HEMISPHERE HIGHLIGHTS
AMERICAS PROGRAM

February 1, 2002, Volume I Issue 2

ARGENTINA CRISIS (STILL); BUSH'S HEMISPHERE SPEECH; CORRUPTION CHARGES IN MEXICO

ARGENTINA

No Easing of Crisis in Argentina. Argentina started the month with protests on its streets and is ending it the same way. In the last such demonstration held on January 25, 10,000 people marched to the Plaza de Mayo to ask for the unfreezing of the banking system and grander objectives, such as an end to corruption and the three-year recession. Although less voluminous than the protests that unseated former president Fernando de la Rúa and his replacement, Rodolfo Rodríguez Saa, they are nevertheless unsettling and all indications point to the marches getting larger and more violent. During the last protest, the police felt compelled to fire tear gas and rubber bullets, wounding at least 13 people. President Eduardo Duhalde-in office for only one month-is urging calm and patience, but his political honeymoon, if he had any, is over. Particularly debilitating to his presidency has been his backtracking on his guarantees on banking system deposits. Within three weeks, Duhalde has gone from promising to respect the currency denomination (U.S. dollars) of the banking system's deposits, to putting restrictions of anywhere between one to three years on when monies could be withdrawn, to more recent promises to keep the purchasing value of the deposits in local currency. The government has yet to explain how it plans to meet this last objective or most of its stated economic objectives, but it will be obliged to explain in the next few days when Argentina's new foreign minister and ambassador to the United States respectively, Carlos Ruckauf and Diego Guelar, make their case in Washington for financial assistance. Both the IMF and the U.S. Treasury Department have gone out of their way to underscore that Duhalde's economic team must propose  a "sustainable" economic program for Argentina to receive any aid. As President George W. Bush conveyed in a recent speech before the World Affairs Council, Washington wants to give Argentina a helping hand, but will not unless it has confidence that this assistance will not just disappear into a black hole. Miguel Díaz

HEMISPHERIC

Bush's Focus on Latin America. The president's speech to the World Affairs Council focused on a number of topics regularly debated inside the beltway, but less so in the country at large. On trade, Bush called for quick passage of trade promotion authority in the Senate, pursuing a free-trade agreement with Central America as well as free trade in the hemisphere as a whole, and renewing the Andean Trade Preferences Act. With an eye on possible protectionist developments in Argentina that could be contagious, he cautioned Latin American countries not to retreat from market reforms. He said that the United States would support international financial support once Argentina has a "sound and sustainable economic plan." The president accepted the invitation to speak presumably to demonstrate that, despite the security concerns that have had pride of place since September 11, Latin America has not disappeared from his agenda. One must assume that the speech was not a one-shot exercise, but that the administration will follow through on the key commitments it contained. Sidney Weintraub

MEXICO

Mexico is facing its first political scandal of the new year, as headlines abound regarding the alleged funneling of Pemex funds (potentially totaling US$11 million) into the 2000 presidential campaign of PRI candidate Francisco Labastida. According to the office of anti-corruption Czar, the allegations involve irregularities in transactions from Pemex Corporate, to the oil workers Union (STPRM). In addition, speculation has arisen as to whether or not the money was then funneled through foreign bank accounts back to Mexico and into campaign coffers. Those who voted President Vicente Fox into office in the hopes he would dramatically clean up Mexico and root out corruption may view this as a step in the right direction; however the timing of the investigation going public has wide sweeping implications. The most significant repercussions may likely be felt in the PRI's leadership elections on February 24. Indeed, some have speculated as to whether the Pemex scandal is less about executive-legislative tensions  and more about the internal vying  for power between party presidential candidates Roberto Madrazo and Beatriz Paredes. The Pemex controversy is believed to harm the prospects of Beatrice Paredes, given her proximity to the Labastida presidential campaign, and to strengthen the candidacy of Roberto Madrazo. The sanctions for the PRI could be fines or, in the most extreme and unlikely case, the potential revocation of the PRI's party registration by the Federal Electoral Institute (IFE) if it can be proven that the money in question actually did go to the campaign or to the party. Short of a smoking gun, sanctions are unlikely given the complexity of substantiating such allegations. President Fox may now encounter greater difficulty in building consensus, particularly in the case of energy reform, in the next session of Congress beginning March 15 of this year-especially with some priistas accusing him of deliberately using the scandal to  strong-arm  them into legislating his agenda through Congress. Armand Peschard and Meghan Bishop

