In addition, Argentina - another "edge" or "boundary condition" country - is a place well worth watching right now.
Note especially in the articles below:
1) Argentine peso has been tied one-to-one to the US dollar for some time;
2) Tax on financial transactions;
3) 35% tariff on consumer - but not producer - imports from outside Mercosur;
4) "Mr Cavallo was not expected to get the authority to revamp the labour
code or touch state pensions."
5) FT admits, "successive austerity packages have only served to deepen the
recession."
6) (Cavallo) "quickly announced that plans to cut spending on teachers'
wages and universities would be abandoned." - due to pressure from the Left
-Brad Mayer
Oakland, CA
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>THE FTAA AND THE WTO:
>THE META-PROGRAM FOR GLOBAL CORPORATE RULE
>
>by John McMurtry, PhD.
>Professor of Philosophy at the University of Guelph, Ontario, Canada
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Argentina acts to boost economy
FT.com site; Mar 26, 2001 BY THOMAS CATAN AND RICHARD LAPPER IN BUENOS AIRES
Argentina implemented a range of emergency measures at the weekend designed to restart the economy and allay fears of a potentially disastrous debt default.
Among the measures coming into effect this week is a new tax on financial transactions that is expected to raise up to $6bn. President Fernando de la Rua also decreed changes to import tariffs over the weekend to protect local industry and encourage investment.
Tariffs on consumer goods coming from outside the Mercosur trading bloc will be raised to 35 per cent - the maximum allowed under the four-country agreement. At the same time, tariffs on capital goods imported by Argentine businesses will be cut to zero.
The changes are part of the "Competitiveness Law" unveiled last Wednesday by Domingo Cavallo, the new economy minister. The plan seeks to slash costs for Argentine industry by 20 per cent to compensate for the overvaluation of the peso, which has been tied one-to-one to the dollar for a decade. The strong dollar has contributed to the country's inability to climb out of a 33-month recession, raising fears that it could become unable to service its $124bn in foreign debt.
Congress was due to vote on Sunday night on the remainder of Mr Cavallo's plan, under which he requests sweeping emergency powers.
Legislators were expected to grant him the extraordinary powers he has requested, albeit with some important limits. For example, Mr Cavallo was not expected to get the authority to revamp the labour code or touch state pensions.
Mr Cavallo, who became the country's third economy minister in as many weeks last Tuesday, has radically altered the prescription for the ailing economy. Previous ministers have sought to cut the fiscal deficit and lower interest rates to get the country growing again. But successive austerity packages have only served to deepen the recession.
Mr Cavallo, by contrast, is seeking to turn around medium-term expectations in Argentina and boost tax collection to improve the national accounts. But investors remain nervous about whether the plan will work.
This will be a crucial week for Argentina's efforts to continue to service its debt. On Friday, Daniel Marx, the finance secretary, said he was negotiating some bridging finance from banks to dispel worries about the country's ability to meet payments on its debt in May and July. He added that the country was able to meet all its debt payments this year without issuing any external debt. ------------------------------------------------------------------------------------------------------ And also, the same day: -------------------------------------------------------------------------------------------------------- THE AMERICAS & INTERNATIONAL ECONOMY: Argentina today: more carnival than confrontation: You know things have changed when, on the 25th anniversary of the country's last military coup, the Revolutionary Communists start pogo-jumping
Financial Times, Mar 26, 2001 By THOMAS CATAN and RICHARD LAPPER
All along the Avenida de Mayo in Buenos Aires there were reminders at the weekend of Argentina's bloody recent history.
An estimated 50,000 demonstrators commemorated the 25th anniversary of the last military coup, many holding aloft grainy black-and-white photographs of relatives and friends who disappeared during the dictatorship.
Others pored over posters showing where the military leaders responsible for the deaths of an estimated 30,000 people live today, long ago set free under a general amnesty. Fresh graffiti evoked the guerrilla campaign of the nationalist revolutionaries crushed in the repression that followed. "Montoneros - the same struggle" read the slogans.
Amid Argentina's worst political crisis in a decade, there were fears that Saturday's march could serve as the trigger for widespread - and potentially violent - opposition to the enfeebled administration of President Fernando de la Rua.
