Date: Wed, 11 Aug 1993 23:15:00 -0700 (PDT) Subject: News: Aug 2-10 (82 KB) Copyright 1993 Reuters Limited The Reuter European Business Report August 10, 1993, Tuesday, BC cycle HEADLINE: FINANCIER SOROS SEES GOLD IN LATAM REAL ESTATE BYLINE: By Janet Duncan DATELINE: MEXICO CITY, Aug 10 Hungarian-born financier George Soros, who bet against the British pound and won a fortune put at $ 1 billion, sees the glimmer of gold in Mexican and Argentine real estate. He has hired Arminio Fraga, former head of international affairs at Brazil's central bank, as a manager of New York-based Soros Fund Management and has already poured millions of dollars into Latin America. Soros made a foray into the local business arena in 1991 when he and Argentine real estate developer Eduardo Elsztain bought Inversiones y Representaciones SA, a 50-year-old shell company. They began with an initial investment of $ 16 million. Two years later, with a further $ 16 million investment, IRSA has 13 properties worth an estimated $ 48.7 million. In July, Soros raised his IRSA stake to 28 million shares or 38.8 percent of shares outstanding through a rights issue. IRSA recently paid $ 10.6 million to buy an Argentine army building that spans an entire block in Barrio Parque, Buenos Aires' swankiest neighbourhood. Soros recently laid plans to move into Mexican real estate. He and Canadian developer Paul Reichmann have reached agreement to invest in the sprawling Santa Fe development on the outskirts of Mexico City, a Soros spokesman said last week. Total investment in the project, over several years and with cash from banks and other individuals, could reach $ 500 million, the spokesman said. Santa Fe, on the edge of the fashionable northwestern suburb of the capital, is a mixed-use centre that includes shopping, restaurants, entertainment, housing and hotels. Toronto's Financial Post reported last week that Reichmann International L.P., the vehicle representing Soros and Reichmann in the Santa Fe project, had agreed to buy about 30 acres to build offices, shopping centres and housing. Soros sparked a rally in gold and gold-mining shares when he bought 6.8 million Newmont shares from Sir James Goldsmith and Lord Rothschild in May. Soros, whose investing triggered a four-month run-up in gold, was blamed last week for contributing to the precious metal's biggest one-day drop in 3-1/2 years. Analysts said there was no question that fund accounts played a dominant role in Thursday's freefall, which wiped out more than $ 22 an ounce from the price of gold. It was the biggest one-day slump since gold plunged $ 35 in the hours after the Gulf War in January 1991. There are rumours Soros has also invested heavily in Mexican peso instruments, but a spokesman declined comment, saying: "He has a policy of not disclosing his investment plans." Press reports have said Reichmann International is also looking at development in the Mexico City's Alameda district and in two tower blocks on the main avenue Paseo de la Reforma. Recently Soros representatives have publicly discussed investment opportunities in two other Latin America countries. He also has a fund devoted to developing markets. "Mr Soros has exhibited his interest in emerging markets by having recently launched the Quantum Emerging Growth Fund," the spokesman said. That fund, launched in 1992, invests mostly in stocks in developing countries such as Korea and some Latin American countries. It and the other Quantum funds are registered offshore and closed to U.S. citizens and residents. In June, Brazilian papers reported that Soros was considering investing in the country's stock market. Soros Fund Manager Fraga was quoted at the time as saying "Brazil is an important market and deserves a whole lot of attention." In July Soros aides checked out investment opportunities in Peru, where he already has gold mining interests. Copyright 1993 Reuters, Limited August 10, 1993, Tuesday, BC cycle HEADLINE: U.S. TOP DRUG FIGHTER STARTS TOUR OF LATIN AMERICA DATELINE: PANAMA CITY The U.S. government's top drug fighter, Lee Brown, began a weeklong tour of Latin America Tuesday with a pledge to tackle both the demand and supply sides of the region's drug trafficking problem. "The emphasis we will place on treatment and prevention (within the United States) will differ from policies taken by previous administrations," Brown told reporters in Panama on his first overseas trip since President Clinton named him head of the Office of National Drug Control Policy in June. "I point this out because I believe that it is very important for Latin Americans to understand how intensely we wage our struggle against the consumption of illegal substances on the home front." A common complaint in Latin America is that U.S. authorities put too much blame on producer countries and ignore the demand created by huge internal consumption. Brown met Panamanian Vice President Guillermo "Billy" Ford Tuesday and will visit the presidents of Bolivia, Peru and Colombia later in the week. Panama is a major transit route for traffickers, while the three South American countries are the biggest drug-producers in the region. Brown said the purpose of his trip was "to assure our Latin American allies that the United States was concerned about their struggle against narco-traffickers and the effort to arrest production and transhipment of illegal drugs across their borders." Copyright 1993 Reuters, Limited August 10, 1993, Tuesday, BC cycle HEADLINE: PRESIDENT WILL NAME TOP MILITARY IN PERU DATELINE: LIMA, Peru Peru's president will have the power to appoint navy admirals and generals of the army, air force and police under an article approved in a new draft constitution. The measure, approved after a heated session of Congress late Monday, marks a change in Peruvian political tradition. Under the 1979 constitution now in place and previous ones since independence in 1821, Congress had to ratify the promotions of top military and police officials. Peruvian President Alberto Fujimori has been naming top military and police officers since December 1991, when his government decreed a law giving him that power with special legislative powers granted him by Congress. In April 1992, he dissolved Congress and declared emergency rule with the backing of Peru's military and police. The draft constitution, which is due to be finished within the next two weeks, is to be submitted to a popular referendum in the near future Copyright 1993 The Chronicle Publishing Co. The San Francisco Chronicle AUGUST 10, 1993, TUESDAY, FINAL EDITION SECTION: NEWS; Pg. A15 HEADLINE: Forgotten U.S. Internees Await Redress. Japanese from Peru used as pawns in World War II BYLINE: L. A. Chung, Chronicle Staff Writer Five years ago today, President Ronald Reagan was hailed as he signed legislation that apologized to 120,000 Japanese Americans for their wartime internment and authorized reparations of $ 20,000 each. The Civil Liberties Act of 1988 was seen as a long-overdue redress of the most egregious large-scale suspension of civil rights in American history. But even now, the government has made no apology to hundreds of people such as San Jose resident Art Shibayama, whose case makes the Japanese American internment seem minor in comparison. 2,000 FROM LATIN AMERICA As a little-known part of World War II history, Shibayama is one of 2,000 Latin Americans of Japanese ancestry who were removed from their homes and shipped to U.S. internment camps. They were used as pawns in a U.S.-orchestrated scheme to exchange American prisoners of war for Japanese internees. Shibayama, a 63-year-old retired auto mechanic, was an adolescent when his family was shipped from Peru into American internment camps -- an act that made him an illegal immigrant for nearly 12 years. 'LEGALIZED KIDNAPING' ''They can't believe it -- a lot of people can't believe it when they hear it,'' said Shibayama, who traveled to Washington last week to meet with members of Congress and the head of the Office of Redress Administration. After World War II, the American Civil Liberties Union called what happened to his family ''legalized kidnaping.'' Born Arturo Shibayama, he was the eldest in a family of six, the son of a Japanese immigrant who had worked and saved enough to buy a shirt manufacturing company in Lima. The boy and his younger sisters spoke Spanish and were driven to school by a chauffeur, inhabiting a house served by cooks and maids. At age 13, he knew he was being groomed to take over the family business. But after December 1941, when a faraway port called Pearl Harbor was bombed, his family and thousands of others had their lives turned upside down. Peru was not directly involved in the war, but it was among a dozen Latin American countries that cooperated with the U.S. government's request. First, his grandparents were taken away. Other Japanese in Lima also disappeared. Each time an American ship appeared in Callao Port, his father, knowing that his prominence made him a target, fled to the mountains surrounding Lima. In March 1944, Peruvian authorities jailed Shibayama's mother, knowing that her imprisonment would flush out his father, Yuzo Shibayama. It did. And Yuzo Shibayama ultimately agreed to go to the United States. Several days later, the entire family left everything they had and began a 21-day ocean voyage They spent the next 2 1/2 years in a Department of Justice-run camp in Crystal City, Texas, about 60 miles southwest of San Antonio. English- speaking Japanese