COLOMBIA

Colombia: Getting Serious about Peace? The government of Colombia announced January 20 that it would give the FARC, the country's largest guerrilla group, a further extension of its right to occupy a 16,000km² demilitarized zone east of the Andes. Pastrana turned the region over to the guerrillas three years ago, soon after he took office, hoping that he could lure them into serious peace negotiations. With his presidential term coming to an end next August and with the guerrillas toughening their demands, the president threatened earlier in this month to have the military reoccupy the zone. UN representative James Lemoyne and 10 resident ambassadors-but not the United States-engaged in intensive mediation that produced the president's order to leave the zone in guerrilla hands until April 10 and the FARC's commitment to a timetable for completing negotiation of measures to lessen violence and kidnapping. By extending the guerrilla's safe haven the government kept a "peace process" alive, at least until after the nationwide congressional and local election March 26. The FARC, perhaps for the first time, backed away from a key demand (that the government loosen its controls around the demilitarized zone). Colombian observers credit the president's uncharacteristic threat, the strengthened armed forces, and the timely role of the UN and other ambassadors for this accomplishment. Yet the agreement reached is still only a timetable for more talk. Peace will remain a central topic in the debate among the candidates leading up to the presidential elections in late May. Phillip McLean

CUBA

For the first time in 40 years, shipments of U.S. agricultural products are landing in Cuba, the result of U.S. legislation last year easing 40-year sanctions to allow humanitarian sales of food, as long as financing comes neither from the U.S. government nor the U.S. private sector. A group of lawmakers representing farming states and agribusiness interests championed this $30 million deal for Cuba to buy U.S. corn, wheat, soy, chicken, and other products. A six-member House of Representatives delegation visited the island this month to continue to push for additional openings in the embargo, including future legislation allowing private financing from U.S. companies. In a separate marathon meeting with President Fidel Castro, Senator Arlen Specter of Pennsylvania and Senator Lincoln Chafee of Rhode Island discussed other issues such as U.S.-Cuban cooperation on counterterrorism and drug interdiction. The increasing number of congressional and business visits to Cuba encouraging a change in U.S. Cuba policy is a counterweight to Bush's determination to uphold the status quo. The role of Miami's pro-embargo exile community in Governor Jeb Bush's campaign in Florida next year will further entrench the White House, even as congressional efforts to derail the policy intensify. Amy Coughenour

VENEZUELA

Ambassador to Washington abruptly resigns. Venezuelan ambassador Ignacio Arcaya is the latest casualty of embattled President Hugo Chávez' unhappiness with his country's deteriorating relationship with the United States. Arcaya, who had been in his post for less than a year, abruptly resigned earlier this month after a tense meeting with Chávez and Foreign Minister Luis Alfonso Davila in New York when Chàvez accused him of not defending his "Bolivarian Revolution" with sufficient fervor. Chávez also reportedly criticized the ambassador for his inability to arrange a meeting with Bush. The Venezuelan president was particularly incensed when U.S. ambassador Donna Hrinak paid a highly publicized visit to the Caracas daily El Nacional to emphasize U.S. support for a free press and when State Department spokesman Richard Boucher said Washington was "concerned with attempts by Chávez supporters to intimidate both the opposition politicians and the press." In a scathing editorial titled "Dictator without a Mask," El Nacional blamed Chávez for a noisy demonstration staged outside its offices by about 100 followers of the president, accusing him of the same "corruption and open use of violence" that he had criticized in previous governments. Chávez claims he has not violated press freedom, arguing that, unlike previous administrations, he has not jailed any journalists. Nevertheless, he wholeheartedly supported the recent protests at El Nacional, saying that they were justified because of "media lies." Already tense relations between the president and the opposition-dominated media are not likely to improve anytime soon as Chávez continues to practice confrontation with his political opponents. Lowell R. Fleischer

Miquilena Resigns; Tens of Thousands Take to Streets. Just one day after tens of thousands of demonstrators took to the streets of Caracas to express their views-pro and con-about the government of Hugo Chávez, one of the president's closest collaborators and the architect of his Fifth Republic Movement, Luis Miquilena, broke with him and resigned as interior minister. The octogenarian Miquilena was reportedly unhappy with Chávez' increasingly authoritarian conduct. Violence did not break out during the January 23 celebration of the downfall of dictator Marcos Pérez Jiménez as an antigovernment crowd estimated at more than 100,000 people banged pots, pans, and drums and shouted anti-Chávez slogans. Chávez himself, wearing his trademark red beret, marched with the progovernment demonstrators, who claimed to equal the opponents in numbers. More than 3,000 police and National Guard troops kept the two groups apart. During the president's January 15 state of the union speech, Miquilena sat in an area reserved for guests and not with the rest of the cabinet. Many perceived this as public confirmation of his widely reported split with the president. Also providing fuel for the rumor mill, for the first time in Venezuela's modern history the U.S. ambassador was not present for the speech. The unexpectedly large number of marchers who took part in the antigovernment demonstration, sponsored initially by the two disgraced old-line political parties, Accion Democratica and COPEI, is further evidence that the opposition to the Chávez regime continues to grow. Such demonstrations are likely to continue and Chávez will continue to look for an excuse to declare martial law and seize even more power. Lowell R. Fleischer

