abcnews.go.com Feb. 7 — By Pablo Bachelet

WASHINGTON (Reuters) - As it prepares for possible war on Iraq, the White House has only won tepid support from its allies in Latin America.

Rather than embrace the Bush administration's call for action against Iraqi President Saddam Hussein, Chile and Mexico, both members of the Security Council, want to give United Nations arms inspectors more time.

"We are in favor of intensifying and strengthening those inspections," said Luis Ernest Derbez, Mexico's foreign minister, after Secretary of State Colin Powell presented intelligence in a speech to the United Nations that he said showed Iraq was hiding weapons of mass destruction.

Brazil and Argentina have issued public statements calling for multilateral action on Iraq.

While Latin American reluctance to back a tough U.S. stance on Iraq partly reflects historical reservations about U.S. unilateralism, many analysts point to a feeling that the United States has failed to live up to its promises to the region.

Latin America's Iraq posture "was predictable because of the baggage of U.S. military intervention in Latin America," said Michael Shifter, of the Interamerican Dialogue, a Washington think-tank. "And another part of it is that Latin America feels the United States hasn't followed through on its commitments."

The United States has a history of intervention in countries such as Cuba and Chile, but this was set to change as President Bush ushered in what he called the century of the Americas. Washington was to lead the way with initiatives such as a free trade area and an immigration pact with Mexico.

Then, after Sept. 11, Washington shifted its focus toward terrorism, North Korea and Iraq.

Day-to-day handling of Latin American affairs devolved to mid-level officials at a time when the region was struggling with economic stagnation and a string of crises.

Mexico was irked when U.S. officials went cool on the migration deal. The Venezuelan economy is in shambles following a long strike against President Hugo Chavez and Argentina is slowly emerging from its worst recession its history.

Brazil came close to a default on its foreign debt and voters in Ecuador and Brazil showed their unhappiness by turning to leaders with populist credentials.

"It's easy to see when Bush is saying so much about the Middle East and North Korea and very little about Mexico or Argentina or Venezuela or Colombia, that perhaps there's something wrong," said Stephen Johnson, of The Heritage Foundation, a conservative think-tank.

SOME POSITIVE ASPECTS

But Johnson said there had been some positive aspects to U.S.-Latin American relations. Bush has met with many Latin American leaders, including Brazil's Luiz Inacio Lula da Silva, a socialist.

Bush managed to pass a trade bill that paved the way for a free trade pact with Chile and set the scene for a pact with the rest of Latin America. The administration also won bipartisan support for increased aid to Colombia.

But Arturo Valenzuela, director of Latin American Studies at Georgetown University, said these gains were attributable to a "sophisticated bureaucracy" implementing policies already in place rather than breaking new ground.

"The boxes are still being checked, the memos are still being sent out," he said.

What's lacking, he said, is a strong U.S. response to Latin America's ills. "You have to be proactive in a crisis."

"If you have a senior person that wants to work on these issues and shows interest, then things can be done," said the Interamerican Dialogue's Shifter.

In the end, Latin Americans may want an old fashioned diplomatic quid pro quo before endorsing Bush's stance on Iraq. "If the United States has not shown sensitivity to Latin America's problems, then its hard for Latin Americans to fully support where the U.S. is going," Shifter said.

www.alertnet.org NEWSDESK   07 Feb 2003 16:08

By Amy Taxin

QUITO, Ecuador, Feb 7 (Reuters) - Ecuador's new President Lucio Gutierrez heads to Washington on Sunday seeking aid to keep his poor nation away from the brink of economic crisis and develop and patrol its porous border with war-torn Colombia.

Gutierrez, who has adopted tight fiscal measures since he took office on Jan. 15, will meet U.S. President George W. Bush on Tuesday requesting help to ease the Andean nation's budget crunch and debt burden, but security issues are expected to be the main focus for the United States.

To boost state coffers, left-leaning Gutierrez has adopted market-oriented but unpopular moves such as price hikes that have stirred dissent in his coalition of poor Indians and unions. Gutierrez -- a retired army colonel who led a coup three years ago -- has cut his own salary by 20 percent and jogged to work to save on gasoline costs.

Less than a month in the presidency, Gutierrez he has scored a preliminary agreement with the International Monetary Fund for a $500 million multilateral aid package that investors say will steer Ecuador away from a possible debt default.