Americans, Buddhist priests and some Germans inhabited the small camp, Shibayama said. When the war -- and their usefulness -- was over, Peru refused to take them back, and the United States tried to deport thousands of the Spanish- speaking Japanese Latin Americans to Japan. About 900 Japanese Peruvians went, but an estimated 300 stayed after finding sponsorship with relatives and with Seabrook Farms, a produce farm in Bridgeton, N.J. that was desperate for workers. For years, people like Art Shibayama were forced to live as illegal immigrants. Some were given citizenship retroactively. Despite his illegal status, Shibayama was drafted in the Korean War and served overseas. WENT TO CANADA After the Korean War, Shibayama said he was advised to go to Canada and re-enter with proper documents to gain permanent residency. When he did so in 1956, he was forced to wait five more years before getting his citizenship, even though by then he had lived in the United States for more than a decade. Japanese-Peruvian Americans like Shibayama are among 2,000 other former camp internees whose requests for reparations have been rejected by the Office of Redress Administration, which has taken a narrow interpretation of the 1988 law. Some were children born outside of the camps but interned when their mothers returned. Others were American-born children who were involuntarily sent to Japan with their parents as part of a prisoner-of-war exchange. Others were denied redress because they are children of members of the 442nd Regimental Combat Team, whose wives left the camps briefly to visit their husbands before they shipped out. In the Japanese Peruvians' case, many have been unable to qualify because they were not permanent residents at the time of internment. ''By almost any measure, what the Japanese Peruvians went through was worse than what many of the American internees went through,'' said John Ota, a member of the National Coalition for Redress and Reparations. ''It was incredibly cruel, in a lot of ways.'' Copyright (c) 1993 The British Broadcasting Corporation; Summary of World Broadcasts/The Monitoring Report August 10, 1993, Tuesday SECTION: Part 4 The Middle East, Africa and Latin America; 4(D). LATIN AMERICA AND OTHER COUNTRIES PAGE: ME/1763/III HEADLINE: Peru: human rights organisation reports on "disappearances" The National Human Rights Coordinating Board had denounced on 5th August the "disappearance of 24 people after their detention by the armed forces in various parts of Peru during the first seven months of 1993", AFP reported. The disappearances had taken place in the following areas: one in San Martin Department; two in Lima; six in Junin Department; and 15 in Ucayali Department. The Board had also pointed out that "during the same period in 1992 over 150 disappearances were reported, which means that there has been a substantial decrease in the number of people reported missing, but this does not free the state of its responsibility for the cases reported this year". The Board had also said that "it has been established legally since 1980 that 4,000 Peruvians detained by the forces of order are still missing". Copyright 1993 American Banker-Bond Buyer a division of Thomson Publishing Corporation LDC Debt Report/Latin American Markets August 9, 1993 SECTION: Vol. 6; No. 31; Pg. 8 HEADLINE: Political/Debt Risk Ratings Below are the monthly financial transfer risk credit ratings of key LDC debtors, as calculated by Political Risk Services in Syracuse, N.Y. Also listed are the nations debt service ratios, as a percentage of exports, over a five year period, and current account projections for one year, in billions of dollars. Countries are rated on a scale from A (lowest risk) to D (highest risk) according to the following definitions: A No exchange, repatriation or financial transfer barriers. pa#B Modest or sporadic transfer barriers possible in the forecast period. pa#C Heavy delays and perhaps blockage of financial transfers. pa#D Heavy exchange controls and long delays in transfer of currency. Debt Risk Rating Service Current Country 18 mo. 5 yr. Ratio Account Algeria C+ C 72 1.10 Argentina B C+ 43 4.00 Bolivia B C 37 0.30 Brazil D+ C 35 2.50 Bulgaria C+ B 62 1.60 Chile B B 27 +0.30 China B+ A 11 +8.00 Colombia A B 39 +1.00 Costa Rica A A+ 31 0.50 Cote dIvoire D+ C 54 0.20 Ecuador B B 44 0.35 Hungary C+ B 40 +0.40 India B C+ 27 4.20 Indonesia B B 32 3.80 Jamaica B+ C+ 30 0.15 Malaysia A A 10 2.50 Mexico B+ B 33 25.00 Morocco B B 30 0.30 Nigeria D D+ 31 +2.00 Pakistan B C+ 25 2.00 Panama A A 47 +0.15 Peru C D+ 13 2.60 Philippines B C 25 1.00 Poland B B 40 0.60 Thailand B+ A 12 8.50 Turkey C B 58 1.00 Uruguay A B 36 +0.00 Venezuela B C+ 34 1.80 Yugoslavia C+ C 34 1.80 Zaire D D 28 1.00 Zambia B C 29 0.10 Zimbabwe C+ C+ 26 1.20 Copyright 1993 American Banker-Bond Buyer a division of Thomson Publishing Corporation LDC Debt Report/Latin American Markets August 9, 1993 SECTION: Vol. 6; No. 31; Pg. 8 HEADLINE: Elections Promising in Mexico, But Peru Likely Faces Coup Coming elections in Mexico, Chile and Bolivia are tilted in favor of foreign investors, but the likeliest development in Peru is a military coup sometime during the next five years, the Syracuse, New York analytical firm Political Risk Services projects in its August forecast. In Mexico, the PRI is of course favored to win the presidency in 1994, with the right wing PAN representing the biggest threat to the PRI, and a left wing coalition headed by Cuauhtemoc Cardenas posed somewhat less of a threat. Any of the leading PRI candidatesFinance Minister Pedro Aspe, Mexico City Mayor Manuel Camacho Solis, Secretary of Urban Development Luis Donaldo Colosio and Secretary of Transportation and Communications, Emilio Gamboa Patronshould push forward economic reforms begun by President Carlos Salinas, the analysts predict. But investors need not fear a PAN win. A PAN government would be fully sympathetic with Salinas free market reforms, analysts say, while even a victory by Cardenas would only slow reforms rather than halt them, they believe. In Chile, Dec. 1993 elections should produce another center left government that will maintain the successful economic policies of the current government. With Senator Frei Ruiz Tagle the favorite Christian Democratic presidential candidate, a Christian Democratic Social Democratic coalition should also retain control of Congress. Free market policies and austerity measures are expected to remain in place. If the coalition fell apart, a minority Christian Democratic government would emerge, and would follow economic policies similar to those of the current government , but with less competence and efficiency, Political Risk believes. Gonzalo Sanchez de Lozada, set to become the next president of Bolivia after expected Congressional ratification this month, will face tough economic times due to a large debt burden and slow growth. Sanchez is expected to renew free market economic policies he began as planning minister in the mid 1980s. The ultimate key will be the militarys willingness to stay out of politics, Political Risk analysts say. International pressure, and public memory of the corruption and drug trafficking associated with military rule, is helping to keep the military out of politics though. If Peruvian President Alberto Fujimori can resist his enemies, his policies may revitalize the economy. However, a military coup will probably replace him (or an elected successor) within the next five years, analysts project. Even though some new investment has occurred, especially in the oil sector, most investors still shun Peru due to its political instability and poor economic base. The 1995 presidential elections could either lead to a center right or center left regime, but a military coup is the most likely scenario, the analysts believe. In other predictions: In Nigeria, the most likely outcome of the power struggle for rule is that Gen.. Ibrahim Babangida will eventually transfer power to Moshood Abiola, winner of the election. This may relieve some short term turmoil, but longer run tensions are as strong as ever, analysts note. Even Abiolas emergence would not solve the political crisis: the military is poised to intervene if it disapproves of the terms of a power transfer. And holding new elections will generate so much violence that the legitimacy of the results will be undermined. In China, leaders will keep pushing ahead with economic reform despite concerns about inflation, an overheating economy and the uneven pace of growth. But the advanced age of Deng Xiaoping and the poor health of Premier Li Peng have created doubts about who is in charge. Copyright 1993 American Banker-Bond Buyer a division of Thomson Publishing Corporation LDC Debt Report/Latin American Markets August 9, 1993 SECTION: MARKETS ; Vol. 6; No. 31; Pg. 3 HEADLINE: Sun Shines on Exotics The August heat sizzled the exotics market last week, with Peru, Ecuador and of course Russia (see page 1) trading up spectacularly as some investors sought to escape the summer doldrums with some bold new ideas. Peruvian debt was sighted in the 44 range Thursday afternoon, up a wild five points over the week, apparently to take advantage of any remaining upswing from an initial debt renegotiating meeting (for which a date has yet to be confirmed) and also on some pro Peru comments from George Soros associates, traders said. Ecuador MYRA rose a less lunatic two points over the week, and was quoted at 34 1/5 bid / 35 offer Thursday