverage from the media (even from most of the alternative media). So, for the outsider, the WSF, since the beginning, was this series of activities that the organizing groups decided were relevant and over which they made an open effort to direct all the spotlights.

Outside that, participation was pretty open. I can't recall any serious incident of a group not being allowed to participate, except perhaps for Colombian guerrilla FARC who had space for a press conference denied over the argument that they were an armed group (someone replied: what about the representatives from the French government, a much more dangerous armed group?). So, despite minor incidents, a number of relatively open activities developed around the core activities - activities which were meaningful and participatory and which were considered by most people attending the WSF as the most interesting and important.

It was on the workshops' space, which could be proposed by any group, or at the activities set up at the Youth Camp (a park where most of the youth camped, under awful conditions) or at parallel activities taking placing autonomously somewhere in Porto Alegre that people got to know each other, where they could share experiences and where they could actually talk and be listened. At those places and only there you could see the practices and the spirit of the new movement the WSF supposedly embodied.

This dual and conflictive structure was very rarely perceived by the radical groups who very often described the WSF (in a sense, appropriately) as bureaucratic and reformist. This interpretation, however, reinforced the official interpretation of the forum and of mainstream press who saw the big activities with the big names as the central part of the WSF. But whatever it had of significance and importance was elsewhere and this elsewhere was what attracted the tens of thousands who traveled to Porto Alegre. Those were not dumb or naïf people mislead by a bureaucratic elite. Those were people who came because the WSF was a place to meet people from around the world, to listen and to talk about different experiences and struggles and - even - to listen to what the big names had to say. That's what the WSF was about despite what its bureaucracy and the press wanted people to believe.

There's been a lot of discussion in radical circles over whether or not we should participate (and if so, how) in the WSF or in the regional forums (European Social Forum, Asian Social Forum, etc.). Linden Farrer has made this controversy explicit in a discerning article called "Abandon or Contaminate". Many people involved in the People's Global Action network, for instance, have defended setting up autonomous spaces close to the forums to "contaminate" them with our practices. Opposing "contamination" projects such as the Intergalactika Laboratory at the WSF or the "Hub" Camp at the European Social Forum - where alternative autonomous spaces were set somehow parallel, somehow within - critics point to the serious risk of participating in the very process of cooptation of our movement.

Several pages could be written about the way the WSF was openly manipulated by Brazilian institutional left and by international NGOs to co-opt us and to present their part of the movement as the whole of it and so, in a way, to channel all our novelty and energy into hierarchical and bureaucratized forms of politics. One could mention the way Brazilian PT has used the WSF as propaganda for its policies, presenting Porto Alegre as the socialist paradise it certainly isn't or the repression led by PT's police against autonomous groups during WSF II or yet the outrageous organizational boycott during WSF III to every single autonomous activity within it, from Radio Muda (probably the most important free radio in Brazil) to Indymedia, from the forum Life After Capitalism (organized by American magazine Z) to the Intergalactika Laboratory of Global Resistence.

None of that, however, could match the political use Brazil's new elected government made of our movement. Lula, Brazil's new president, gave an opening speech at the WSF and then, immediately after, took a flight to São Paulo and then straight to Davos to speak to the bad guys, "building a bridge" - in his own words - between the two forums and - also in his words - "taking the message of Porto Alegre into Davos". But who put him in a position to speak in behalf of the movement? And how could his amazingly right-wing speech stand as "Porto Alegre's message"?

In Davos, Lula's speech was basically a criticism of the protectionism of the rich countries. Quoting his speech: "We want free trade, but free trade with reciprocity. It's useless to make an effort to develop exportation when rich countries preach free trade and practice protectionism." "We want free trade": is that the message Porto Alegre should send to Davos? Is this the outcome of all the years of struggle against neoliberalism and institutions such as the IMF, the World Bank and the World Trade Organization? Not only Lula went to Davos speaking on our behalf. He went there and on our behalf spoke for free trade, criticizing people in Davos for not being neoliberal enough.

Is this reason enough for us to boycott the Social Forums once and for all? I really don't know. What I do know though is that the Social Forums are attracting a wide range of people, many of whom we really want to bring to our part of the movement. It's not enough to sit and criticize the Forum and erroneously suppose people are being manipulated by it. We should somehow set our own events and attract those people - be it by setting parallel events in the "contamination" strategy, be it by setting our own autonomous meetings - not meetings of activists, but open meetings where we can present our views to a wider public. It's time to stop merely criticizing and start more effectively opposing the outrageous assimilation of our movement by the worst practices of the old institutional left.

sg.biz.yahoo.com Saturday February 8, 9:34 AM A Wall Street Journal Online News Roundup

Americas markets fell Friday, tracking Wall Street lower after a terror alert from the Bush administration and the release of mixed U.S. economic data.

In Toronto, the S&P/TSX index fell 0.2% to 6477.74, as downward pressure from New York was offset by strength in the energy and health-care sectors.

The Dow Jones Industrial Average sank 65.07 points to 7864.23, its lowest close since Oct. 11.

Six of Toronto's 10 sector fell and one, information technology, remained unchanged. The energy sector rose 0.4%. In the group, EnCana rose 37 Canadian cents to C$47.48, Shell Canada rose 29 Canadian cents to C$46.00 and Petro-Canada rose 35 Canadian cents to C$50.90.

