www.koreaherald.co.kr

To many on Wall Street, the U.S. State Department and the IMF, the specter of Che Guevara and past legions of bearded, bandana-wearing commandantes is haunting Latin America. Not without reason. Left-leaning military officers have been on a roll lately. But another ghost haunts the continent: economic ignorance about Latin America in the capitals of the West.

Brazil's new President Luiz Inacio Lula da Silva was elected with the same great expectations that brought the ex-paratrooper and coup leader Hugo Chavez to power in Venezuela three years ago. But it would be unwise to paint President Lula as a dangerous populist just because his political base resembles that of the wayward Chavez.

President Lula's poorest supporters undoubtedly expect him to transform Brazil from the world's most unequal society into a modern social democracy. His middle-class backers are no less eager to see their living standards grow. But despite these expectations, Lula is unlikely to pursue anything like the chaotic "Bolivarian Revolution" Chavez unleashed.

Expectations are always the hardest thing for leftist leaders to manage. For example, Lula's Workers' Party, which rejected pension reforms submitted by the previous Cardoso administration, expects Lula to preserve far more of the scheme than former President Cardoso believed possible.

More demanding are the expectations of speculators and investors in New York and London. They expect Lula to accomplish the equivalent of Nixon's trip to China - to be the leftist who hard-headedly balances Brazil's budget, eliminates foreign investors' fear of debt repudiation via hyperinflation, and gives them fat capital gains on their Brazilian stocks and bonds.

Unlike in Venezuela, there is a viable scenario in which both visions - macroeconomic orthodoxy and greater social justice - can be realized. Suppose Brazilian interest rates stabilize at a high but not astronomical 10 percent, the economy grows at 4 percent per year, and the government achieves a "primary surplus" - a surplus of taxes over program spending - equivalent to 4 percent of GDP. These are all feasible targets; if they are met, then Brazil's government debt will be a stable 60 percent of GDP.

Once investors see that Brazil's fiscal policy is sustainable, and they see continued low interest rates in the industrial core, Brazil will look more attractive. Foreign direct investment will flow in, bringing more access to world-class technology and further boosting economic growth.

Soon, Brazil's government would find itself able to roll over its short-term debt on more favorable terms, as interest rates drop below 10 percent. Reduced debt-service costs would mean that the debt/GDP ratio would start to fall, and government spending on infrastructure, education, healthcare, and redistribution could rise. Reduced government debt would also means more money available for private investment, providing a further boost to labor productivity.

But all of this would require extraordinary patience on the part of the Workers' Party and its supporters, whose hopes must be deferred as immediate priority is given to appeasing the bond market. Will Lula have sufficient command over Brazilian politics to keep his supporters and political cadres happy with promises of jam tomorrow when it is clear that there will be no bread today?

Indeed, a strategy of bond-market appeasement may turn out to be futile, because it places a huge bet on the rationality of global financial markets. But the people in New York and London who set interest rates know little about Brazil. They know that Ipanema is a beach, that the Amazon is a river, that ex-U.S. Treasury Secretary Paul O'Neill worried that money loaned to Brazil would reappear in numbered European bank accounts, and that Lula is a president without administrative experience who heads a party with "workers" in its name.

Remember, these are the type of people who once thought that selling dog food over the Internet was a brilliant business strategy, and that by 2010 Qualcomm would be able to sell two mobile phones a year to everyone in the northern hemisphere. If such people cannot be appeased, or if they panic for no particular reason, then everything goes down the drain. Lula becomes a failure, and Brazil loses another decade as its economy sinks into a depression of uncertain length and suffers inflation of uncertain magnitude.

Once upon a time, Lula would have been able to rely on broad international support, as Cardoso did. The Clinton administration and the IMF educated financial markets about countries that they believed were following sound policies and that had bright long-run growth prospects. The U.S. Treasury under Robert Rubin and Larry Summers was unafraid to join the IMF in betting the store on Mexico, Thailand, Korea and Brazil when they thought the odds were favorable.