morning. Consolidated loans reached 40 1/4 bid / 40 3/4 offer by Thursday afternoon, a three point rise. Panama and the Dominican Republic were also reported strong, with Panama up about 1 1/2 points over the week to 36 1/4 bid/ 37 1/4 offer , and the DR holding to a powerful 47 cent to 48 cent range, a four point rally over two weeks before. The lunge for exotics mystified some Brady traders and exotics specialists alike, who said the rise could not be clearly linked to any specific events. Personally, Im very worried at this point, said an exotics trader who believes that some paper, such as Peru, is overvalued at these levels. Both Panama and the DR have seen some mildly positive news tidbits of late, such as comments by Panamanian President Guillermo Endara that he plans to complete a debt deal before leaving office next year, and the imminent release of the DRs term sheet, apparently without changes but still a month late so far without real explanation. But these issues were not thought significant enough to fuel such a powerful rally. Flavor of the week Russia may have inspired such flights into exotica, though non buyers were quick to criticize. Very trendy, said one. I think people are out of their minds. By contrast, big issues had a mostly humdrum week, with Europes monetary shakeup having less of an impact than expected, and even a volatile U.S. long bond failing to drag around Brazilian, Argentine, and Mexican issues, traders said. Venezuelan issues were the exception, falling across the board on domestic economic uncertainties, traders said. One New York trader described Brazilian IDUs as landlocked: at 74 1/8 / 74 3/8 Thursday afternoonflat as a board over the week as the market waited for the debt deal scenario and domestic economic wrangles to clarify, though the fall of gold prices was thought to be a strengthener. Argentina pars were strong in the 55 4/5 to 56 range, a quarter point up or so over the week, sitting rock solid through U.S. Treasury volatility and still up two to three points over their early July levels. Mexican pars were relatively stable at 73 7/8 bid / 74 1/4 offer, as were discount bonds at 82 1/4 bid / 82 1/2 offered. Venezuela, whose investors have never proved unfailingly loyal, lost the confidence of buyers last week while its financial enabling law seemed to be languishing in Congress. DCBs and pars fell about a point Wednesday, traders said, then recovered somewhat Thursday. DCBs were quoted down about 1 1/2 point over the week, at 68 1/4 bid 68 1/2 offer Thursday afternoon, and pars were down about half a point, to 69 3/8 bid /69 5/8 offered. Copyright 1993 Federal Information Systems Corporation Federal News Service AUGUST 9, 1993, MONDAY SECTION: MAJOR LEADER SPECIAL TRANSCRIPT HEADLINE: USIA FOREIGN PRESS CENTER BRIEFING TOPIC: DRUG CZAR'S TRIP TO LATIN AMERICA BRIEFER: LEE BROWN, NATIONAL DRUG CONTROL POLICY DIRECTOR MODERATOR: PHIL BROWN, FOREIGN PRESS CENTER WASHINGTON DIRECTOR NATIONAL PRESS BUILDING, WASHINGTON, DC MODERATOR: Good morning, and welcome to the Foreign Press Center. We're very pleased to have with us this morning Dr. Lee P. Brown. Dr. Brown was recently named by President Clinton and confirmed by the Senate to the position of director of the Office of National Drug Control Policy. Dr. Brown is about to launch on his first overseas trip to Bolivia, Peru, Colombia and Panama. Dr. Brown will have a brief statement, after which he'll be pleased to answer your questions. Dr. Brown, welcome to the Foreign Press Center. MR. BROWN: Thank you. It's my pleasure to meet with you this morning on the eve of my departure for Latin America. As you know, I will travel tomorrow to Panama and later in the week to Colombia, Bolivia and Peru. One of the reasons I've decided to make this visit very early in my tenure as director of the Office of National Drug Control Policy is to assure our Latin American allies that the United States is concerned with their struggle against the narco-traffickers and that this country will continue to support their efforts in arresting the production and transportation of illicit drugs across their borders. Equally important for me in this initial trip to Latin America will be the opportunity to consult with anti-narcotic officers in host countries. As a former police officer myself, I'm aware of the risk involved in law enforcement operations, and I hold profound admiration for the courage of the officials -- officials have shown in each country that I will visit. The opportunity to review their efforts firsthand will give me a broader perspective as I develop anti-drug strategies with other Cabinet members upon my return to Washington, DC. As I engage in consultations with Latin American officials, I would explain to them the comprehensive approach President Clinton's drug strategy will take against the consumption of illicit drugs here in America. The emphasis we will place on treatment and prevention will differ from policies taken by previous administrations. I believe that it's important for Latin Americans to know how intensely we will wage our struggle against the consumption of illegal substances in this country. I also hope to learn from my counterparts about the special needs and concerns of their individual societies, and through consultation during this trip, I plan to gather information that will lead to a firmer consensus between the United States and Latin America on the commitment to rid our societies of this devastating problem. And through our joint efforts, much progress has been made, but there's still a great deal of work to be done. President Clinton has pledged his commitment to work with other nations that have shown political will to fight illegal drugs, and as his emissary I will renew this pledge to the people of Panama, Colombia, Bolivia and Peru. I'll be glad to take your questions now. MODERATOR: Thank you, Dr. Brown. We'll go to questions now. Please identify Dr. Brown -- for Dr. Brown your name and news organization. We'll start over here. Will you use the microphone? Q Good morning, Dr. Brown. MR. BROWN: Good morning. Q Recently, the Congress cut the budget for -- I'm sorry. I'm Sulima Palasio (sp) from Voice of America. Recently, the Congress cut the budget for -- or reduced the budget for international assistance in the drug war. How much is Latin America going to be affected? How much those countries you are going to be visiting are going to be affected in the budget? And how are you going to replace or change or innovate, do something different about, the work with those countries? MR. BROWN: I think it's important to point out that the president has a real commitment given by the fact that I'm going there on my first visit out of the country in my new capacity. It's also important to point out that when we start looking at our relationship with our allies, it's not just the line item in the budget. There are other things that we are working with as well. Trade, economic development become very important issues as well. In this instance, the Congress has, as has seen fit in many budget issues dealing with this country, to deal with the deficit. We will work with what we have. We won't let that be a deterrent to carrying on our commitment. The president has pledged to do so, and we will continue to do so, even keeping in mind that we're not talking about just one line item in the budget, but there are other things equally important, such as trade and also the economic development issues. Q I'm Catherine Foxhall (sp), and I'm with Substance Abuse Funding News. Along -- somewhat along those lines, can you -- you talked about the emphasis on treatment and prevention in this country. Is there anything that has been fleshed out further? Can you elaborate on those lines since your confirmation? And also, there was somewhat of a dustup about the House cutting certain line items, and is there any further movement along those lines? MR. BROWN: As you know, we're still in the budget process, and that has not been completed yet. President Clinton has made strong statements about his support for dealing with the demand for drugs. Saying that does not mean that we will by any means neglect the supply side, and we'll still deal with law enforcement. But we believe that we should close the gap between those who want treatment and those who are able to get treatment. We believe that we must deal with protecting our children through prevention programs. Those matters are now part of what we're working on. I'm in the process right now of putting together for the president and the American people our interim strategy which will guide this administration as we deal with the drug issue in America. That should be ready around Labor Day. That will be our guidance for the Clinton administration. That's where we are. We're still working on the budget issues. We're still committed to our concern about prevention, committed to our concern about treatment. We're looking at treatment through the national health reform. It's our belief it should be part of the national health care system. We believe that with legislation that's currently pending before Congress, our Safe Schools legislation, that'll help us deal with providing quality and effective preventive educational programs to our children all the way up to -- from preschool to our 12th graders. Q Alejandro Rodrigo with the Italian News Agency. Can you tell us what you think has been achieved by the Andean strategy devised by the Bush administration? And