www.forbes.com Reuters, 03.07.03, 1:29 PM ET By Susan Schneider NEW YORK, March 7 (Reuters) - Brazilian sovereign bonds held steady on Friday after this week's weighty 3 percent jump, as investors remained sanguine about the new government's economic policies, but hesitated to take big positions ahead of the weekend. Brazil's portion of J.P. Morgan's Emerging Market Bond Index Plus gained 0.26 percent in terms of daily returns as the benchmark C bond <BRAZILC=RR> lost 0.125 points to 77.125 bid. With Brazil comprising a weighty one-fifth share of the EMBI- Plus, its scant movement kept the broader market little changed on the day. The horizontal day for market bellwether Brazil came as investors digested a grim U.S. employment report and took a breather from a debt rally fueled by hopes Brazilian President Luiz Inacio Lula da Silva can stitch together support to overhaul the nation's pension and tax regimes. "We saw a little bit of reaction today from the economic number out of the U.S. There was a little bit of selling. But in general, the tone is still strong, everyone believes the whole Brazil story," said an emerging debt trader. The U.S. Labor Department said on Friday that the economy suffered its worst jobs drop since the aftermath of the Sept. 11 attacks, with a 308,000 non-farm payrolls drop in February. The plunge came as worries about a possible U.S.-led attack on Iraq prompted caution in hiring. Yet Brazil has largely shrugged off global jitters about the economic fallout of a conflict in Iraq as investors take heart from Lula's reform efforts, which analysts say are needed to shore up the nation's financial health. The country's bonds have surged nearly 17 percent so far this year. Friday's performance extended the trend as the market made little movement after U.S. President George W. Bush said he was ready to go to war even if the United Nations Security Council failed to authorize the use of force against Iraq. Emerging debt also looked past the Friday address of chief U.N. weapons inspectors Hans Blix and Mohamed ElBaradei, said traders. Blix criticized the rate at which Iraq has provided documents on banned weapons, but said there had been some acceleration in Iraq's efforts to disarm since January. "The main thing driving Brazil now is that the opposition jumped on the side of reform. That's what (former president Fernando Henrique) Cardoso tried to do for years, so if they get the politics to agree that something needs to be done on social security and tax reform, I think we'll continue to grind higher," the traded added. While Brazil's share of the EMBI-Plus was largely neutral on the day, traders said the country's bonds saw a touch of profit taking as investors locked in recent gains. "The market is looking heavy. I think there are some people trying to take advantage of this rally to lighten some positions," said another emerging debt trader. Brazil's Par bond <BRAPAR=RR>, for example, shed 0.75 points to 71 bid in midday trading and its DCB bond <BRADCB=RR> shed 0.25 points to 63.75 bid. Turkey's bonds, meanwhile, traded a tad higher as investors continued to hope parliament will reconsider last week's rejection of a U.S. request to use Turkish territory as a base for an Iraqi invasion. Turkey's share of the EMBI-Plus notched 0.28 percent higher on the day, aided by a 0.25 point increase in the benchmark dollar bond <TRGLB30=RR> to 103.5 percent of face value. The nation's bonds veered sharply lower on Monday after the parliament move, which raised concerns the nation's fragile economy would be pummeled by a war without the promise of billions of dollars in U.S. aid. But the tone has improved in recent days as investors eye clues the government may make a second attempt to pass a resolution allowing the stationing of U.S. troops. Sources in Washington said late on Thursday that Turkey could get direct U.S. loans rather than loan guarantees if it grants U.S. troops access to its bases.

reuters.com Fri March 7, 2003 11:41 AM ET By Robin Emmott

PANAMA CITY (Reuters) - Vultures circle overhead at Panama City's putrid refuse mountain on the edge of town as droves of half-naked men, women and children roam the garbage dump looking for anything they can eat, drink, use or sell.

As Panama's economy suffers its worst downturn in more than a decade and with unemployment around 18 percent, more penniless people arrive every day to join the hundreds of scavengers who already live and work at the rubbish mountain.

