www.upi.com By Bradley Brooks UPI Business Correspondent From the Business & Economics Desk Published 2/20/2003 8:01 AM

RIO DE JANEIRO, Brazil, Feb. 20 (UPI) -- Latin American stocks were mixed in light trade this week, as the potential war in Iraq weighed on investors and domestic news did little to prompt action.

Brazil's central bank on Wednesday hiked its Selic interest rate to 26.5 percent from 25.5 percent, a move widely forecast by analysts.

It was the fifth hike since October as officials try to dampen inflation sparked by a currency that shed 35 percent of its value last year.

"The interest-rate move from the central bank was expected. What was a surprise was the increase in the reserve requirements from 45 (percent) to 60 percent," said Carlos Firetti, director of BBV Corretora in Sao Paulo.

That extra move to halt inflation and shore up the local currency -- the forcing of banks to deposit more cash into the central bank -- is seen by local economists as a positive, extra step and one that further indicates the government's appetite for austerity.

But Brazilian banking stocks dived after the announcement, with investors fretting that profits may sink 5 percent or more this year as banks have less money to invest.

Bradesco -- Brazil's largest private bank -- shed 4.3 percent, while the Itau bank finished 3.47 percent off.

But Firetti and other analysts agree that the effect of the rate hike and reserve requirements on Latin America's biggest economy will be short-lived, with the potential for conflict in the Middle East continuing to drive markets.

"It is all Iraq. The main catalyst for the (Brazilian) market will continue to be the international markets," Firetti said. "Most days now the Bovespa is trading close to the Dow and Nasdaq. That is going to continue."

And it will do so in the rest of Latin America as well, with the possible exception of Venezuela, where internal troubles are hefty enough to keep investors looking inward.

Meanwhile in Mexico -- Latin America's market most closely aligned with Wall Street -- a rash of earnings reports is receiving attention, though Iraq is dominant.

On Wednesday, Bear Stearns raised Mexican equities to "market weight" from "underweight."

The investment bank said in a report that the local market had lost enough in the past two months that bargain hunters should be moving in to buy cheap stocks.

But Bear Stearns said it didn't necessarily see any "catalyst for relative strength" apart from a turnaround in the United States.

As for the markets, Brazil's Bovespa stock index finished last Thursday down 3.8 percent at 10,107 as worries about a potential war in Iraq gave investors fright. Airplane manufacturer Embraer sunk 12.3 percent after it said its delivery projections for this year and 2004 would be substantially lower. Oil giant Petrobras lost 1.7 percent as investors fretted over its future should war break out in Iraq.

On Friday, the Bovespa ticked down 0.3 percent to 10,080 as investors were sidelined on Mideast worries. Embraer lost an additional 5.6 percent. Varig airlines gained more than 7 percent after word that talks for a merger with another domestic airline were going well.

Monday saw the Bovespa gain 1 percent to 10,188 as investors cheered the government's decision to increase utility rates. Eletrobras added 2.4 percent. Fixed-line phone company Telemar gained 1.4 percent.

The Bovespa gained 2.6 percent Tuesday to 10,450 as traders tracked Wall Street. Investors were also cheered by the thought that the central bank will hike interest rates the next day. Telemar gained more than 4 percent.

On Wednesday the Bovespa shed 1.89 percent to end at 10,252. Banking issues took a beating on the new reserve requirement. Elsewhere, long-distance carrier Embratel lost 3.8 percent, while Telemar shed 2.9 percent.

In Mexico, the IPC stock index ended last Thursday up 0.5 percent at 5,791. America Movil, Latin America's largest cellular company, gained 0.6 percent in heavy trade. Broadcaster TV Azteca rose 3.3 percent. On Friday the index lost 0.3 percent to 5,774 in quiet trade. TV Azteca lost 1.8 percent after its previous gain.

On Monday the IPC gained 1 percent to 5,830. America Movil added 1.7 percent, while TV Azteca rose 2.5 percent. Tuesday saw a gain of 0.9 percent to 5,880 for the index. America Movil added 1.8 percent.

Wednesday brought a loss of 0.38 percent to 5,857 for the IPC. America Movil gained 1.24 percent in heavy trade, BBVA bank lost 1.2 percent, and Wal-Mart de Mexico shed 1.09 percent.

Argentina's Merval index closed flat at 582.5 Thursday. Banco Frances lost 2.7 percent on profit taking after several sessions of gains. But energy company Perez Companc gained 1.8 percent. On Friday the Merval lost 1.9 percent to end at 580.5. Telecom Argentina shed 9.7 percent as worries about its debt burden mounted.