Government officials hope the Bush meeting -- a sign of improving bilateral ties -- will keep doors open for credits and private sector investments to help reduce poverty that affects 60 percent of the population.

Our goal is to "ratify that with our government, Ecuador is a trustworthy country, with legal securities for investment," Patricio Acosta, general secretary of the administration and regarded as Gutierrez's right-hand man, told Reuters.

The trip also seeks funds to develop and patrol the border area with Colombia -- where drug smugglers and guerrillas operate -- Acosta said. Ecuador, which has one of South America's smallest economies, received about $25 million in border development funds from the United States last year, according to a U.S. embassy spokesman.

Gutierrez, who faces protests at home over his economic policies, has played up the visit after his predecessor Gustavo Noboa could not get face time with the leader of the world's No. 1 economy. He is also planning to meet several top U.S. officials despite the Bush administration's focus with plans fro a possible war to disarm Iraq of allegedly illegal arms.

The visit comes as leftists have gained momentum in Latin America, with Gutierrez and Brazil's Luiz Inacio Lula da Silva, a former metalworker, coming to power in January to form an informal front alongside Venezuela's leader Hugo Chavez.

Gutierrez will also meet with IMF Managing Director Horst Koehler and other multilateral lender officials before traveling to New York to meet with private investors.

AMERICAN AGENDA

Political analysts say Washington will likely seek to discuss the drug-fueled war in Colombia with Gutierrez. The U.S. currently runs anti-narcotics surveillance operations for the Andean region out of a coastal air force base in Ecuador.

Ecuador is not a drug-producing country, unlike nearby Colombia, Peru and Bolivia, but is a site of drug transit.

Ecuador is one of Latin America's most unstable nations and has toppled two of its elected presidents amid popular uprisings in the last few years.

"The U.S. agenda prioritizes security issues, then issues of democracy and in third place, commercial matters," political analyst at FLACSO university Adrian Bonilla told Reuters.

A U.S. embassy spokesman in Quito said Gutierrez had made strides to show his interest in speaking with the Bush administration and improving ties with the United States. His predecessor was a vocal critic of several U.S. policies.

"Gutierrez has said he's ready to talk to the IMF, he's ready to talk to the U.S. He wants to improve the relationship. Why would you not want to do whatever you could to take him up on his offer?" he told Reuters.

www.alertnet.org NEWSDESK   07 Feb 2003 16:08

By Amy Taxin

QUITO, Ecuador, Feb 7 (Reuters) - Ecuador's new President Lucio Gutierrez heads to Washington on Sunday seeking aid to keep his poor nation away from the brink of economic crisis and develop and patrol its porous border with war-torn Colombia.

Gutierrez, who has adopted tight fiscal measures since he took office on Jan. 15, will meet U.S. President George W. Bush on Tuesday requesting help to ease the Andean nation's budget crunch and debt burden, but security issues are expected to be the main focus for the United States.

To boost state coffers, left-leaning Gutierrez has adopted market-oriented but unpopular moves such as price hikes that have stirred dissent in his coalition of poor Indians and unions. Gutierrez -- a retired army colonel who led a coup three years ago -- has cut his own salary by 20 percent and jogged to work to save on gasoline costs.

Less than a month in the presidency, Gutierrez he has scored a preliminary agreement with the International Monetary Fund for a $500 million multilateral aid package that investors say will steer Ecuador away from a possible debt default.

Government officials hope the Bush meeting -- a sign of improving bilateral ties -- will keep doors open for credits and private sector investments to help reduce poverty that affects 60 percent of the population.

Our goal is to "ratify that with our government, Ecuador is a trustworthy country, with legal securities for investment," Patricio Acosta, general secretary of the administration and regarded as Gutierrez's right-hand man, told Reuters.

The trip also seeks funds to develop and patrol the border area with Colombia -- where drug smugglers and guerrillas operate -- Acosta said. Ecuador, which has one of South America's smallest economies, received about $25 million in border development funds from the United States last year, according to a U.S. embassy spokesman.

Gutierrez, who faces protests at home over his economic policies, has played up the visit after his predecessor Gustavo Noboa could not get face time with the leader of the world's No. 1 economy. He is also planning to meet several top U.S. officials despite the Bush administration's focus with plans fro a possible war to disarm Iraq of allegedly illegal arms.