HAITI AND THE DOMINICAN REPUBLIC

On January 17, Haitian president Jean Bertrand Aristide signed an accord with Dominican president Rafael Hipolito Mejía during his first official visit to the Dominican Republic since taking office in February 2000. Besides the usual commitments to mutual respect and cooperation, the wide-ranging accord sought to tighten border security, reinforce the countries' right to deport undocumented foreign nationals, expand commercial, cultural, and social ties, and create joint development projects. A main purpose of the visit was to pressure Mejía to hand over Guy Philippe, former police commissioner accused of staging a December coup on the National Palace, who has been hiding in the Dominican Republic. Although Mejía has refused, feel-good rhetoric about respecting human rights and fundamental freedoms abounded, with a "neutrality" clause appended to ensure that neither country meddles in the other's affairs. The credibility of the accord in the face of escalating violence, persecution of the press and political foes, and a complete breakdown of democracy in Haiti, is shaky at best and, at worst, an attempt to legitimize a discredited government by taking advantage of Dominican good will. Amy Coughenour

CANADA

Canada Trade. Three disputes with Canada are garnering attention. The largest concerns softwood lumber. In September a U.S. preliminary determination was issued for a 19.31 percent tariff on Canadian softwood imports. In December, talks stalled after the U.S. industry complainant, the Coalition for Fair Lumber Imports (CFLI), rejected reforms proposed by Canadian provinces to settle the dispute. The U.S. Trade Representative (USTR) asked the CFLI to submit a list of reforms it would accept from the provinces, which is expected soon. In January, Canada asked the WTO to name panelists to address the dispute in Geneva. Meanwhile, a Canadian firm launched a suit of dubious merit against the U.S. government under NAFTA Chapter 11, arguing that U.S. harassment of Canada's softwood firms amounted to an expropriation of U.S. market access rights. In addition to softwood, USTR is pursuing a weak case against the Canadian Wheat Board, a marketing board that has drawn the ire of some U.S. farm groups, and Canadian steel firms fear they will be included in new quotas that the Bush administration is considering for a range of foreign steel-producing countries. With the Canadian economy already in recession, Canadian view these disputes bitterly as friendly fire against an ally. Christopher Sands

Canada and the War. On January 7 Canada announced that it would send 750 ground troops to fight in Kandahar and be based with U.S. forces at Fort Rhino. This will be the first time since World War II that U.S. and Canadian troops have fought side by side without a United Nations or NATO aegis for the mission. Critics, including former foreign minister Lloyd Axworthy, charged that no crisis could justify the loss of sovereignty implied by Canadian troops taking direction from U.S. commanders in the field. However, all prior attempts by Ottawa to negotiate a way for Canadian forces to join the crowded UN mission in Kabul under British command failed, partially due to Canada's inability to provision its soldiers so far from home. The United States agreed to transport and provide logistic support for the Canadians, who will free up commandos for Phase 2 operations outside Afghanistan. U.S. officials were willing to facilitate Canada's participation in thanks for what they consider more essential Canadian efforts to upgrade their domestic security measures to help with the war effort on the North American front. Christopher Sands

Canada Politics. Prime Minister Jean Chrétien's government has a new look following the most significant cabinet shuffle since 1993, when the Liberals came to power, affecting 30 cabinet posts. John Manley, who distinguished himself as foreign minister after September 11 with his no-nonsense support for the United States, was promoted to become deputy prime minister and retains responsibility for coordinating homeland security arrangements. He will be the lead minister for U.S. relations (encompassing virtually all portfolios). The new foreign minister is Bill Graham, who served as chair of the House of Commons committee on foreign affairs and international trade for several years. He is expected to make Latin America, the Caribbean, and Africa his priority areas. Other key posts were left unchanged, with experienced and able figures such as Paul Martin as finance minister, Pierre Pettigrew as international trade minister, Art Eggleton as wartime defense minister, and David Anderson as environment minister. Chrétien dropped scandal-plagued Maria Minna, however, in favor of talented cabinet newcomer Susan Whelan as international cooperation minister, the portfolio that oversees Canada's foreign aid. Overall, the new cabinet is stronger than before-a sign that Chrétien may be planning to continue as prime minister, or perhaps that he is ensuring that the government, and the Liberal Party, will be in good hands if he decides to retire before the party's 2003 leadership review. Christopher Sands

Hemisphere Highlights is published monthly by the Americas Program at the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary.
 

CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the authors.
 

© 2002 by the Center for Strategic and International Studies.