what impact do you think the -- what I believe will be fewer resources allocated to these countries in terms of direct aid, what impact will it have in these programs that they undertook in these past few years? MR. BROWN: As I look at it, I think we've made some progress working with our allies in Latin American countries, but yet there's much work to be done. So, we'll look at each country individually, and really that's the purpose of my visit, to do consultation, to find out what needs to be done. Representing the president, it's my responsibility to develop our strategies, but clearly we must do it in partnership with our allies. And thus, I make the trip to see firsthand what we're doing, to have a firsthand assessment of what progress we have made, to have a firsthand assessment of what strategies we need to implement. So, that's where we are right now. I think we've made progress, but it's clear that we need to continue to do more, redouble our efforts, and thus my going there is to allow us to develop the strategies individually and also regionally. Q The question is to do more with less? MR. BROWN: Again, on the issue of the budgeting concerns, we look at it not being just as an item on -- a line item on a budget. We look at it in terms of this country's commitment to those countries as allies and working with them on things that are broader than that. Being the director of drugs for America, then my responsibility certainly is to deal with the issue of drugs. We want to see it in context of this country's positions with other issues, such as democracy, building up the various institutions, making sure there's a strong judiciary system. All that goes hand in hand. As we look at the drug issue, we won't look at it one-dimensionally, but rather we'll look at it comprehensively. And that's the case not only in this country, but with our allies in Latin America as well. Q I'd like to know, if possible, some of your agenda in those countries. What specifically are you going to be talking about? Or is it just an informative trip? MR. BROWN: It's essentially more than one reason. One, I want to, on behalf of the president, reassure our allies of our commitment to work with them on the drug issue that affects not only our country but their country. Number two, I want to and will be meeting with the presidents of the countries except the president of Panama will not be in the country. I cannot meet with him. I'll meet the vice president to hear their concern and again reassure them of our commitment, the president's commitment. Three, I want to look at what we're doing there in the host countries: how are we addressing the drug issue, what's working, what's not working, what should be our strategy? Thus, I can come back to DC and then put together our strategy in -- in concert with the consultations I've had in other countries. So it's a multi- purpose trip, and I'll be addressing all of those issues. Q Cliff Kincay (sp) with the American Legion Magazine, Dr. Brown. The New York Times recently unearthed a sensitive document out of our embassy in Mexico indicating that drug traffickers are preparing to exploit the North American Free Trade Agreement in order to facilitate drug trafficking in the United States. What do you think about that? Are you opposed to NAFTA on that basis? And the second part of my question is, what do you think about the effort in Congress here to reduce or eliminate mandatory minimum sentences for drug traffickers and drug offenders? MR. BROWN: We understand that those who are trafficking in narcotics will be innovative in trying to pursue their goals, thus we have to be even more innovative in preventing it. So no, I'm not opposed to NAFTA on that basis. What we have to do is make sure that we prepare for the potentiality. As you know, we're not cutting down in any way the searches for drugs under the agreement, and thus our efforts would be commensurate with the increase in traffic. So we do not see ourself just allowing the efforts of the narcotic dealers to flow with impunity. We'll continue to address it. This administration is very well aware of some of the impact of minimum mandatory sentencing. And consequently, the Attorney General has taken the initiative on behalf of the administration -- and I am -- I am working with her -- to take a look at minimum mandatory sentencing. We want to know should there be a recommendation to the Congress to change the policy and should there be legislation to change the policy. Thus it is something that was implemented by Congress. We do know that it has raised some questions about the -- the disparity that exists between, say, minorities and whites because of crack cocaine and -- and powder cocaine. We know that it raises questions about prison overcrowding and whether we should have alternatives to prison -- imprisonment such as boot camps or things of that nature. So it's an issue that's currently on the table with the Attorney General taking the lead on it and certainly my office working with her. MODERATOR: Maybe I'll ask a question of my own. If I recall correctly, President Clinton when he reduced the size of the White House staff reduced the staff in the Office of National Drug Control Policy. And there was a feeling at the time that perhaps the Clinton administration was downgrading drug control as a priority. Can you disabuse us of that notion? MR. BROWN: Delighted to do so. First of all, the president recognizes the drug problem for what it is: one of the most serious domestic problems confronting our country at this time. And that is the reason he elevated my position to that of a cabinet-level position. That was not the case under previous administrations. I think that in itself illustrates his commitment to addressing the drug problem. Thus, I sit at a table with all other cabinet members right now as we address problems that confront -- that are of concern to this country. Indeed, just as we have experienced it in all other aspects of government, there have been some reductions in order to make sure that we carry out the business of government in the most cost effective way. My office also was reduced. That means that we have to carry out our mandated objectives in -- in many different ways, like if we need information, it's not necessary that my staff gather that information. We can tap the resources of all the other departments in government. So the responsibilities will be carried out, even with the reduced staff. The commitment of this president will be never wavering on the issue of drugs. He's committed, he's illustrated that, and we'll continue to do the business. MODERATOR: One more question. Q I'd like to know your opinion about a Colombian, the most wanted man on earth: Pablo Escobar. And I'm sure Colombia will be very much interested to know what's your opinion about -- he's still on the run and his family on the run through the world and not being able to stop in any country because nobody wants them. What's your opinion about it? MR. BROWN: Well, I'm sure that the -- the Colombian government is doing all that's humanly possible to make the appropriate apprehension. I would certainly be interested in hearing from them anything that they would want to share with me about that. But I have confidence they're doing what they need to do on that issue. Q (Off mike.) MR. BROWN: Pardon me? Q (Off mike.) MR. BROWN: I'm not sure I understand the question. What do I think about his family -- Q (Off mike.) Q (Off mike.) MODERATOR: Let's go right here. Q (Name inaudible) -- with the Venezuela News Agency, and my question deals with Venezuela. There's a growing concern in the country that the Colombian drug cartels are moving their operations into Venezuela, especially that they are laundering billions of dollars in Venezuela. I was wondering if you can comment on that, and if the US is planning to increase cooperation with Venezuela. I see that you're not going to Venezuela this time but -- MR. BROWN: No, that is not on my itinerary this trip. But clearly, we would be concerned any place in the world where we find problems emerging that would have an impact on the drug trafficking, not only in this country but other countries as well. We know, for example, that although the drugs may be grown or processed in another country, transported through other countries, the drug trafficking also creates problems for those countries. And so it would be our expectation to work with countries such as Venezuela to be response to whatever problem might emerge there and, hopefully, even beyond that, to prevent the problem from happening. It's clear that prevention is better than reacting to a problem after it has occurred. And so we are always alert to that potential and we'll work with other countries as well. Q Another question from Mexico. Even without NAFTA, Mexico is the most important point of entry for cocaine coming into the United States. What are your plans, what's your approach concerning the drug trafficking through Mexico? What would you like to see in terms of cooperation and things that can be maybe undertaken on the other side of the border? MR. BROWN: Well, I think you really answered the question in posing it. It's critical that we have cooperative, close working relationships with other countries, particularly our close neighbor, that being Mexico, to ensure that the officials there are working closely with the officials here because the problem, as I indicated earlier, will impact both of our countries. I've