Adamant: Hardest metal
Monday, March 10, 2003

THE AMERICAS

www.sltrib.com Compiled by ROGER MORTON THE SALT LAKE TRIBUNE

    * Brazil: A wave of invasions of farms and government offices in recent days has abruptly ended a truce between landless farmworkers and President Luiz Inacio Lula da Silva. Since March 1, farmworkers have occupied public and private property in five Brazilian states, loudly resuming their favored tactic to pressure the government to speed up agrarian reform.         * Ecuador: Ecuador and other nations neighboring Colombia should brand the rebels from the largest guerrilla group there as terrorists, the U.S. ambassador to Ecuador said Thursday. Last month's kidnapping of three Americans by the Revolutionary Armed Forces of Colombia, or FARC, "demonstrates that they are terrorists," Kristie Kenney told the newspaper El Universo.         * Peru: Nearly a century after a Yale professor became the first foreigner to reach the Inca citadel of Machu Picchu, Peru is asking the university to give back artifacts he took with him. Hundreds of the ceramics and human bones dug up by expeditions led by Hiram Bingham between 1911 and 1915 went on display at the university's Peabody Museum in late January. The Peabody Museum's Web site says the artifacts became part of its collection "by agreement with the Peruvian government."         * Argentina: The Supreme Court declared unconstitutional on Wednesday a government decree that converted dollar bank accounts to devalued pesos -- a ruling that could ease the way for thousands of Argentines seeking to restore the value of their savings. Hundreds of people danced and hugged on the steps of the courthouse amid shouts of "Give us our money back!" Despite the celebrations, it remained unclear how far-reaching the impact of the court's decision would be on about $9 billion in bank deposits.         * Chile: Former dictator Gen. Augusto Pinochet underwent tests Tuesday to determine whether doctors should replace the pacemaker he has had for seven years, an aide said. No decision was immediately announced on whether the 87-year-old will need a new device to control his heart beat. Nearly 3,200 people were killed during Pinochet's 1973-90 reign.         * Mexico: President Vicente Fox defended his wife's political appearances and social work Thursday, saying he and the first lady are a "presidential couple." Martha Sahagun, the president's former spokeswoman, married him in July 2001. Sahagun resigned after their wedding and took an unpaid post as head of the charitable fund for Mexico's family welfare agency.

Cuba Charges U.S. Thwarting Jailed Spies Appeal

reuters.com Sun March 9, 2003 04:23 PM ET By Marc Frank

HAVANA (Reuters) - Cuba charged on Sunday that the United States was holding five Cubans convicted of spying incommunicado to thwart an April 7 appeal of their sentences, and demanded they be allowed to see lawyers.

Cuban lawmakers said the agents, who are being held in five different federal prisons, were all placed in solitary confinement Feb. 28, and had since been denied contact with lawyers, family and Cuban officials.

"This measure was adopted by Washington with the deliberate purpose of obstructing a just appeals process," the statement by Cuba's National Assembly said, pointing out the lawyers for the five prisoners had planned to consult and visit with them this week to prepare the appeal.

"We demand the five patriotic Cubans be immediately permitted to communicate and meet with their lawyers," the statement said.

The agents were convicted by a Miami court in June 2001 of conspiracy and espionage. Three were sentenced to life in prison, one received a 15-year term and the other 19 years.

The five spies were part of a ring that infiltrated U.S. military bases and Cuban exile groups and fed information to Havana. They said at the trial that they caused no harm to the United States and gathered information solely to defend their homeland from terrorist attacks by Cuban exiles.

Western diplomats said tensions between the two countries, bitter enemies for more than 40 years, had increased in recent weeks due to the Bush administration's more aggressive support for President Fidel Castro's domestic opponents, and perhaps due to the five agent's upcoming appeal.

Cuba and the United States have not had diplomatic relations for four decades and the American mission operates as the U.S. Interests Section of the Swiss embassy in Havana.

Sunday's protest came just three days after Castro threatened to close the U.S. diplomatic mission in Havana for supporting dissidents, whom Havana charges are paid by the United States to subvert the one party socialist state.

The five are seeking a new trial outside of Miami and insist that their conviction was influenced by the hundreds of thousands of Cuban exiles who live there and are hostile to the Castro government.

The spies also claim new information obtained after their conviction will prove their innocence

Havana insists the five were sent to the United States only to spy on Cuban exile groups that have launched repeated attacks against the Communist-run Caribbean island.

Since their arrest in 1998, Cuba has heaped its highest honors on the agents and launched an international campaign to free them.