Monday brought a flat close at 580. Natural gas company TGS was one of the few movers, gaining 2.3 percent. The index gained 0.8 percent to 585 Tuesday. Telecom Argentina rose 3.7 percent as bargain hunters moved in.

Wednesday saw the index lose 0.76 percent to 580.5 in sluggish trade.

In Chile the IPSA index ended 0.5 percent down at 1,013 on Thursday. Friday brought a loss to 1,011. Telecom CTC Chile shed nearly 1 percent.

The IPSA ticked up to 1,012 Monday. On Tuesday, the index fell 0.2 percent to 1,010. Utility Enersis lost 3.3 percent. Wednesday saw the index lose to 1,004 in uneventful trade.

Venezuela's IBC index gained 1.1 percent to 8,022 Thursday. CANTV, the national telephone company which comprises 40 percent of the index, lost 2.6 percent. Friday saw a small gain to 8,080 for the index.

On Monday the index gained 1.4 percent to 8,195. Tuesday saw a close at 8,212. The IBC lost 0.89 percent to 8,140 Wednesday.

www.miami.com By Andres Oppenheimer Posted on Thu, Feb. 20, 2003

SAO PAULO - Six weeks after taking office, Brazil's leftist president Luiz Inácio Lula da Silva is doing better than many had anticipated: His popularity rating is higher than ever, the media treat him like a rock star, and many people here see him as an upcoming regional leader.

But will Brazil's political euphoria last? Or will South America's most powerful country soon lapse into a crisis of unfulfilled expectations?

Judging from what I heard here, da Silva's honeymoon will last longer than the usual 100 days. But there are several factors -- including a possible U.S. war against Iraq, and growing unemployment rates -- that may soon take some of the glitz away from Latin America's first elected leftist government in decades.

First, let me give you the facts. The percentage of Brazilians who believe da Silva is doing a good job has risen to a whopping 84 percent, higher than that of any recent Brazilian president, according to separate surveys by the Vox Populi and CNT-Sensus polling firms. By comparison, da Silva was elected with 61 percent of the vote.

So far, da Silva has successfully allayed fears that he would scare off investors with his radical rhetoric of the not-so-distant past. A lifelong socialist who founded the Workers Party 22 years ago, da Silva until recently called for severing ties with international financial institutions, and not paying Brazil's foreign debts.

Perhaps seeing what has happened in neighboring Venezuela, where President Hugo Chávez's incendiary speeches against the ''oligarchy'' have triggered massive capital flight and created 2.5 million new poor, da Silva is following pretty orthodox economic policies. At the same time, he has launched a nationwide campaign to eliminate hunger, and says he is pursuing a more independent and assertive foreign policy.

''He has done very well,'' U.S. Ambassador Donna Hrinak told me in an interview, reflecting the view of most foreign diplomats in Brazil.

EFFECTS OF A WAR

On the downside, a war against Iraq could hurt Brazil, economically and politically.

Brazil still imports 15 percent of its oil, meaning that a rise in oil prices could complicate the country's efforts to

meet its foreign debt payments. In addition, a war-linked world recession would affect Brazil's exports, and further dry up foreign loans and investments. In times of uncertainty, lenders tend to stay away from emerging markets.

Politically, there is a danger of a rift with the Bush administration over a possible war with Iraq. Despite a successful first meeting in Washington with President Bush last year, da Silva -- who is as prone to shoot from the hip as his U.S. counterpart -- has already angered U.S. officials by stating that Bush is ''obsessed'' with Iraq.

On the domestic front, da Silva is facing growing opposition from the radical wing of his party. Still, he seems to be gaining more support in Congress from centrist parties than he may lose in the event of a break with the Workers Party's ultra-leftist wing.

''The fight with the radicals is excellent for Lula,'' said Fatima P. Jordao, a sociologist and consultant to several polling firms. ``It places him at the center of the political spectrum.''

POSSIBLE BACKLASH

Da Silva's biggest problem may be a possible backlash from unfulfilled expectations. While 78 percent of Brazilians expect unemployment to drop, according to the Vox Populi poll, economists say unemployment levels may actually rise. Many jobless people who had given up hope are now starting to seek work, buoyed by the country's upbeat mood. That would drive up Brazil's 12 percent unemployment rate because, like many other countries, Brazil measures its unemployment rate by the number of people who seek work.