been pleased with the efforts that are underway in Mexico and the cooperation that we receive. It's my belief that that cooperation will only increase as time goes by. But the key to it is to make sure that we work together, have a strategy that we all agree upon, and look at it as a partnership where we're working together to solve a very serious problem for both countries. Q Dr. Brown, I'm John (Walsh ?) with the Washington Office on Latin America, a human rights group on Capitol Hill. At a recent House Judiciary hearing, a representative of the DEA characterized the drug war as a disservice in terms of -- thinking in terms of the effort as a military effort. The Clinton administration's first budget continues about $45 million in military aid to the Andes, which has been criticized by human rights groups like WOLA because of the records of violations by the police and military. Do you see that -- or do you think that military aid like this will continue to be an important part of the US strategy? MR. BROWN: As you know, this country is very much concerned about issues of human rights throughout the world. That concern will always be there, it will continue to take into consideration human rights efforts toward democracy, economic development, as well as drugs in those countries. What we're in the process of doing right now is assessing just where we are on our strategies in that region of the country. That's the purpose of my trip, to see first-hand what needs to be done and, in doing that, I can come back and develop our strategies. But it has to be done in consultation with the allies. That's what I'm doing right now, that's the purpose of the trip, to see what we need to do. Q I hope this isn't too domestic a question, but -- Louise (Finney ?), USIA. You've been police commissioner and police chief in two or three major American cities. If you could do anything you wanted and had the budget to do anything you wanted to help solve the drug problem in this country, what would you do? MR. BROWN: I don't think there's a silver bullet, or there's one thing you can do to solve the drug problem. We have to understand it's been a very complex problem dealing with many of the institutions we have in our country. I think the president's economic plan will go a long ways to help us as we address issues such as jobs, as we deal with health reform, as we deal with economic development, as we deal with the problems of our inner cities, as we deal with promoting the concept of community policing throughout America. Those are all issues that we see as being part of the drug problem in America, because if we can get at the root causes of the drug problem, we've made a big step forward. And jobs become very important. Our experience suggests that those who are capable of maintaining meaningful employment, thereby supporting themselves and their families, are less likely to get involved in drugs. And so we would still have a very comprehensive approach. Our interdiction efforts become important; our international efforts, working with our allies, that will always be important. So there's no single answer to the problem because of the complexity of the issue and the problem. MR. BROWN: We'll take one last question in the back row. Q Agostino Della Porta with the German Press Agency. Dr. Brown, just a household question. Are you planning to visit Mexico as part of the preparation of the strategy, or any other of the countries that has somehow either a producing or trafficking drug problem? MR. BROWN: Well fortunately, I had a visit from the Mexican official early on in my tenure, so I had a chance to sit down him earlier and exchange information. Q Any other country that you're planning to visit? MR. BROWN: On this trip -- Q (Inaudible.) MR. BROWN: -- just the four that we've announced here today. There will be other visits in the future, but right now as we look at the source countries and the need to reassure them of our commitment, we've selected these countries first. Q Were you just asked -- were you particularly by the president to make this trip? Or did you initiate it on your own? MR. BROWN: Well, it was a combination. The president and I agree that this is the right thing to do because of the need to reassure our allies. MODERATOR: Dr. Brown, I'd like to thank you for coming by this morning. We wish you a successful trip and success in your very important job back here. MR. BROWN: Thank you very much. Thank you. END Copyright 1993 Kyodo News Service Japan Economic Newswire AUGUST 9, 1993, MONDAY HEADLINE: Peru media hails Hosokawa as prime minister DATELINE: LIMA, Aug. 9 Kyodo The Peruvian media on Sunday welcomed the launching of the new cabinet in Tokyo, making special note that new Prime Minister Morihiro Hosokawa and the father of President Alberto Fujimori both hail from Kumamoto Prefecture in southwestern Japan. Newspapers and radio and televisions news programs reported in detail the birth of the 'Non-Liberal Democratic administration' and the drama unfolding in Japanese politics. The El Comercio, in its Friday edition, carried a special message from Fujimori to Hosokawa, 'When I visited Kumamoto in 1990 (shortly after being elected president), I remember well the hospitality of then-governor Hosokawa.' Fujimori also said Hosokawa expressed his understanding of Peru and indicated aid for the South American country, which is home to a number of emigrants from Kumamoto. President Fujimori asked the new Japanese leader to make an official visit to Peru. Natives and descendants of the emigrants from the prefecture on Japan's southernmost main island of Kyushu also welcomed the selection of a Kumamoto native as prime minister. August Murayama, 85, head of the Kumamoto association, said, 'This is very prestigious. Peru will continue to change and Japan, with a young prime minister, will become even better than it has been.' The Kumamoto association plans to celebrate the 90th anniversary of Japanese emigration to Peru. Murayama said the celebrations will be 'twice as happy.' Copyright 1993 Reuters, Limited The Reuter Business Report August 8, 1993, Sunday, BC cycle HEADLINE: IADB CHIEF CALLS FOR "PROFOUND SOCIAL REFORM" BYLINE: By Mary Powers DATELINE: LIMA, Peru Inter-American Development Bank president Enrique Iglesias called late Saturday for a "profound social reform" in Latin America, a goal which he said could only be achieved by consolidating economic reforms. "Economic reform is what will make an authentic social reform viable," Iglesias told a press conference. He said the IADB had begun a new strategy of helping member nations define their priorities in the area of social policy in order to better spend the resources available. "The time has arrived in Latin America for a profound social reform that attacks the policies in place and aims to bring in investment," Iglesias said on a one-day visit to Peru. Iglesias said reducing poverty was "difficult but possible" in Latin America. He cited Chile, saying it had sharply reduced poverty levels under President Patricio Alwyn's government. Peru, which since 1990 has gradually returned to the international financial community, was on a "right path" toward consolidating its economic reforms, he said. It had cost Peruvians "great sacrifice" but the result was a growing level of confidence both at home and abroad. However, he said Peru and other Latin American nations would need to invest more of their resources in health, education and housing. "Latin America will have to solve its social problems. The solution is not going to come from outside," he said. The IADB has programmed $ 1.1 billion in loans to Peru for 1993-1994, two-thirds of which will be destined for health, education, housing and basic infrastructure in poor neighborhoods. In 1991-1992, resources for the country were assigned mainly for structural reforms and highway improvement. He said Peru, with its abundant mining, fishing, oil and human resources, was a country with "great possibilities" capable of achieving "solid sustained development." Iglesias, an Uruguayan, and President Alberto Fujimori inaugurated a section of road in northern Peru, part of 2,000 miles in roads to be repaired with a $ 200 million loan. Other credits this and next year will be granted in the areas of health, basic services for shantytowns, water and sewage projects, education, municipal development, small business and housing. Copyright 1993 Latin America Institute, University of New Mexico NotiSur - Latin American Political Affairs August 6, 1993 SECTION: Human rights HEADLINE: PERU: UPDATE ON DISCOVERY OF CLANDESTINE GRAVES On July 21, a clandestine grave was discovered in Juaja, Junin department, after an anonymous caller told police its whereabouts. The cemetery--which contained human bones, hair, and pieces of clothing--was located near the site where last year authorities found another clandestine grave that housed the skeletal remains of five students from the Universidad del Centro. Between mid-July and mid-October of 1992, at least 34 students from the Universidad del Centro were kidnapped from various parts of Huancayo, the city where the university is located. To date, the bodies of 22 of the 34 students have been found in clandestine graves in the area. All showed signs of torture, plus coup de grace bullet wounds to the head (see NotiSur 10/27/92). Discovery of the grave in Junin came just two weeks after authorities unearthed another clandestine cemetery in Cieneguilla, 14 km. southeast