Perhaps this assurance of broad international support made it prudent - or at least less imprudent - to appease the financial markets first. It is not at all clear that the Bush administration and today's IMF can offer similar support. So Lula's odds do not look particularly high. But they still look better than the odds attached to any alternative political-economic strategy - and certainly than anything being offered by khaki-clad would-be commandantes.

J. Bradford DeLong is professor of economics at the University of California at Berkeley, and a former assistant U.S. treasury secretary. - Ed.

worldnetdaily.com

Posted: February 27, 2003 1:00 p.m. Eastern By Diana Lynne © 2003 WorldNetDaily.com

Cuban dictator Fidel Castro may be on the hook for hundreds of millions of dollars in damages to an exile group for the shoot-down of its planes by Cuban MiG fighter jets.

A federal court in Fort Lauderdale, Fla., heard testimony yesterday in the damages phase of a lawsuit that seeks in excess of $40 million.

Judicial Watch, the public-interest group that investigates and prosecutes government corruption and abuse, filed the lawsuit last May against Castro, the Republic of Cuba and Castro's brother, Raul, who is the former director of the Cuban Secret Services and commander in chief of the Cuban Air Force.

The lawsuit was filed on behalf of José Basulto, founder and president of the Miami-based humanitarian group Brothers To The Rescue, or BTTR.

"Castro will pay for his murderous acts," said Judicial Watch Chairman and General Counsel Larry Klayman. "Unlike the U.S. government, Judicial Watch is taking action against Castro for this blatant terrorist attack against American citizens."

Basulto is a survivor of the Feb. 24, 1996, attack by Cuban Air Force fighter jets on three unarmed, civilian search-and-rescue aircraft operated by BTTR in international airspace over the Florida Straits. Two aircraft were shot down by Castro's MiGs, resulting in the deaths of Armando Alejandre Jr., Mario De La Pena, Carlos Costa and Pablo Morales.

Brothers to the Rescue pilots shot down by Cuban MiGs in 1996.

Basulto piloted the third Cessna that escaped the attack. Three others on board also survived.

"The aim was to kill me," Basulto told WorldNetDaily. "We were very threatening to Castro."

WorldNetDaily has reported testimony offered in a June 2001 trial of a Cuban spy network that infiltrated exile groups in Miami, including BTTR, provided evidence the BTTR aviators were assassinated.

Double agent Juan Pablo Roque had become a BTTR pilot and supplied information to the Cuban government as well as the FBI. Roque was part of the Cuban Intelligence Service's "Wasp Network." Five members of this espionage ring were convicted of 23 espionage-related charges.

BTTR is a humanitarian, pro-democracy organization that advocates the non-violent establishment of a democracy in Cuba. BTTR volunteers fly search-and-rescue missions for Cuban refugees. Since 1991, BTTR has saved the lives of over 4,200 Cubans seeking to cross the Florida Straits in search of freedom from communist Cuba. BTTR has flown close to 2,000 missions over the area of the 1996 shoot-down.

The incident sparked widespread condemnation of the Cuban government, which claimed at the time the planes were in Cuban airspace.

Castro subsequently admitted to ordering the shoot-down.

"I take full responsibility for what took place," Time magazine quotes him as saying in a Mar. 11, 1996, article.

Castro repeated this confession in a Sept. 3, 1996, interview with CBS News anchor Dan Rather.

On its website, BTTR links to a recording of the MiGs pilots' radio communications during the shoot-down.

Citing "expert independent sources and the U.S. government," BTTR claims to have enough evidence to prove that the Clinton-Gore administration had prior knowledge of the attack, consented to the shoot-down, collaborated with Castro's Cuba to make the crime possible and covered up its own participation by using misinformation and efforts to remove evidence and potential witnesses.

In 1997, families of three of the four victims successfully sued and were awarded $188 million in damages paid from Cuban government assets frozen in U.S. banks. The judge in that case called the attack an act of terrorism.

The Judicial Watch suit was filed under the Antiterrorism and Effective Death Penalty Act of 1996, which enables suits for money damages against foreign states that cause "personal injury or death that was caused by an act of …extrajudicial killing, aircraft sabotage… or the provision of material support or resources for such an act."

The U.S. designated Cuba as a state sponsor of terrorism in 1990. Cuba loses its immunity because of that, according to Klayman.

