Winds of Change.NET Regional Briefings run on Tuesdays & Wednesdays, and sometimes Fridays too. This Regional Briefing focuses on Latin America, courtesy of Randy Paul.
TOP TOPIC
- Bolivia's natural gas referendum passes, nationalizing its reserves and strengthening President Mesa's hand. What it will mean for the future of Bolivia's control over its vast reserves remains to be seen. More inside...
Other Topics Include: How do you make millions as commander of the armed forces in Latin America's most transparent economy? Ask Augusto Pinochet; Brazil's economy is looking up in several areas, but unemployment and stagnant wages remain stubborn. Will this come back to haunt Lula's party in the state and municipal elections in October and November?; Will former Mexican President Luis Echevarria face justice for the murder of twenty-six student protestors thirty-three years ago; Argentinians remember a tragic anniversary and President Kirchner renews a commitment for justice. Will it succeed?; A film recommendation that shows Colombians in a way that Hollywood never does.
BOLIVIA
- Despite threats of disruption that ultimately didn't materialize, Bolivia's five question referendum regarding the vast reserves of natural gas passed on Sunday, July 18. This certainly seems to strengthen President Carlos Mesa's hand as he presses forward with implementing changes in how Bolivia deals with extracting and selling the second largest reserves of natural gas in the continent.
- You can also depend on Bolivian bloggers Miguel Centellas, Eduardo Avila and Miguel Buitrago for coverage of the natural gas issue as it continues to develop. Centellas has an excellent analysis of the referendum here and Buitrago has more details here.
- In today's New York Times is an interesting profile of Mesa. Eduardo Gamarra, the head of the Latin American Studies program at Miami's Florida International University and a Bolivian said of the task facing President Mesa, "Here you have a guy who has no control over the armed forces, no control over the police . . . He basically controls the palace, and he has the daunting mission of trying to re-found the country."
- I have to agree with Gamarra to the extent that Mesa is hardly out of the woods on this issue. Rumblings of discontent and unwillingness to accept their lot among the indigenous in South America are on the increase and who can blame them? These are the people who globalization has done little to help. If Mesa can convince the indigenous community to trust in him while convincing Congress that he has a strong mandate from the public for the referendum, he will have performed one of history's most impressive balancing acts.
CHILE
- The recent US Senate investigation into Riggs Bank and its flouting of rules designed to prevent money laundering disclosed an interesting fact: former Chilean dictator and accused human rights abuser Augusto Pinochet is a millionaire! The key question is, how did he get this money?
- Although Pinochet left the presidency in 1990 after losing the plebiscite in 1988, he remained a general and head of the armed forces, yet according to the report, the accounts have existed since 1994. Riggs also engaged in several subterfuges to avoid detection of the funds; a maenuver that was most critical when Spanish Judge, Baltazar Garzón was seeking Pinochet's extradition to Spain in 1998-99 and had issued an order to freeze his assets.
- Riggs helped Pinochet set up phony offshore companies; opened accounts in their names and altered names on the accounts to conceal his control of them; conducted transactions through Riggs' own accounts to hide Pinochet's involvement in some cash transactions; hid the existence of his accounts from comptroller's office examiners for two years and initially resisted the regulators' requests for information, much of which happened (including the creation of the phony companies) before Pinochet's arrest in London in October 1998. The bank clearly schemed to hide these assets, including using the general's matronomial name (Ugarte) and his wife's maiden name (Hiriart) to thwart electronic searches for Pinochet's accounts. Now that is some fine personal banking!
- Pinochet's defenders say that the funds (in the neighborhood of US$8 million at Riggs) are legitimate and came from the proceeds of speaking engagements and smart investments in stocks by Pinochet. Nevertheless, this doesn't answer why the scheming to conceal the funds took place.
- Chilean online magazine El Mostrador (Spanish only paid subscription required) quoted current government spokesman, Francisco Vidal as saying that "No one in Chile, absolutely no one in today's Chile could, little by little put together something like this legally." Indeed, Chile is perenially regarded as the most transparent country in Latin America by Transparency International. There was an attempt to mount an investigation into allegations that Pinochet's son, Augusto was receiving kickbacks from military-run businesses, but the military in a maneuver as subtle as a brick wall known as "the Boinazo" on May 28, 1993, intimidated the civilian government into ending the investigation. One hopes that this time the facts will come out.
BRAZIL
- I spent a couple of hours yesterday with my friend Beto and his family as they visited New York. Beto works for US bank in Brazil and had lived in New York working for the same bank for a couple of years. I would be making a grand understatement if I said that he was less than sanguine about Brazil's economy.
- Unemployment dropped .9% in May, but that was from a three year high in and it still remains at a brutal 12.2%. Underemployment still remains a major problem and wages remain stagnant at best. Last weekend thousands marched to protest unemployment and the nation's slow recovery from last year's worst economic performance in eleven years.
- There are some encouraging signs. Industrial capacity is at 82.5%, exports are up (currency weakness may be a factor in this), retail sales are rising and the trade surplus keeps breezing along. Interest rates still remain high compared to US rates. Beto told me that the prime was in the neighborhood of 16%. Brazil, which has one of the major benchmark bonds (denominated in dollars) for emerging economies due to mature in 2040 could be impacted if the US Federal Reserve increases interest rates as The Economist noted here.
- Brazil has nationwide state and municipal elections this October (runoffs in November if necessary). These elections could be the best barometer as to public satisfaction with Lula's handling of the economy, especially if the unemployment drop in May doesn't continue.
MEXICO
- It appears that Mexican President Vicente Fox, if he leaves no other lgeacy after he leaves office, he will at least address some of his country's history of impunity. Part of that effort may very well encompass charges being brought against former President Luis Echevarría. Echevarría, a member of the PRI (Institutional Revolutionary Party, arguably one of history's great oxymorons), for his alleged involvement in the massacre of twenty-six student protestors in 1971.