But it turned out to be more carnival than confrontation: a demonstration of fire-eaters and clowns rather than riot police and tear gas. Opposite the famous Tortoni cafe, demonstrators from the Revolutionary Communist party started pogo-jumping. "I thought it would be different. We were expecting worse," said the barman at The Clover, a nearby Irish pub.
Indeed, at the end of another convulsive week in Argentine politics, there are signs that the country could pull out of its deep crisis. The arrival in government of Domingo Cavallo - an avuncular figure known by supporters as "Mingo" - has led to a change of mood, generating in the words of Jorge Luis Velazquez, columnist in the daily newspaper Clarin, an "economic and political climate that was unthinkable only a month ago".
In the early 1990s, Mr Cavallo won an international reputation for defeating hyperinflation and restoring stability to Argentina. But the leftwing parties, trades unions and community groups that organised Saturday's march blame him for the job losses and austerity that accompanied reform.
Many draw comparisons between the military coup of 1976 and the market-based economic model that has followed the return to democracy. "The coup - terror of blood; the market - terror of hunger" read one banner. The newspaper of the small Workers' party makes much of the fact that Mr Cavallo was central bank chief for a time in the dying days of the military government.
"It is the same model," says Andres Ramon Castillo, a former Montonero militant who is now an organiser for the bank workers' union. "After the disappearances of people we are now seeing the disappearance of the state and our industries."
In fact, in his first few days in office, Mr Cavallo has done much to defuse social tensions. After being named economy minister last Monday, he quickly announced that plans to cut spending on teachers' wages and universities would be abandoned. These proposals, announced just a few days earlier, had sparked widespread protests from all shades of the political spectrum and raised the prospect that the leftwingers who organised Saturday's march might win much broader support for their cause.
Argentina still needs to reorganise its public finances to meet targets agreed with the International Monetary Fund as part of a broader Dollars 39.7bn (Pounds 28bn) international support package and to avoid default on its external debt. Mr Cavallo, however, has opted to raise the money through a new tax to be charged on bank deposits and credits.
In addition, Mr Cavallo is acting to revive Argentina's stagnant economy, now in its 33rd successive month of recession, raising hopes that the steady recent rise in unemployment could be stemmed. Last Wednesday - 10 years and one day after he announced his successful anti-inflation plan - Mr Cavallo launched a Competitiveness Law, offering tax and tariff breaks for local industrialists in a bid to stimulate fresh investment.
On Friday, leaders of the opposition Peronists, who control most provincial governorships and a majority in the upper house of Congress, said they would support Mr Cavallo's plans. International investors are still nervous but there were signs last week that Mr Cavallo is beginning to regain their confidence, with bond prices recovering strongly in the final hour of trading.
All this has been in sharp contrast to the drift of the past few months, in which Mr De la Rua has made decisions one day, only to change course a few days afterwards. Although there is no danger of military intervention today, many Argentines say that the steady disintegration of Mr De la Rua's administration has reawakened memories of Argentina's troubled past.
"It is clear that a generation ago, this situation would have ended with a coup," says Gerardo Fuksman, a sociologist.
This time around, for the moment at least, many Argentines appear willing to allow Mr Cavallo to fill that gap.
Emergency measures aim to boost ailing economy
Argentina implemented a range of emergency measures at the weekend designed to restart the economy and allay fears of a potentially disastrous debt default, write Thomas Catan and Richard Lapper in Buenos Aires.
Among the measures coming into effect this week is a new tax on financial transactions that is expected to raise up to Dollars 6bn (Pounds 4.3bn). President Fernando de la Rua also decreed changes to import tariffs over the weekend to protect local industry and encourage investment.
Tariffs on consumer goods coming from outside the Mercosur trading bloc will be raised to 35 per cent - the maximum allowed under the four-country agreement. At the same time, tariffs on capital goods imported by Argentine businesses will be cut to zero.
The changes are part of measures unveiled by Domingo Cavallo, economy minister. The plan seeks to slash costs for industry by 20 per cent to compensate for the overvaluation of the peso, which has been tied one-to-one to the dollar for a decade. The strong dollar has contributed to the country's inability to climb out of its recession, raising fears that it could become unable to service its Dollars 124bn in foreign debt.
Congress was due to vote last night on the remainder of Mr Cavallo's plan, under which he requests sweeping emergency powers.