John Kinsey, portfolio manager at Caldwell Securities, said the threat of war in the Middle East continues to firm up oil and gas prices.

But the biggest winner of the day was the health-care sector, which rose nearly 3%, on heavyweight pharmaceutical company Biovail's announcement of final U.S. regulatory approval for its key hypertension product, Cardizem LA. The stock gained C$4.43 to C$47.48.

Meanwhile, the industrials sector shed 0.9%, as airline Air Canada gave up another 42 Canadian cents to C$42.65 after reporting a huge fourth-quarter loss and announcing possible asset sales Thursday.

In Mexico City, the key IPC index fell 0.5% to 5866.03. Most Mexican stocks followed U.S. counterparts lower, but broadcaster TV Azteca posted sharp gains as investors cheered its plan to pay dividends.

TV Azteca's CPOs soared 8.7% to 3.25 pesos after the company announced its board has approved plans to use a large chunk of its anticipated free cash flow over the next six years to pay shareholders more than $500 million in dividends on a regular basis. The broadcaster plans to use an additional $250 million of free cash to pay down its $647 million debt load.

Merrill Lynch raised its recommendation on the stock Friday to "buy" from "sell" based on the plan. Merrill also upgraded retailer Elektra, which has the same chairman as TV Azteca, to "buy" from "sell," citing a "halo effect" from the greater cash-flow discipline at its sister company. Elektra's shares rose 3.8% to 21.80 pesos.

Among decliners, cement group Cemex's CPOs shed 2.9% to 39.13 pesos and retailer Walmex's V shares dropped 2.1% to 23.86 pesos.

The main Bovespa index in Sao Paulo lost 1.8% to 10380.59 despite news Brazil hiked its 2003 primary budget-surplus target to 4.25% of gross domestic product -- higher than market expectations of 4%, according to a central bank survey.

The new goal exceeds the 3.75% level mandated in a $30 billion International Monetary Fund rescue package brokered in August and reassures investors the new government of Luiz Inacio Lula da Silva is working to ease the weight of Brazil's hefty debt load.

Elsewhere in the region and unlike its neighbors, Argentina saw it Merval Index add 1% to 564.89. Perez Companc, the market's most liquid share, rose 1.3% to 2.29 Argentine pesos.

Copyright (c) 2003 Dow Jones & Company, Inc.

All Rights Reserved.

www.charlotte.com Posted on Sat, Feb. 08, 2003 KEVIN G. HALL Knight Ridder

RIO DE JANEIRO, Brazil - At an entrance to Rio's infamous Cidade Alta slum, a skinny teen stands sentry, scarcely taller than his AR-15 assault rifle. He's a soldier for Comando Vermelho, the city's top drug gang.

As a taxi eases past, driver and passengers look away. Eye contact is a bad idea in Cidade Alta. So are visits by outsiders. Even police enter only in large, heavily armed, military-style raids.

New President Luiz Inacio Lula da Silva is promising nutrition programs, enhanced education and even some urban land reform to millions of impoverished Brazilians. But first he, too, must get past the teen sentries and the drug gangs they serve.

If the experience of charity groups is any indication, da Silva wouldn't be welcome. Aid workers in favelas, as Rio's slums are called, say they operate in unremitting fear of the gangs.

"What they want is that everyone knows THEY are in charge," said a worker for the well-known Brazilian charity Cruzada do Menor ("Crusade for Minors"), who spoke on condition of anonymity. It shuttered its operations in Pavaozinho, a hillside slum in Copacabana, after traffickers invaded one of its day-care centers and threatened to kill any child who returned. For many kids, the center had provided the only nutritious meal of the day.

Another group, Acao Comunitaria ("Community Action"), provides after-school activities in Rio's Mare slums and brings in professionals to assess learning disabilities and counsel children. Agency officials will talk to reporters only if trafficker-imposed conditions are met: No questions about drug gangs. No photos outside the agency's walls. All outsiders must be gone by nightfall.

Favela drug gangs, like the U.S. mob, controlled illegal gambling and vice for generations before they took over the drug trade. They, too, have a generous side, but the motive tends to include an assertion of power.

"They can impose their law with arms, but they can also use the power of money," said Brazilian criminologist Geraldo Tadeu. "They finance samba schools, homeowners associations, sponsor parties and even provide food baskets. They create a scheme of economic dependence for those who live in slums."

In slums where most residents are squatters, Rio state investigators say drug gangs control many traditional homeowners groups, set up to resolve disputes among neighbors and confer unofficial home ownership documents.

More legitimate forms of government barely penetrate the favelas, a water-by-the-pail world where PVC pipes jut from houses to carry raw sewage at least a few feet away. Garbage simply rots. On a hot day, the stench can dizzy a visitor.

"The vulnerability (to organized crime) has been brewing over time. There has been an abandonment by the government," said Marcelo Rasga Moreira, the author of a new book on drug trafficking, "Neither Soldiers Nor Innocents."

In March, da Silva's government will offer slum dwellers what sounds like a sweet deal: the chance to legitimize with land titles tens of thousands of homes built on federally owned land.

Theoretically, land titles will enhance the homes' value, enable banks to make home mortgage loans and end fears that the government will relocate residents.

Homeowners associations will be the link between residents and the federal government, however, and since drug traffickers control so many of them, da Silva may find the negotiations awkward.