"It's humiliating, but it's a way to survive," says one rubbish collector, who gave his name only as Euclides.

After 3-1/2 years in office, Panama's populist President Mireya Moscoso of the Arnulfista Party, who was voted in on a platform of poverty reduction, is seen as another Latin American leader who failed to live up to promises to help the destitute.

Many Panamanians are disillusioned with the inability of successive governments to reduce the nation's gulf between rich and poor, one of the most pronounced in Latin America.

With campaigning for the next president already under way a full 15 months before elections, Panama's voters are apparently moving to the left, inspired by the recent victory of Brazil's socialist President Luiz Inacio Lula da Silva, newly elected Lucio Gutierrez of Ecuador and Chile's left-leaning Ricardo Lagos.

"People want change and so the election race has begun very early this time around. There is a real disenchantment with the parties that have run Panama for the past 50 years," said Raul Leis, analyst at political consultancy Ceaspa.

ENTERING THE FRAY

Enter Guillermo Endara of the Liberal Party, a lawyer and former president who is rapidly gaining support among Panama's blue-collar voters.

Coming to the fray as an alternative to the traditional Arnulfista and Partido Revolutionario Democratico (PRD) parties, Endara is promising a Lula-style mix of socialism and wealth redistribution, while still keeping international financial markets happy.

"I've got nothing against prudent fiscal management of the economy. But it is also time we did something for Panama's poor," Endara said at his sea-front apartment in Panama City.

Many voters say the free-market PRD policies of privatizing state-owned companies in the 1990s, when the party was last in power, pushed up the cost of living in Panama and failed to improve the lot of the poor.

The populist Arnulfista Party, formed in the 1940s by former president Arnulfo Arias, is seen as lacking any clear ideology, and is perennially criticized for tailoring its policies for the benefit of Panama's oligarchy.

That point is not lost on Endara.

"The role of the state is to protect the weak. Why in Panama are we always protecting those who are already so strong?," the 66-year-old candidate told Reuters.

WEALTH GAP

More than 1 million Panamanians or 40 percent of the population live in poverty with 25 percent living in extreme poverty and surviving on around $50 a month.

The proportion has barely changed since 1970 despite successful endeavors to make Panama an international transport and financial hub with economic growth as high as 9 percent a year during the 1990s.

Although Panama is classed as a middle-income country, the richest 20 percent of the population earn 60 percent of the country's annual income while the poorest fifth earn just 2 percent, according to United Nations and World Bank studies.

University of Panama professors Ivan Quintero and William Hughes calculate a group of about 80 people, many linked by business and family ties, control around half of the country's annual gross domestic product, some $5.5 billion.

"This means the economically powerful will always be in power no matter who is in government," Quintero and Hughes wrote in their recent study "Who owns Panama?"

Endara, whose support in opinion polls has risen to about 30 percent since announcing his candidacy in January, says he wants to try to break down Panama's oligarchy.

He aims to channel government revenues into education, housing for the poor and support for the agricultural sector, which employs a quarter of Panama's working population.

In line with Lula of Brazil, he is also skeptical about the benefits of an Americas-wide free trade area slated for 2005.

"We've got to protect our industries and the people who work in them,," Endara said

"PANAMA NEEDS A REVOLUTION"

Endara's closest challenger is likely to be Martin Torrijos of the PRD who trails him slightly in opinion polls. Torrijos is son of Omar Torrijos who ruled Panama from 1968 to 1981.

Three Arnulfista contenders including former Foreign Minister Jose Miguel Aleman are expected to compete in a primary to select the party's candidate, and minor parties are also likely to field candidates.

Endara is seen as a credible figure because as president in 1989 to 1994 he rebuilt Panama's trampled economy after the dictatorship of Gen. Manuel Noriega in the 1980s.

Endara won the May 1989 election but was kept from the presidency as the results were annulled by Noriega. Endara was installed as president by the United States in December 1989 after the U.S military invasion to oust Noriega.