of Lima (see NotiSur, 07/23/93). The human remains found at Cieneguilla on July 8 are believed to be those of the victims from the La Cantuta disappearance. On July 18, 1992, nine students and a professor were abducted from La Cantuta campus outside Lima. Since discovery of the Cieneguilla grave, the government has come under fire for its handling of the investigation. The grave site was reportedly left unguarded for the first six days after the discovery. Moreover, evidence removed from the cemetery has been badly mishandled by Peruvian authorities, who distributed the remains among several different government offices. Observers also say Peruvian authorities lack the experience and equipment necessary for the forensic tests needed to establish definitive identity of the remains. (Sources: Inter Press Service, Spanish news service EFE, Agence France-Presse, 07/22/93) Copyright 1993 Agence France Presse Agence France Presse August 5, 1993 SECTION: News HEADLINE: Firefighters battle blaze near Machu Picchu DATELINE: CUSCO CUSCO, Peru, Aug 5 (AFP) - Firefighters battled a blaze Thursday near the ancient ruins on Machu Picchu in southeast Peru. A spokesman for the cultural office said some 200 emergency workers had been deployed to put out the fire which broke out Tuesday along the road between Cusco and Quillabamba. The fire was caused by field burning, a common practice used by farmers here to prepare the ground for new crops. Fire official Jesus Valdivia said the blaze was within 15-20 kilometers (9 -12 miles) of the Inca ruins atop Machu Picchu, but authorities reported the ancient city did not appear to be in immediate danger. Copyright 1993 Reuters, Limited August 5, 1993, Thursday, BC cycle SECTION: Bonds Capital Market. Money Report. HEADLINE: PERU MINISTER SAYS RELEECTION WILL HELP INVESTMENT DATELINE: LIMA, AUG 5, REUTER Peru's economy minister Jorge Camet said congresssional approval of a clause in the draft constitution allowing presidents to stand for a second term will help bring investment to the country. "If an investor has to look at the mid and long-term, he is very interested in juridical stability and the continuity of a stablization program," he told Radio Programas del Peru. The approval of the clause in the draft constitution is expected to open the way for President Alberto Fujimori's reelection in 1995. The consitution Magna is expected to be submitted to a referendum after the draft is finished. Copyright (c) 1993 Latin American Newsletters, Ltd. Latin America Weekly Report August 5, 1993 SECTION: EXCHANGE RATES; WR-93-30; Pg. 354 Local currency per US$ 1 COUNTRY CURRENCY Year ago Previous Current 24.07.92 16.07.93 23.07.93 Argentina peso 0.99 fr 0.999 fr 1.00 fr Bolivia boliviano 3.91 o 4.28 o 4.29 o 3.92 p 4.29 p 4.30 p Brazil cruzeiro 4,027.0 c 62,900.0 c 66,849.50 c 4,400.0 p 69,000.0 p 73,000.00 p Chile peso 365.5 b 404.20 b 404.02 b 368.0 m 412.00 p 411.00 p Colombia peso 699.7 m 797.06 m 798.17 m 655.0 p 770.00 p 770.00 p Costa Rica colon 135.1 o 142.07 o 142.40 o 135.0 p 142.45 p 142.75 p Dominican Rep.peso 13.0 fr 13.0 fr 13.0 fr Ecuador sucre 1,455.0 o 2,000.00 o 2,000.0 o 1,535,0 p 1,950.00 p 1,950.00 p El Salvador colon 8.42 fr 8.79 i 8.78 i Guatemala quetzal 5.25 p 5.75 p 5.70 p Honduras lempira 5.65 i 6.60 fr 6.70 fr Mexico neuvo * 3.11 b 3.26 o 3.26 o peso * 3.14 e 3.12 p 3.12 p Nicaragua cordoba 6.15 o 6.16 o oro 5.50 fr 6.33 p 6.45 p Paraguay guarani 1,489.0 fr 1,750.00 fr 1,755.00 fr Peru nuevo sol 1.24 fr 2.06 fr 2.05 fr Uruguay nuevo peso * 3,17 fr 4.11 i 4.04 i Venezuela bolivar 67.23 fr 91.10 fr 91.60 fr * new peso equivalent c commercial p parallel o official b banking t tourist i inter-banks e exchange houses m market rate fr free Copyright (c) 1993 Latin American Newsletters, Ltd. Latin America Weekly Report August 5, 1993 SECTION: DEBT & LENDING ROUND-UP; Peru; WR-93-30; Pg. 355 HEADLINE: CAF loan The CAF has granted Peru a US$ 97m loan package: US$ 30m to expand and modernise Lima's telephone system, US$ 25m to finance exports, and the rest for several industrial projects. Copyright (c) 1993 Latin American Newsletters, Ltd. Latin America Weekly Report August 5, 1993 SECTION: PERU; Politics; WR-93-30; Pg. 359 HEADLINE: More bodies found in mass grave; GOVERNMENT REFUSES TO LET FOREIGN EXPERTS EXAMINE THEM The decision to hold the traditional Independence Day military parade down Avenida Brasil on 28 July for the first time in eight years, since the Sendero Luminoso emergency made such events too risky, was intended to underline the success of President Alberto Fujimori's pacification policies and the gradual return of normality to everyday life. Only gradual, because the parade was a day earlier than usual, 'for security reasons', which gave an ironic twist to the advance publicity, which billed the event as the 'Desfile Militar de la Pacificacion Nacional'. Tight control on inquiry The decision to hold a big parade could also be seen as a compliment to the armed forces at a time when their reputation was being called into question as a consequence of the discovery of several mass graves near Lima (see Page 334). The government took steps to ensure that the investigation of the remains would stay under tight control, by refusing to allow two highly experienced Argentine experts in forensic anthropology to examine them, as suggested by Amnesty International. The public prosecutor, Nelida Colan, ruled that there were enough suitably qualified Peruvian experts to make the use of foreigners unnecessary. But human rights organisations protested that the authorities had made no effort to conduct a proper inquiry, leaving the site where the remains were found, at Cieneguilla, without police protection for six days and collecting the evidence in a haphazard and amateurish way. All the authorities have revealed so far is that the Cieneguilla remains seem to be of four people, at least one of whom shows signs of a bullet wound. They were killed and burnt elsewhere and their remains buried in Cieneguilla. Excavations on the site were said to be continuing. Anonymous tip-off While this debate was going on, another mass grave was discovered near Jauja in the central highlands. The tip-off seems to have come from the same anonymous source that led to the Cieneguilla discoveries, and there were hints that the Jauja graves might contain further remains of the nine students and a lecturer who disappeared last July from the campus of the Universidad Nacional de Educacion (La Cantuta). Another theory floated in La Republica newspaper was that the Jauja grave contained the remains of some of the 22 students who disappeared from the Universidad Nacional del Centro in nearby Huancayo last year. The police claimed to have found evidence that the information came from a member of Sendero Luminoso's propaganda department, with the intention of further blackening the name of the Peruvian security forces. The implication was that the remains were nothing to do with the "La Cantuta 10'. Copyright (c) 1993 Latin American Newsletters, Ltd. Latin America Weekly Report August 5, 1993 SECTION: PERU; Politics; WR-93-30; Pg. 359 HEADLINE: CCD misses its end of July deadline; FUJIMORI SEES GROWING THREAT FROM MAYOR BELMONT The text of the new constitution drawn up under the control of the pro- government Nueva Mayoria-Cambio 90 coalition was not given the Congreso Constituyente Democratico (CCD)'s seal of approval by 28 July after all. When the target date came debates was continuing. Re-election at issue The point at issue was the immediate re-election of a sitting President, which the majority is strongly committed to, but which is equally passionately resisted by the disparate opposition groups of both left and right in the CCD. President Alberto Fujimori, while purporting to remain aloof from the argument, sets great store by the proposed measure, which would enable him to cash in on his continued high level of personal popularity (see Page 280). The latest opinion poll, by Imagen, showed an increase in his approval rate from 63% in June to 67.1% at the end of July. Even more striking is the widespread optimism about economic prospects, with 53% saying the situation is satisfactory, and 42% believing it will improve over the next few months. No fewer than 65% believed it was better than under the previous government. Enter Ricardo Belmont The only blot on this landscape as far as Fujimori is concerned is the growing popularity of Ricardo Belmont, the populist mayor of Lima, re- elected in January, who has higher ratings even than the President. He is beginning to make a name for himself on the national stage by rallying the opposition to the centralising tendencies of the draft constitution, which threaten to reduce the elements of regional and municipal autonomy that were among the few undoubted achievements of the Alan Garcia administration. Fujimori knows he has little to fear from the fragmented opposition in the CCD, and even less from the parties that have boycotted it -- Accion Popular, Apra and Libertad -- but a flamboyant crowd-pleaser like 'Colorao' Belmont could be a different proposition. Belmont has not confessed to any presidential ambitions, but Fujimori's recent attacks on local politicians show that he takes the threat seriously. Single chamber Another controversial point in the draft constitution is the proposal to reduce the future congress to a single chamber with 120 members. The majority argue that this would make it much more agile and efficient, but