Privatization Blues

www.msnbc.com By Joseph Contreras NEWSWEEK INTERNATIONAL

Foreign takeovers have sparked a backlash—but for poor governments, there’s no turning back

March 17 issue — When Luiz Inacio Lula Da Silva was sworn in as Brazil’s president in January, he vowed to uphold all existing contractual agreements that he inherited from his predecessor. That was a big promise: Fernando Henrique Cardoso had sold off scores of state companies to the global private sector, raising $103 billion from the auctions. But some of those firms are now putting Lula’s pledge to the test.         THE U.S. CONGLOMERATE AES, for example, missed a deadline last month for paying $329 million on the billion-dollar debt it acquired with the purchase of the state-owned utility Eletropaulo. Officials of a government development bank refused to extend the deadline, suggesting they may be ready to begin foreclosure proceedings against AES, a move that would in effect restore public-sector control over the electric-power company. “Both parties are still talking,” said an energy-industry insider close to the negotiations.         Could the Eletropaulo case trigger a rollback of other unprofitable, or controversial, privatization deals? Worried foreign investors hope not. Many Latin Americans will remember the 1990s as the Great Fire Sale Decade: from shipyards to steelworks, hundreds of billions of dollars in assets changed hands, remaking the skylines from Tijuana to Tierra del Fuego. Out went the lumbering, money-losing dinosaurs of the state-led economy with their alphabet soup of acronyms—YPFB, Entel, Telebras. In came Telefonica, Vivendi, BBVA and other standard-bearers of a new, globalized world. The sell-off brought consumers many benefits—a new phone line could be installed within a few days instead of months, for example—but a price also had to be paid. The rates charged by Eletropaulo and all other newly privatized electric-power and phone companies have soared, creating a consumer backlash that has swept across the hemisphere. “We want to get our companies and natural resources back,” thundered Bolivian opposition leader Evo Morales last year. “We can’t allow them to be concentrated in the hands of a few transnational corporations.” That message helped Morales finish a surprising second in the 2002 Bolivian presidential elections.         Other politicians in the region have adopted a similar stance. In Argentina, where long-suffering consumers once welcomed the sale of inefficient state enterprises, Peronist presidential candidate Nestor Kirchner has called for a revision of all government contracts with the private firms that operate the country’s passenger railroads. Kirchner is responding to growing public dissatisfaction at the poor service offered by some of the private railroad operators. In Peru, former president Alan Garcia has restored some of his political clout by pointedly attacking the long-distance phone rates charged by the Spanish telecommunications giant Telefonica, which acquired the state phone company in 1994. A 1990 opinion survey by the Belo Horizonte polling firm Vox Populi found that about 75 percent of all Brazilians favored privatization policies; a decade later that figure had fallen to 25 percent.         What happened? When prices rise, especially for basic services, foreign owners make an easy target for angry customers. For example, in the fall of 1999, a consortium led by the California engineering corporation Bechtel won a 40-year concession to provide water to the Bolivian city of Cochabamba. Within weeks of its arrival, the company announced hefty rate increases that, in some cases, doubled or even tripled water bills. The price hikes triggered a general strike and violent clashes between police and irate demonstrators in February 2000 that left one dead and hundreds injured. The unrest was so severe that Bechtel managers fled the country. The water contract was abruptly canceled. A spokesman for Bechtel argues that the government raised the rates, by an average of 35 percent, to pay back debt accumulated by the public utility that had previously operated the system.         Experts say the street protests and campaign rhetoric do not presage a wholesale state takeover of companies that went private in the 1990s. Latin American governments simply don’t have the money to buy back and run the companies, let alone invest in their infrastructure. Privatization may be a dirty word at the grass-roots level of many societies, but that view hasn’t necessarily taken hold among the majority of government leaders. Analysts note that, in some cases, rate increases are inevitable when utilities switch from public to private ownership. Public utilities often subsidized their rates, and lost money. Private firms want to make money in exchange for their investments. In a recent survey of Brazilian businessmen, judges, military officers and other members of the country’s elite, political scientists Amaury de Souza and Bolivar Lamounier found that 70 percent still favor opening up the economy to foreign investors. “For a country that is struggling to pay its debts and keep the public deficit under control, re-nationalizing privatized companies is out of the question,” says Roberto Teixeira da Costa, a So Paulo banker who heads the Brazilian Center on Foreign Relations.         Tighter government oversight of privatized companies is a more realistic option. In one of his strongest public pronouncements as president of Brazil, Lula lashed out at the country’s autonomous regulatory agencies responsible for the telecommunications and electricity sectors. He accused them of setting steep rate hikes that are fueling inflation. The problem is more complex. Utility —rates are tightly pegged to a wholesale-price index that is rising by more than 22 percent annually. Lula’s complaint prompted speculation that his government might try to take a more direct hand in determining future rate increases. But executives fear that such market meddling would set a bad precedent—and besides, experts argue that the real problem is that the privatization of Bra-zil’s energy sector hasn’t gone far enough. While private companies distribute three quarters of Brazil’s power, the government still controls 80 percent of electricity generation. Trying to set prices in such a system is a nightmare. “There’s no way to promote competition in a government-controlled market,” says Peter Greiner, who served as Brazil’s Energy secretary in the late 1990s. Newsweek International March 17th Issue •  International Editions Front •  Cover Story: Saddam's War •  World View: Is This the New World Order? •  Letter From America: Let's Make Love, Not War •  International Periscope & Perspectives •  International Mail Call •  The Last Word: Jose Maria Aznar         For all the problems in the energy industry, privatization has mostly worked in Brazil and other countries. Brazil’s steel, banking and telecommunications industries are now booming under private ownership. In the 12 years since Brazil auctioned off its various state-owned Telebras phone companies, the number of fixed telephone lines in the country has nearly doubled. Cellular phones, once a luxury, are now as common as football jerseys. El Salvador has embraced privatization with such gusto that even road maintenance in that country is handled by outside contractors. “We have to separate reality from the noise sometimes,” says Miguel Lacayo, the Economy minister of El Salvador. “The perception can often be that privatization hasn’t been very effective, but the truth of the matter is that things have improved.”         As Lula ponders what to do about an ailing foreign company, he might do well to consider the approach of another Latin politician who didn’t always follow “the model.” Outgoing Ecuadoran President Gustavo Noboa defied an International Monetary Fund edict last year when he scaled back cooking-gas prices that had sparked an uprising among some of the country’s indigenous communities. Noboa felt compelled to make that move, but he still backs privatization as a sound policy tool for promoting economic growth. “Privatization isn’t bad,” he told NEWSWEEK. “Our countries don’t have the money to manage all the companies, and we need serious foreign investors to extract the [natural] resources that we cannot extract on our own.” With improved regulatory oversight, and a fair, long-term focus by corporate owners, there is no reason privatization shouldn’t work.         With Mac Margolis, Peter Hudson and Jimmy Langman in South America, and Dan Moreau in New York