Endara aims to revitalize the economy once again if elected. The economy under Moscoso's Arnulfista Party averaged just 1.6 percent growth a year since 1999, compared with 5 percent during the 1990s, according to Finance Ministry data.

But his critics say he will struggle to bring about real change in Panama, where the sight of new sports cars flashing past one-legged beggars is all too familiar.

"Panama needs a revolution to bring change. But the poor are ultimately too disorganized to challenge the oligarchy," says sociologist and political analyst Danilo Toro at the University of Panama.

"I wouldn't vote for any president. They are all crooks that do nothing for the people," says 33-year-old Gabriel as he fills up bags of discarded laundry detergent on Panama City's garbage mountain, which he later hopes to sell.

www.agriculture.com

BRASILIA, Brazil, March 6 (Reuters) - Brazil's new government on Thursday confirmed genetically modified plantings of key crops like soy were illegal but said it would seek legal ways to market what has been planted so far.

"The government considers that, as a result of a control fault by the previous government, there have been plantings of transgenic soy, which represents an illegality," President Luiz Inacio Lula da Silva's spokesman Andre Singer told reporters.

But Singer, who spoke after a government meeting to discuss the issue, said the agriculture sector was facing a social and economic problem with tens of thousands of farmers depending on this year's harvest, part of which is transgenic.

He did not say whether the plan was to sell existing genetically modified crops at home or abroad. Brazil is the world's No. 2 soybean producer and exporter. The decision should at least partly satisfy producers.

Brazil is the last major soybean exporter to still ban GM crops but it has been finding it increasingly difficult to maintain GM-free status as farmers opted in growing numbers for more profitable genetically modified soybeans.

Meanwhile, environmental and consumer groups have been resisting any moves to allow the sale of transgenic products, citing safety concerns.

Harvesting is already well under way in Mato Grosso and Parana, the two main soy producing states, and will soon start in No. 3 Rio Grande do Sul.

Market sources say up to 80 percent of the crop is planted with transgenic beans, although Agriculture Minister Roberto Rodrigues has said recently the state had only eight percent of the transgenic crop.