The visit comes as leftists have gained momentum in Latin America, with Gutierrez and Brazil's Luiz Inacio Lula da Silva, a former metalworker, coming to power in January to form an informal front alongside Venezuela's leader Hugo Chavez.

Gutierrez will also meet with IMF Managing Director Horst Koehler and other multilateral lender officials before traveling to New York to meet with private investors.

AMERICAN AGENDA

Political analysts say Washington will likely seek to discuss the drug-fueled war in Colombia with Gutierrez. The U.S. currently runs anti-narcotics surveillance operations for the Andean region out of a coastal air force base in Ecuador.

Ecuador is not a drug-producing country, unlike nearby Colombia, Peru and Bolivia, but is a site of drug transit.

Ecuador is one of Latin America's most unstable nations and has toppled two of its elected presidents amid popular uprisings in the last few years.

"The U.S. agenda prioritizes security issues, then issues of democracy and in third place, commercial matters," political analyst at FLACSO university Adrian Bonilla told Reuters.

A U.S. embassy spokesman in Quito said Gutierrez had made strides to show his interest in speaking with the Bush administration and improving ties with the United States. His predecessor was a vocal critic of several U.S. policies.

"Gutierrez has said he's ready to talk to the IMF, he's ready to talk to the U.S. He wants to improve the relationship. Why would you not want to do whatever you could to take him up on his offer?" he told Reuters.

www.forbes.com Reuters, 02.07.03, 11:34 AM ET By Hugh Bronstein

NEW YORK, Feb 7 (Reuters) - Bolstered by hope that Brazil will increase its budget surplus target in a show of fiscal prudence, emerging market sovereign bond prices edged higher on Friday despite fear that a coming war against Iraq will scare investors into safer markets. "Money is still chasing yield for the time being," said Americo DaCorte, managing partner at Latin World Asset Management in New York. "So I would not be surprised if, in the short term, you see emerging market bond prices grind higher," he said. "If we have a war, that's another story." Benchmark Brazil C bonds <BRAZILC=RR> rose 5/8 to bid 69-3/4 as traders waited for a late-afternoon news conference by Brazilian Finance Minister Antonio Palocci, who is expected to unveil a new surplus target. The conference is scheduled for 4 p.m. local time(1800 GMT). Markets are widely expecting Palocci to hike the budget surplus -- which excludes debt payments -- to around 4.3 percent of gross domestic product from the current target of 3.75 percent of GDP. "This would signal that (President Luiz Inacio Lula da Silva) is adopting a policy of fiscal and monetary prudence," said Martin Schubert, chairman of the European Inter-American Finance Corp., a Miami-based emerging markets debt trading and fund management firm. Lula, a one-time radical union leader who won last year's election after shifting his rhetoric from left to center, took office at the start of the year. "He's giving all the right signals in this honeymoon period, but the key test remains his ability to pass social security and tax reforms that will allow the government to reduce its internal debt," Schubert said. Emerging market bond spreads tightened 7 basis points to 726 over U.S. Treasuries, according to JP Morgan's Emerging Markets Bond Index Plus. Brazil's portion of the market tightened 20 basis points to 1,309. Tighter spreads reflect the perception of decreased risk as measured against safe-haven U.S. Treasury bonds. Despite the war jitters, which have shaken markets around the world, total returns as measured by the EMBI-Plus have risen by 2 percent since the start of the year. Brazilian returns are up 5.1 percent since Jan. 1 as optimism about Lula grows.

VENEZUELA STABILIZES AFTER SELL-OFF Venezuela spreads tightened by 14 basis points to 1,318 over Treasuries on Friday after a sell-off spawned by the government's move on Thursday to impose foreign exchange and price controls. Vowing to starve his foes of dollars, Venezuelan President Hugo Chavez announced the measures to shore up an economy reeling from a two-month opposition strike. Venezuela total returns, which include accrued interest and price movements, have fallen 5.5 percent so far this year as the country contends with its political crisis. Chavez, who has defied opposition demands that he resign, said payments to foreign bond holders will be given top priority under the new foreign exchange system. But Wall Street analysts said the new currency regime may invite corruption and hurt confidence.