The Judicial Watch complaint maintains Castro and his brother are known to collaborate with other terrorists and terrorist states, such as Palestinian Authority leader Yasser Arafat, al-Qaida chief Osama bin Laden and the Irish Republican Army.

"[Deputy Defense Secretary] Paul Wolfowitz and everybody admits that he's got bio-chemical labs on his island and that he assists Iran, Iraq and Libya in terrorist activities. He's sponsoring the FARC in Colombia. He's in bed with Hugo Chavez in Venezuela. He's a bigger problem than he was 20 years ago," Klayman said.

The suit never went to trial. Last month, Basulto won by default because neither Castro nor his legal representatives responded to the legal action by the given deadline.

Cuba maintains U.S. courts have no jurisdiction.

This morning, Basulto and his wife provided testimony of their pain and suffering over Basulto being an assassination target and over the wrongful death of the BTTR brothers.

The verdict on the size of the award is expected in a few months.

"I hope [the suit] accomplishes first of all another public indictment of Castro for what he's done so he appears as the criminal and terrorist he is," Basulto told WND.

Basulto plans to use the damages award to "help bring freedom" to Cuba. He said he will disclose the details of plans to help buttress an opposition movement in Cuba when the verdict comes in.

Klayman plans to enforce the award against the frozen assets of the Cuban government in the U.S. and said, if necessary, he would attach accounts of American companies that are doing business with Castro – like travel agencies.

"We're trying Castro for acts of terrorism. He's even worse than Saddam Hussein, and the president needs to do something about him," Klayman told WND. "We're not only trying to get justice for Jose Basulto but we're sending a message to the president that Castro should be next."

Judicial Watch also filed a criminal complaint against Castro and his brother in Brussels, Belgium, for crimes against humanity.

We're trying Castro for acts of terrorism. He's even worse than Saddam Hussein and the president needs to do something about him. We're not only trying to get justice for Jose Basulto but we're sending a message to the president that Castro should be next.   --Larry Klayman, Judicial Watch chairman and general counsel

www.pandct.com 27/02/03

BP announced today that it has agreed to transfer to Perenco its interests in two Venezuelan production assets for $160 million in a cash transaction. The interests are a 60 per cent stake in the Boqueron field in eastern Venezuela and 100 per cent in the DZO (Desarrollo Zulia Occidental) field in the west of the country. BP currently operates both fields. BP's share of production from these fields averaged 26,100 barrels of oil a day in 2002. The deal is subject to approval from PDVSA. This transaction follows a number of recent disposals that BP has made in other parts of the world, including the sale of several UK Southern North Sea gas production assets to Perenco. This deal will strengthen Perenco's overall position in Venezuela.

www.vheadline.com Posted: Thursday, February 27, 2003 By: Robert Rudnicki

A statement from the US Carter Center ... which had played a key role in attempts to find a peaceful resolution to the Venezuelan political crisis ... has strongly criticized the "rapid deterioration in Venezuela" and "deplores the escalation of violence."

The Center is now calling on the international community to redouble its support for initiatives aimed at producing "a peaceful, democratic solution to the present crisis."

The statement also called on President Hugo Chavez Frias, his government, the opposition and media bosses to sign an agreement stating their support for a peaceful means of resolving the crisis. "We believe that verbal violence and threatening tone of political leaders, amplified by the media, encourage violent behavior."

www.vheadline.com Posted: Thursday, February 27, 2003 By: Robert Rudnicki

According to Planning & Development (Cordiplan) Minister Felipe Perez the government is considering changing the current exchange rate of the bolivar, which is pegged at Bs.1,600.00 / Bs.1,596.00 against the US dollar. "We are studying the possibility, we will have 15 days to evaluate and to modify the exchange rate."

• Another option that the government is believed to be considering is changing the rate on a weekly basis under a crawling peg regime. 

Dollars will soon be available through seven privately-owned banks following the signing of currency accords with the Currency Administration Commission (Cadivi) with around $40 million likely to be offered every day. Cadivi president Edgar Hernandez Behrens says he expects dollar applications considered to be priority to begin to be processed early next week.