the opposition points out that it would make it easier for a strong President to control, given the greatly enhanced powers for the executive contemplated in the draft text. Fujimori's wish for a congress that does not put up obstacles to his initiatives is well known. Critics of the measure argue for a senate with powers to modify and moderate legislation put forward by a government-controlled lower house. The congress dissolved by Fujimori last year had a 180-member lower chamber and a 60-strong senate. Copyright (c) 1993 Latin American Newsletters, Ltd. Latin America Regional Reports: Southern Cone August 5, 1993 SECTION: FOR THE RECORD; RS-93-06; Pg. 4 HEADLINE: What the military are discussing; AEROSPACE COMMITTEE & 'MERCOSUR ALLIANCE' The commanders of 23 American air forces (including those of Canada and the US) met in early July for the 33rd consecutive meeting they have held since the Sistema de Cooperacion de las Fuerzas Aereas Americanas (Sicofaa) was created. Publicly the agenda item which received most attention was the Chilean proposal to set up an Aerospace Committee to co-ordinate the use of space for peaceful purposes, such as the study of the 'hole' in the ozone layer, meteorological research with a view to assisting agriculture and preventing floods, and possibly the detection of mineral deposits. The commanders, however, spent a fair portion of their time considering the regional drugs trade and the spread of terrorism, and there was a suggestion that a regional strategy could be agreed. Though the Chilean spokesman, Commander Alejandro Salas, would not confirm this, he did say that the countries most affected by the drugs trade -- Colombia, Peru and Bolivia -- had shared their experience with others. Mercosur In late June representatives of the Mercosur armies met in Buenos Aires to look at the prospects for co-operation within that subregional group. The possibility of a Mercosur military alliance was mooted by Paraguay's General Lino Oviedo, who suggested for Mercosur a 'European model', by which he meant something like Nato as the military counterpart of economic and political union in the EC. He said the armed forces of the subregion could engage in joint action against drug-traffickers and their 'terrorist' organisations, and in 'support for democratisation'. Brazil's General Silvio da Gama Imbuzeiro suggested more vaguely that the armed forces should become 'incorporated in a framework of economic, political and social strengthening' of the subregion. Argentina's General Martin Balza proposed for the subregion the development of 'defence capabilities [to] underwrite international relations.' But Balza's political master, defence minister Oscar Camilion, warned about the difficulty and complexity of any eventual subregional collective security scheme. The Uruguayan military were more in tune with Camilion. They said that Mercosur should be confined to economic relations and that contacts between the military to basic technical co-operation. Copyright (c) 1993 Latin American Newsletters, Ltd. Latin America Regional Reports: Southern Cone August 5, 1993 SECTION: CHILE; Trade & Investment; RS-93-06; Pg. 6 HEADLINE: Saying hello again to Latin America; REGION EMERGES AS TRADING AND INVESTMENT PARTNER It is not all that long ago that headlines in the Chilean press were announcing farewells to Latin America and all the rest of the Third World. It is a sign of how much things have changed in the rest of the region that Chileans are now taking it much more seriously as an export market and a target area for investment -- and even as a source of foreign investment. Exports to Latin America are growing faster than those to any other region of the world. In 1992 they expanded by 31%, from US$ 1.3bn to US$ 1.7bn. Figures for the first quarter of this year show that the trend is continuing: exports to Latin America totalled US$ 403.4m, a 20.2% increase on the same period of 1992. The only other market to have grown between March 1992 and March 1993, by 14%, is North America -- and that was largely due to an 81.8% increase in sales to Canada. Exports to Europe were down 12.8%, to Japan 4.2%. At the end of 1991 Chile's exports to Latin America accounted for 12.8% of the total; by March this year their share had risen to 15.3%, still some distance behind the 21.2% taken by the US, but catching up with Japan's 16.9%. The biggest Latin American markets are Argentina (4.4%) and Brazil (3.9%). Investing abroad Over the last two years, according to Santiago's World Trade Center, Chileans invested abroad some US$ 758m. About 80% of this amount went to Latin American countries. Again, Argentina was in the lead, with 43% of the total, followed by Panama with 17.4% and Uruguay with 11.6%. [Most of the Chilean investment went into financial services (39.5%) and power utilities (27.3%).] Inward investment One great disappointment for Chile is that the Far East, though a good export strike, has not proven to be a good source of foreign investment. A recent survey of foreign investment between 1974 and May this year, conducted by the Comite de Inversiones Extranjeras (CIE), shows that only US$ 418m, or 4.8% of the total, came from the Far East (US$ 373.2m from Japan). Investment from other Latin American countries totalled US$ 1.3bn. Of the investment included under this heading, US$ 785m came from such offshore centres as the Cayman Islands, Panama and the Bahamas, but the remainder (US$ 479m) is still higher than the amount that came from the Far East. [Investment from the US accounts for 36.3% of the total; from Europe. 26.3%; from Oceania, 11%.] Neighbourly interest Offshore centres aside, the leading Latin American investor is Argentina, with US$ 226.3m, followed by Brazil with US$ 122.9m, Uruguay with US$ 54.5m and Colombia with US$ 15.6m. Argentine investment in Chile is on its way to matching recent Chilean investment in Argentina. What makes these figures more interesting is the fact that Latin American investment in Chile only began to take off in the past couple of years -- and it is clearly picking up speed. In the first half of this year, for example, eight Argentine investment projects worth US$ 117m were approved (they were dominated by the US$ 112m pipeline from Neuquen in Argentina to Concepcion in Chile). Though it is still early days, an interesting feature of Chile's regional trade and investment patterns is that they do not match the map of free- trade agreements which the Alywin government has been pursuing with such as Mexico, Venezuela and Peru: relations are closer with Mercosur, of which Chile is not a member. TRADE: UPS & DOWNS First qtr 1993/1992 Area % var. Latin America +20.2 North America +14.0 Asia -4.2 Europe -12.8 Oceania -20.0 Africa -74.0 Source: Central bank. TRADE: DISTRIBUTION Share of total Country % US 21.2 Japan 16.9 Latin America 15.3 -Argentina 4.4 -Brazil 3.9 -Peru 1.7 -Mexico 1.4 -Bolivia 1.4 Source: Central bank. OUTBOUND INVESTMENT 1991-92 Country % of total* Argentina 43.0 Panama 17.4 Uruguay 11.6 Peru 3.0 Latin America 80.0 * Total + US$ 758m. Source: World Trade Center. INCOMING INVESTMENT 1974-1993 * Country US$ m Cayman Is. 449.5 Panama 254.0 Argentina 226.3 Brazil 122.9 Bahamas 82.0 Uruguay 54.4 Colombia 15.6 Mexico 15.4 Peru 14.9 Latin America 1,264.0 * The bulk was made in the last two years. Source: CIE. Copyright 1993 The New York Times Company: Abstracts AUTH: BY PATRICIA SALDANHA TITL: BRAZIL STUDIES TRANSPORT LINK TO PACIFIC VIA PERU AND CHILE REFR: JOURNAL OF COMMERCE Section B; Page 2, Column 3 JOURNAL-CODE JCM DATE: August 4, 1993, Wednesday ABST: Government of Brazil is ordering feasibility studies on rail, road and river links between country's Atlantic coast and Pacific Ocean powers in Chile and Peru (S) Copyright 1993 Institutional Investor, Inc. Portfolio Letter August 2, 1993 SECTION: INTERNATIONAL FOCUS; Vol. XV, No. 30; Pg. 4 HEADLINE: LAIDLAW SHUNS TOP-DOWN STRATEGY BUT LIKES PERU Laidlaw Holdings, which runs about $ 300 million in individual accounts, is an international investor without an international fund or a country allocation strategy. "Unless I had some very specific company that was truly dramatic I would not have a country allocation unless it was going into a bull market . . . I pick individual stocks and I always will," says Gottfried Von Meyern-Hohenberg, chairman. The money manager is currently buying foreign blue chips -- "they are undervalued relative to our own," he explains -- but he adds that if he were a top-down manager Peru is the place to be. It looks like Peru will be able to repay its debts by the fall as its bond issues get "Brady-ized," says Von Hohenberg. "Debt has risen from $ 0.25 on the dollar to $ 0.37 on the dollar over the last two months, and that gives you a feeling for what the debt markets feel toward this country," he adds. The money manager also sees China's activity in Peru's steel industry and Japan's support for Peru's economic efforts as positive signs. "Peru has over one million Japanese and has the good will of the Japanese government," he says. The Peruvian markets have not yet developed any relationships with U.S. clearing houses so Laidlaw is not currently active there. "If you had a fund it would be easy [to invest] but if you have private accounts it is difficult to get delivery in the clearing house," says Von Hohenberg. His investment strategy would be to buy Peru's telephone company and the biggest bank, construction company and brewery. "You wouldn't need a Peru fund