cc Reuters 03/07/2003 05:36 a.m.CDT

www.hindustantimes.com AP Rio de Janeiro, Brazil, March 7 In a colourful samba rendition of a classical biblical tale, a robe-clad Moses levitated atop a huge Carnival float, giving a dose of mystical magic to the finale of Brazil's famed pre-Lenten bash. An estimated 70,000 people watched as the Mangueira samba group paraded around a gilded 260-foot-long (87-meter) Pharaoh's palace with slaves wearing no more than G-strings and glitter, just enough to avoid breaking a rule against total nudity. The Mangueira theme of the Ten Commandments and its mandate against killing struck a responsive chord with the revellers who packed the city's renowned Sambadrome, singing along as the group passed the grandstands. More than 400,000 people flocked to Rio for Carnival amid unprecedented security after gang violence terrorized the city last week. "He who sows peace, reaps love," sang veteran samba crooner Jamelao, as Mangueira's 4,000 dancers and 300-member drum corps shimmied down Sambadrome's 700-yard (640-meter) parade runway. Nearby, thousands of soldiers with rifles and flak jackets stood guard near Rio's shantytowns and tourist destinations in an unprecedented show of force following five days of mayhem by drug gangs last week. Gang members apparently upset about the transfer of a notorious drug lord out of a Rio prison burned 48 cars and buses, sprayed supermarkets and police posts with gunfire and tossed six small bombs at apartment buildings. In the wake of the violence, about 40,000 police and soldiers one for every 10 Carnival visitors were deployed across Rio de Janeiro state to keep the peace. Scattered violence continued this week, with the killings of eight people in greater Rio on Monday, including two police officers, authorities said. Details were sketchy, but police said many of the incidents were routine and did nothing to upset the celebrations. Most occurred in areas far from the areas where the major Carnival events take place. The Sambadrome parades ended at dawn Tuesday with a closing march by the Imperatriz Leopoldinense group, the last of 14 that strutted their stuff before a team of judges. The samba groups are rated on their music, percussion, costumes, floats and enthusiasm. The winner will be announced Wednesday. Foreigners like Anna Michielotto were amazed at the elaborate choreography each samba group used to score points. "It's not like in Venice," said the 39-year-old museum director from Italy. "You have to participate. I'm coming back next year to parade." The threat of violence didn't stem the flood of visitors to Rio, and the state tourism board TurisRio said virtually all hotel rooms were booked. While visitors were aware of the gang violence, it didn't appear interfere with their partying. "Carnival is just great," said Teresa Golineleo, visiting Rio from the far southern Brazilian state of Santa Catarina. "If there was violence, we didn't see any. All the street parties were beautiful. It's just a great time." As the parades ended, the merriment turned to "blocos" small neighbourhood groups or bands with members wearing improvised costumes as they march through the streets. The blocos are widely considered the most authentic symbol of Carnival. Among the neighbourhood groups parading was the Banda de Ipanema, the city's most traditional Carnival street band. It draws crowds of drag queens and transvestites in outrageously overdone makeup, huge platform shoes and tiny miniskirts, dancing through the posh beachside zone of Ipanema to the sassy beat of trumpets and trombones. In the northeastern city of Salvador, which rivals Rio for the title of Brazil's best Carnival, thousands of revellers jammed streets behind the ear-splitting sound trucks known as electric trios. The more privileged like Brazilian super model Gisele Bundchen rode up top, where she sang along with pop star Daniela Mercury. By contrast, Carnival was muted in Brasilia, the nation's capital. With government offices shut, President Luiz Inacio Lula da Silva declined offers to party and took time to rest. Carnival officially ends on Ash Wednesday, when some stores, banks and government offices begin to reopen and this predominantly Roman Catholic country slowly returns to work. But Rio's Carnival champions will parade again on Saturday, giving the winners and their fans a good excuse to extend the party through the weekend.

www.sfgate.com STAN LEHMAN, Associated Press Writer Thursday, March 6, 2003
(03-06) 19:26 PST SAO PAULO, Brazil (AP) --

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, their longtime defender.

Since Saturday, 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.

"We have waited long enough for the new government to take concrete action in favor of agrarian reform," Joao Paulo Rodrigues, a leader of the of the Landless Rural Workers Movement, or MST, said by phone Thursday. "The wait-and-see period is coming to an end."

The latest invasions are simply a dress rehearsal for a series of nationwide of protests in April, Rodrigues said.

It's an ironic twist for Silva, a former union boss who took office Jan. 1 as Brazil's first left-wing president in 40 years. His Workers Party has long championed land reform and the farmworkers' movement.

Land distribution in Brazil is among the most uneven in the world. Some 90 percent of the land is owned by just 20 percent of the people, while the poorest 40 percent of the population holds just 1 percent.

During his campaign, Silva, better known as Lula, wooed conservative ranchers and landowners by claiming that only he could control the MST. For months, the movement refrained from occupying land.

The peace ended Saturday, when some 1,000 landless farmers occupied a ranch 80 miles west of Sao Paulo.

The invasion was intended "to show Lula there's an unresolved issue he must deal with," said Maria Rodrigues, who coordinated the occupation.

The invasion was peaceful, but ranch owners quickly obtained an eviction order. MST leaders said they would leave the ranch only if the government finds another area to settle the squatters.

On Tuesday, two other properties were occupied in two southern states. On Wednesday, farmworkers took over the offices of the government's Agrarian Reform Institute in two midwestern cities.

Presidential Chief of Staff Jose Dirceu, a former radical who was jailed and exiled by a previous military regime, urged protesters to "respect the limits of democracy."

Silva has not forgotten land reform, the Agrarian Development Ministry said. In January, the government expropriated 500,000 acres of unproductive land for redistribution to landless farmers, the ministry said.