Ambassador Hrinak is optimistic that da Silva will do well. The success or failure of the da Silva presidency will have major repercussions in all of Latin America, she says.

''If he can combine sound economic management, with effective attention to social programs, this sends a powerful message to the hemisphere,'' she said. ``And if he can't do it, then what does it say to other progressive parties about waiting 22 years to come to power? Will they actually do that?''

I agree. One of the best things that could happen to Latin America would be if other leftist parties emulated da Silva's model, and gave up violence and totalitarian utopias. Conversely, one of the worst scenarios would be if da Silva fails, and groups such as Colombia's leftist guerrillas or the radical coca growers in Bolivia use Brazil's example to argue that fighting for social justice in the political arena is a waste of time.

So let's hope that da Silva continues on his present course. I'm not terribly optimistic that he will manage to maintain his current popularity, but I'm convinced that it's in everybody's interest that he does.

abcnews.go.com

— CARACAS, Venezuela (Reuters) - Armed men, apparently from the Venezuela state security police, on Thursday captured a business chief who led a strike against President Hugo Chavez after a judge ordered him and a union boss arrested for rebellion, opposition leaders said.

Eight heavily armed men grabbed Carlos Fernandez at a restaurant in eastern Caracas early and fired shots in the air to keep back protesters before bundling him into a car, witnesses and opposition representatives said.

Foes of Chavez quickly condemned the order to detain Fernandez, the head of the Fedecamaras business chamber, as intimidation by the leftist leader they accuse of wielding power like a dictator.

"This is one more demonstration of intimidation," said opposition negotiator Rafael Alfonzo. "This is completely outside of the law," he said.

A judge told state television that Fernandez and union chief Carlos Ortega, who spearheaded the two-month opposition strike started in December to try and oust Chavez, were ordered detained for civilian rebellion, sabotage and other charges.

An official from the security police could not immediately confirm that officers from the agency were involved in the incident.

Chavez, who was first elected in 1998 and who survived a coup in April, has taken a hard-line stance against his opponents since strike leaders lifted the shutdown in early February to ease the burden on the private sector.

Branding his enemies "terrorists" and "coup plotters," Chavez has vowed to crack down on foes he accuses of trying to topple him by sabotaging the nation's vital oil industry. He has also introduced tight currency curbs and price controls to shore up the weakened economy.

The strike briefly crippled the oil industry of the world's No. 5 petroleum exporter as part of the opposition campaign to push Chavez into resigning and accepting early elections.

But the combative Venezuelan leader has so far rejected calls for a vote. Using troops and replacement crews, Chavez has fought back against the strikers as he battles to restart the oil exports that provide half of state revenues.

Three months of negotiations between the two sides have made little progress toward hammering out an agreement on elections. But earlier this week government and opposition negotiators signed a nonviolence pact to ease tensions.

reuters.com Thu February 20, 2003 06:57 AM ET

CARACAS, Venezuela (Reuters) - Armed men, apparently from the Venezuela state security police, on Thursday captured a business chief who led a strike against President Hugo Chavez after a judge ordered him and a union boss arrested for rebellion, opposition leaders said.

Eight heavily armed men grabbed Carlos Fernandez at a restaurant in eastern Caracas early and fired shots in the air to keep back protesters before bundling him into a car, witnesses and opposition representatives said.

Foes of Chavez quickly condemned the order to detain Fernandez, the head of the Fedecamaras business chamber, as intimidation by the leftist leader they accuse of wielding power like a dictator.

"This is one more demonstration of intimidation," said opposition negotiator Rafael Alfonzo. "This is completely outside of the law," he said.

A judge told state television that Fernandez and union chief Carlos Ortega, who spearheaded the two-month opposition strike started in December to try and oust Chavez, were ordered detained for civilian rebellion, sabotage and other charges.

An official from the security police could not immediately confirm that officers from the agency were involved in the incident.

Chavez, who was first elected in 1998 and who survived a coup in April, has taken a hard-line stance against his opponents since strike leaders lifted the shutdown in early February to ease the burden on the private sector.

Branding his enemies "terrorists" and "coup plotters," Chavez has vowed to crack down on foes he accuses of trying to topple him by sabotaging the nation's vital oil industry. He has also introduced tight currency curbs and price controls to shore up the weakened economy.

The strike briefly crippled the oil industry of the world's No. 5 petroleum exporter as part of the opposition campaign to push Chavez into resigning and accepting early elections.