with those four because that would give you 80% of the action," he adds. Von Hohenberg will keep buying Fomento Economico Mexicana, Telefonos de Mexico (TMX), Ciba-Geigy International and CITIC Pacific as long as their p/e ratios remain below their growth rates. He calls TelMex the cheapest telephone company in the world and he feels that FEMSA will benefit heavily from the North American Free Trade Agreement. "If there is any benefit to private or disposable income in Mexico it will go straight to beer, Coke, etc.," he says. He sees Ciba-Geigy, along with many other Swiss companies, benefitting from a switch over the U.S.' General Agreement on Tariffs and Trade (GATT) accounting standards in their efforts to get American depository receipts (ADRs) listed on U.S. stock exchanges. CITIC Pacific is a conglomerate that owns significant parts of two airlines and also has interests in automobile distribution companies and infrastructure development and telecommunications in both Hong Kong and mainland China. "It's owned up to 45% by the Central Committee in China, which means its fortunes are closely tied," says Von Hohenburg, adding that "if they need to get permission for something they are more likely to get it faster." CITIC is building a toll road through Shanghai and it also owns some "interesting" real estate at the Shanghai airport, he notes. The company has had a 25% annual sales growth rate and he sees no reason such a growth should not continue. "It's my red chip play in China," he quips. Portfolio Letter is a general circulation newsweekly. No statement in this issue is to be construed as a recommendation to buy or sell securities or to provide investment advice. Copyright 1993 Crain Communications, Inc. Automotive News August 2, 1993 SECTION: OPINION; LETTERS; Pg. 12 HEADLINE: U.S. industry trails in South America BYLINE: FLAVIO GRAF, Lima, Peru America has always been blamed for its short-term vision vs. the Japanese. I can also blame America for its ill self-centered vision. Nowadays here in Peru (you can tell a similar story in other South American countries), the only play is Japanese, Korean or Russian. Those guys have either a corporate or a local distributor. What about Americans? There are only a couple of weak dealerships for Jeep-Eagle and General Motors (the last mainly imports from Brazil). The slice of the cake for American cars is nearly non-existent. In the automobile business here, it is said that when you want an Asiatic to do business with you, he asks, ''What do you need?'' When you want to do business with Americans, they tell you, ''We need ...'' Those ''we needs'' are generally unobtainable quotas. With the new smaller and reliable cars America is producing, the strong yen and the new lean and aggressive management in the United States, the Big 3 should consider extending their achievements overseas. It will take time and will to rebuild a presence lost long ago. Peru has signed an agreement with the Korean government and Daewoo to build an industrial tax-free zone. President Fujimori said Daewoo wants to assemble cars in that zone in order to sell them locally and export to nearby countries. Copyright 1993 Inter Press Service Inter Press Service August 2, 1993, Monday HEADLINE: PERU: ARMED CIVILIAN MARCHERS MAY POINT TO MILITARIZATION BYLINE: by Abraham Lama DATELINE: LIMA, Aug. 2 The participation of armed civilians in military parades has made people wonder whether Peruvian society has become militarized. Spectators were surprised to see the civilians sharing the limelight with soldiers during a traditional military parade last week. Among them were university students and members of self-defense units that patrol the outskirts of Lima. Former Socialist Sen. Enrique Bernales, who is now United Nations human rights rapporteur, said that Peruvian President Alberto Fujimori militarized the country on Apr. 5, 1992, when he asked the army's help in dissolving Parliament and the Supreme Court. He has ruled by decree since then, and, as a result, said Bernales, "Fujimori has become a virtual prisoner of the armed forces." According to Bernales, the army's control of the farmers' groups that the government organized and armed to fight the rebels is proof that civilians have been militarized. The groups had been originally formed to fight cattle rustlers. About 250,000 farmers from 3,000 agrarian and indigenous communities have joined the rural patrols to which the government has distributed about 14,000 shotguns. But analyst Alberto Panessi, however, thinks that Fujimori has actually "made the military more civilized by forcing them to abideby the guidelines of a civilian government." Panessi said Fujimori gained control over the army by a clever administrative decision. "According to military regulations, the commanding general had to retire last year. But Fujimori kept him at his post, and since then the general depends on the president, who could take take away his power any time," he said. Fujimori said that his strategy of fighting the Maoist Shining Path guerrillas has had great respect for human rights because it sought the support of the people and therefore the military could not resort to repression. He said the people's concern and participation were instrumental in turning the tide against rebels, who had been winning the war until early last year. Fujimori said his counterinsurgency strategy was based on intelligence work, the people's participation, heavier penalties for the rebels and shorter prison terms for those who surrender. Experts say about 23,000 people have died and 7,000 have disappeared since rebels began fighting the government in 1980. According to Fujimori, only about 572 rebels were imprisoned from 1980 to 1992. But almost 590 have been caught since April last year. Former leftist deputy Carlos Tapia said Fujimori's strategy has obliged the army both to modify its conduct toward the people and to give better treatment to rebel prisoners. "In trying to win over the population, the Peruvian military now believes that it is better to capture terrorists alive than to kill them," Tapia said during a national forum organized by the leftist opposition. Tapia said the farmers' patrols have stopped the spread of the insurgency movement and obliged rebels to leave the cities. But some people fear that, as in Nicaragua, El Salvador and Guatemala, the armed civilians could turn into bandits, cause political instability and become a risk to democracy once the civil war ends. Tapia said that, in some places, drug traffickers had begun to corrupt the farmers by offering them big amounts of money. "There is the problem of what to do with these patrols once the war ends," Tapia said. "Whatever happens to them, it is certain that this alliance between the military and the hundreds of organized and armed farmers can become a serious problem for Peru." Copyright 1993 Inter Press Service Inter Press Service August 2, 1993, Monday HEADLINE: PERU: EXPERTS SAY SENDERO LUMINOSO NOT NEAR EXTINCTION DATELINE: LIMA, Aug. 2 Peru's Maoist guerrilla group "Sendero Luminoso" is not near extinction, despite numerous setbacks including the capture of Abimael Guzman, the group's founder and leader, two counterinsurgency experts said at a recent seminar here on the country's civil war. Carlos Tapia of Peru and David Scott Palmer of the United States said that excessive optimism by the government and public as to the ultimate demise of Sendero Luminoso could be dangerous. "There is talk of the imminent eradication and cleaning out of terrorism, but this does not take into account that civil war is a political process," Tapia said. "The will of fundamentalist insurgent groups is difficult to break. They can always continue with relatively small forces, waiting to reinitiate their fight at a later time," Tapia said. "The government's victory rhetoric could result in their guard being lowered, not only in the actual combatting of terrorism, butby not making the political changes necessary to fight the social causes for subversion," he said. In an interview with the weekly magazine "Si," Palmer said, "It is too early to celebrate the death of the Sendero Luminoso, because even if its ideological leader has been captured and the spine broken, there are still members capable of acting autonomously. I would say that the group is in a state of rest." According to Palmer, Sendero Luminoso still has a nearly intact military leadership, and forces in the interior and jungle areas of the country are able to get money and arms through drug trafficking. Palmer thinks the public currently supports President Fujimori because it feels that the combination of economic and political crises, along with the problems of terrorism and drug trafficking, demand that extraordinary measures be taken. The expert said that Guzman had made two major errors: moving the focus of the war from the mountains to Lima and using terrorist tactics. "Sendero Luminoso path has carried out armed struggle, but has not received the hoped for support from the people, because it did not offer them any alternatives to their own revolutionary project," he said. "We know that Guzman represented the dogmatic hard line; and perhaps the most dangerous threat to Peruvian democracy is the possible development of a more moderate opposition," he commented. "A moderate group could respond better to the needs of local areas and farming and indigenous communities, thus carrying out an insurgency with greater support," Palmer said.