Salomon Brothers High Yield Bond Fund

www.nytimes.com By CAROLE GOULD

INVESTMENT grade bonds now account for about 12 percent of the $587 million Salomon Brothers High Yield Bond fund — a portfolio that typically owns no such high-rated bonds, says its manager, Peter J. Wilby.

He bought those bonds after the crashes of Enron and WorldCom last year. "Other bond managers were running for the exits," Mr. Wilby said, "and that created big opportunities for us."

The overall credit quality of the portfolio's 200 issuers averages a rating of double-B from Standard & Poor's. (Junk bonds are those rated below triple-B.) The portfolio contains big chunks of triple-B bonds as well as single-B bonds bought in recent months.

The fund's trailing 12-month yield is 9.54 percent, compared with 8.94 percent, on average, for high-yield bonds tracked by Morningstar Inc.

The fund's duration, a measure of interest-rate sensitivity, is 4.5 years, mirroring the Salomon Smith Barney High Yield Market index, he said, "so it has junk bonds' typical sensitivity to interest rates."

But Mr. Wilby said that as interest rates rose, an improving economy would reduce credit risk, "allowing a high-yield fund to do quite well in that environment."

The fund returned 1.7 percent a year, on average, for the three years through February and adjusted for its front-end load, or sales charge, of 4.75 percent. That puts it in the top 16 percent of all high-yield bond funds, which lost 2.3 percent a year, on average, according to Morningstar. The fund returned 3.1 percent in the 12 months through February, adjusted for the load, compared with 0.3 percent for its group.(The fund's current 4.5 percent load is not yet part of Morningstar's database.)

Mr. Wilby, 44, is a managing director of Salomon Brothers Asset Management, the fund's adviser.

The fund can buy corporate or government bonds, typically denominated in dollars, anywhere in the world. Emerging-markets debt, which can account for up to 35 percent of assets, is now about 20 percent, Mr. Wilby said, because he is cautious about overseas risks.

The allocation is based on his 12-month forecast of credit quality.

"Even though the U.S. economy is sluggish," he said, "I see credit quality improving because companies have been punished for carrying too much debt and have spent the last year cleaning up their balance sheets."

Other factors should also contribute to a strong high-yield market, he said. As for corporate accounting scandals, the worst should be over, he said, and a war with Iraq has already been factored into the market.

The fund is about 5 percentage points overweight in the cable and media industries, compared with the Salomon Smith Barney High Yield Market index, Mr. Wilby said, because of his aggressive buying of bonds in these sectors during their meltdown last summer.