- PRI officials are claiming that is political payback, but I'm not convinced. The PRI controlled the Mexican presidency for seventy years. As this online briefing book from the National Security Archives shows, their rule was often quite brutal. Who else could be responsible for Mexico's Dirty War and such horrific incidents that preceded it like the Tlatolelco Massacre?
ARGENTINA
- Last Sunday, July 18, marked the tenth anniversary of the bombing of the AMIA Jewish Community Center in Buenos Aires which killed 85 and was probably the work of Hezbollah. While President Kirchner has made a sincere effort to push the case forward (unlike his predecessors, especially Carlos Menem), there is a feeling among some that the investigation is dead in the water.
- This is most unfortunate, but clearly a major portion of the blame for this failure belongs squarely in Menem's shoulders. His efforts to solve this crime were neglible and there have been allegations that he received US$10 million to cover up allegations of Iran's involvement in the bombing. Menem has been able to fight extradition from Chile, his wife's country, to Argentina, for corruption allegations. Menem is 73 and one wonders if he will take whatever knowledge he may have in this case to the grave with him.
FILM RECOMMENDATION
- The only time I can remember seeing Colombians being portrayed in Hollywood films are as one-dimensional drug dealers in such films as Blow, Collateral Damage and Clear And Present Danger.
- I live in a community (Jackson Heights, New York) with a significant Colombian emigre population and I count a number of Colombians as my friends. So you can imagine their interest and mine in the new film, Maria, Full of Grace that shows the complexity of life in the troubled country and its immigrants here in Jackson Heights. It's an independent film, currently showing in Los Angeles and New York and could use your support. It features a performance by Catalina Sandino Moreno in the title role and I can only say that it is one of those truly rare performances where you simply do not feel that the actor is in fact, "acting." Don't miss it.
Randinho's Latin America Briefing will be back next month, including news about Venezuela's referendum. Meanwhile, regular updates concerning Latin American events can be found at Beautiful Horizons.
I would think that anybody with a large crowd of human rights lawyers gunning for them would be wise to try to conceal their assets.
Ray,
It still doesn't answer the question as to where Pinochet came up with the money which is the larger issue.
He remained commander of the Chilean military until 1998. Riggs set up the dummy corporations while Pinochet was still a general.
By the way, about 1/10th of a mile from Riggs Bank's private international banking offices, is Dupont Circle where this act of state-sponsored terrorism by Pinochet's secret police took place in 1976. Makes you wonder what these people are thinking sometimes.
Bolivia has a real problem on its hands.
On the one hand, I suspect nationalization will exacerbate many of the perceptions of the federal government as a drain on the country, and lead to problems of corruption (and possibly increased violence, now that control of federal politics is suddenly worth a lot of money) over the long term.
On the other hand, it's clear that the the national government is grasping for a source of funds, strength, and long-term unity. They need to start somewhere, and they worry that leaving things alone or even implementing an Alaska-style system of direct dividends could end up funding local forces intent on dividing or balkanizing the country.
Both nationalization and "hands off" look like loser strategies under the circumstances. But the Alaska model, unlike the others, offers the prospect of a widespread boost to development.
Maybe if they went with some kind of hybrid model that gave out a fixed percentage out in an Alaska-style dividend, then took a page from Hernando de Soto re: widespread property ownership, they'd begin to put some solid foundations in place.
With Uncle Sam busy elsewhere, however, this one's all up to them. I hope they make it.
FWIW regarding those wanted in connection with past crimes in Latin America or elsewhere. If a non-US person has assets -- or is physically present (e.g., retired) -- in the US, they could face a lawsuit for damages for abuses or crimes (e.g., torture, disappearances), under the Alien Torts Claim Act of 1798 and the Torture Victims' Protection Act (see 28 USC § 1350).
Case law also helps:
- Filartiga v. Pena-Irala established that the ATCA could apply even when the parties are all non-US nationals and the acts took place outside the US. (The plaintiff's son had been tortured to death in Paraguay and the other party was in the US on a tourist visa).
- Ford ex rel. Estate of Ford v. Garcia established that the Yamashita command-responsibility doctrine can apply (and it can implicate not just generals but civilian authorities as well, under the Celibici Camp_ case). The families of US churchwomen murdered in El Salvador brought an action against certain Salvadoran generals living in Florida. The case was inconclusive but the jurisdiction and proceeding is valid for future cases.
Mind you, these would be tort actions inside the US but would be useful if someone implicated in crimes against humanity either maintains accounts or property in the US (jurisdiction in rem) or makes the mistake of coming in on a tourist visa or retires there (jurisdiction in personam). Given either of those, a US court could entertain a claim.
Where and how they came up with the money, of course, might come out during the discovery phase of the trial. None of this, of course, precludes criminal proceedings in the US or in an international court — nor does it preclude extradition — but it may be easier this way for a US court to pursue this rather than under US criminal law.
People sometimes complain about the US penchant for lawsuits, but a torts proceeding can be useful at times.
Bob,
In the Filartiga case, Peña was actually being deported when his deportation was halted. IIRC, when Dolly Filartiga initially lost the case - later upheld on appeal - Peña left the country.
In addition to the ATCA, there is also the Torture Victims Protection Act which provides for civil damages and the Torture Statute (the enabling legislation for the Convention Against Torture).
Randy Paul, You're right about the Torture Victims' Protection Act. That was the basis for the Estate of Ford v. Garcia case. Maybe the plaintiffs in both Filartiga and Garcia did not get a conclusive victory, but the fact that both cases were judged to be proper as far as jurisdiction and claim is significant of itself. Someone else can sue, and maybe make it stick.