But the combative Venezuelan leader has so far rejected calls for a vote. Using troops and replacement crews, Chavez has fought back against the strikers as he battles to restart the oil exports that provide half of state revenues.

Three months of negotiations between the two sides have made little progress toward hammering out an agreement on elections. But earlier this week government and opposition negotiators signed a nonviolence pact to ease tensions.

www.vheadline.com Posted: Thursday, February 20, 2003 By: W. E. Gutman

International commentarist W. E. Gutman writes: A nationwide survey released at year's end by the Anti-Defamation League (ADL) shows an increase in the number of Americans manifesting anti-Semitic attitudes, reversing a 10-year decline and raising concerns that "an undercurrent of Jewish hatred persists in America."

Conducted by an independent polling organization, the nationwide survey reveals that 17% of Americans -- or about 35 million adults -- hold views about Jews that are "unquestionably anti-Semitic." Previous surveys commissioned by the ADL over the last decade had indicated that anti-Semitism was in decline.

"We are greatly concerned that many of the gains we had seen in building a more tolerant America have not taken hold as firmly as we had hoped, and have to some degree been reversed," says Abraham H. Foxman, ADL National Director.  "While there are many factors at play, all of the evidence suggests that a strong undercurrent of hared toward Jews persists in America."

One of the most unsettling findings of the ADL poll concerns Hispanic Americans, the fastest growing minority in America. The poll reveals an extraordinary gap between those born in the US and those born abroad. The survey reports that while 20% of Hispanics born in the US express vague feelings of antipathy against the Jews, 44% of foreign-born Hispanics harbor hard-core, fossilized anti-Semitic convictions. This suggests that anti-Semitic views pre-exist entry into the US and that these views continue to flourish in the insular, clannish and xenophobic atmosphere pervasive in Hispanic society in the US.

The anti-Semitic propensities of foreign-born Hispanics are not surprising. Religious background and indoctrination have always played a role in determining one's attitude toward Jews. There is no doubt that this is a reflection of what is being learned about Jews in the schools, churches and communities of Latin American nations, where Jews are, for the most part, a microscopic minority.

According to human rights monitors, anti-Semitism in Latin America appears to be highest in nations that the smallest number of Jews. The larger the Jewish communities, such as in Argentina, Brazil and Venezuela, the less palpable and more diffuse are anti-Jewish sentiments. These sentiments appear to be at a peak in Mexico and Central America, as well as in Ecuador and Bolivia where where Jewish families number barely in the dozens.

Survey results conclude that:

-- Anti-Semitic attitudes are up; the most widely held stereotype is that "Jews have too much power in the US."

-- Anti-Semitism is a function of education. Less educated people are more likely to hold anti-Semitic views.

-- Anti-Israel feelings trigger anti-Semitism. For the first time, negative attitudes toward Israel and concern that American Jews wield influence over U.S. Middle East policy are helping to foster anti-Semitic beliefs.

-- Anti-Israel sentiments are used to fuel, legitimize and rationalize anti-Semitism."

-- Anti-Semitism among foreign-born Hispanics is high. Perceptions of "Jewish control," influence and power as well as more traditional canards about Jews, religion and ethical practices appear to be driving anti-Semitism among foreign-born Hispanics.

For example, more than half of foreign-born Hispanics agree with the assertion that "Jews don't care what happens to anyone but their own kind," whereas nearly half were raised to believe that "Jews are responsible for the death of Christ."

Apt to fall into the most anti-Semitic category are:

-- Those who believe that Jews have too much influence over US foreign policy in the Middle East.

-- Those who view US policy tilting too much toward Israel.

-- Those who predict that the US is more likely to be targeted for terrorist attacks because of America's support of Israel.

The tragic events of September 11 and the crisis in the Middle East have clearly had an impact on the growth of anti-Semitism in America. As these life-altering events have transformed us as a nation, they have also resurrected the anti-Semitism that lay dormant beneath the surface.

The explosive spread of Islam, which runs a formidable worldwide proselytizing machine, the spate of conversions to Islam taking place in Latin America and the unusually high rate of anti-Semitism among Hispanics in the U.S. are part of a trend issued from separate but converging dynamic processes. This alarming phenomenon, at a time of unease in a world ever closer to the brink of war, adds yet another dimension to the evil that spawned yesteryear's nightmares.

• W. E. Gutman is a veteran journalist. He lives and works in southern California.