Mr. Wilby works with eight sector analysts to pick individual issuers. Over all, he said, he tends to avoid rapid-growth companies with no cash flow. Currently, he owns issues like AT&T and Sprint, as well as other beaten-down bonds. He also looks for above-average expected 12-month returns, based on an issue's price and yield.

He visits companies' executives, too. "We want to see that management is competent," he said, "and not so pro-shareholder that they don't understand their fiduciary duty to creditors as well."

He sells bonds when his industry or credit-quality outlook changes or an issuer's credit quality weakens.

In July, Mr. Wilby bought 9.87 percent subordinated debt due in February 2013 and issued by Cablevision Systems, the cable operator. He paid $67 for each $100 of face value. The bonds now trade at $103.50; they are rated B+ by Standard & Poor's.

Mr. Wilby said the bond's price did not reflect "what we believe to be the true value of the assets." The company generates cash flow, he said, and its core business is solid.

  N August, he bought a 7.25 percent coupon bond due in 2011 and issued by Ford Motor Credit. He paid $92.31 for each $100 in face value of the bonds, which now trade at $93.00. They are rated triple-B by Standard & Poor's.

The biggest bond issuers were under the most selling pressure last spring, Mr. Wilby said, as bond investors reduced their holdings of large-capitalization, investment-grade bonds to diversify their portfolios. " Ford started trading like a cheap high-yield bond," he said, partly because investors exaggerated what they saw as Ford's competitive disadvantage to other automakers.

In July, Mr. Wilby bought 12 percent coupon bonds issued by the Brazilian government and maturing in April 2010. "The government was under a lot of pressure" at the time, he said, as investors feared that the Workers' Party candidate for president, Luiz Inácio Lula da Silva, "would not be market friendly" if elected. But Mr. Wilby said he thought that those fears were exaggerated.

Market confidence has improved, he added, after Mr. da Silva's victory in October. The bonds, for which he paid $63.50 for each $100 in face value, now trade at $76.75. 

No lack of issues for women

www.theage.com.au Sunday 9 March 2003, 10:05AM

Hundreds of thousands of women all over the globe turned out to remind the world that they are still far from equal citizens, with a looming war in Iraq adding extra anger to many of their protests.

Events to mark International Women's Day ranged from traditional marches in many cities and towns to a rare conference in the Afghan capital Kabul, an exhibition of dolls representing women's professions in Singapore, an austere ceremony in the North Korean capital Pyongyang and a high-profile protest over violence against young women in France's poor suburbs.

Many of the marches played up the problem of violence against women, and some of them suffered violence, as in famine-hit Zimbabwe, where police beat protesters, some of them with babies on their backs, and arrested others in the city of Bulawayo.

There was also trouble in the southern Indian city of Hyderabad, where firecrackers caused a stampede at a women's march, leaving one person dead and several injured.

A particularly poignant protest in the Bangladeshi capital Dhaka focussed on the horrific problems of acid attacks against women, with a number of victims of the practice, often carried out by unrequited lovers, taking part.    advertisement       advertisement

In Russia, where International Women's Day was made into a major event by the former Soviet authorities and is often marked by gifts of flowers from men, protesters pointed to the prevalence of conjugal violence, which kills more women than a major war.

A non-governmental organisation said some 14,000 women were killed by their partners each year in the country -- as many people as died in all of the 10-year Russian war in Afghanistan.

Violence was also high on the agenda in France, where rapes and other attacks on young women in tough suburbs have recently been in the news.

A campaign sparked by the murder of a woman in a Paris suburb, who was set on fire by her boyfriend in October last year, led to a prominent theme in this year's protests, announcing that young women were "neither whores nor submissive".

In Poland women protested against the restrictions placed on abortion since the fall of communism, burning a copy of the country's law at a rally in Warsaw.

In Afghanistan, 3,000 women attended a conference in the capital Kabul, although President Hamid Karzai failed to show up as planned. Afghan women also got their first radio station, broadcasting mostly educational programmes.

In neighbouring Iran some 300 women took part in the first Women's Day march since the Islamic Revolution of 1979.

In Argentina protests focused on the widespread hunger and misery since the country's economy fell apart, and in neighbouring Brazil, also struggling against widespread poverty, President Luiz Ignacio Lula de Silva asked his compatriots to do more to enhance the status of women.

Long after the first marches began in Asia and Oceania, protesters were still rallying in much of the Americas.

Several of the protests in the United States were due to have an anti-war tinge, with women rallying near the White House in Washington and others in San Francisco planning to project a huge anti-war symbol onto the city's Golden Gate Bridge.