Date: Tue, 17 Aug 1993 00:31:57 -0700 (PDT) Subject: News: Aug. 10-13 (120KB) Copyright (c) 1993 The British Broadcasting Corporation; Summary of World Broadcasts/The Monitoring Report August 14, 1993, Saturday SECTION: Part 4 The Middle East, Africa and Latin America; 4(D). LATIN AMERICA AND OTHER COUNTRIES PAGE: ME/1767/III HEADLINE: Chinese Foreign Ministry official in Peru President Fujimori on 10th August told the visiting Chinese Assistant Foreign Minister Liu Huaqiu, during a meeting in Lima reported by the Chinese news agency Xinhua, that Peru "attaches great importance to developing friendly and cooperative relations with China", with which it wanted to promote bilateral relations, particularly measures to strengthen economic cooperation and trade. Fujimori added that Chinese enterprises were welcome to invest in Peru. Liu Huaqiu had earlier visited Bolivia, and left Peru for Colombia later on the 10th, Xinhua added. Copyright 1993 Agence France Presse Agence France Presse August 13, 1993 SECTION: Domestic News HEADLINE: Colombian president meets with U.S., U.N. drug chiefs DATELINE: SANTAFE DE BOGOTA SANTAFE DE BOGOTA, Aug 13 (AFP) - Colombia's president asked the U.S. and U.N. anti-drug chiefs for more help in fighting the drug scourge, including the creation of an international crime panel. President Cesar Gaviria said current multilateral efforts were insufficient during separate meetings Thursday with U.N. drug chief Giorgio Giacomelli and Lee Brown, head of the U.S. Office of National Drug Control Policy. The Colombian leader also called for more and tougher international cooperation in fighting money laundering and controls on chemicals used to process coca into cocaine. Brown briefed Gaviria on President Bill Clinton's anti-drug policies, and said he supported Colombia's anti-drug efforts. Most of the world's coca is grown in Peru and Bolivia, but Colombia's powerful drug gangs control the processing and exportation phases of cocaine production. Copyright 1993 The Houston Chronicle Publishing Company The Houston Chronicle August 13, 1993, Friday, 2 STAR Edition SECTION: A; World briefs; Pg. 25 HEADLINE: World briefs BYLINE: Houston Chronicle News Services Peru trade rules ease WASHINGTON -- President Clinton is liberalizing trade rules with Peru in an effort to help the Andean nation fight narcotics trafficking and encourage it to trade in legitimate products. In a letter to congressional leaders released Thursday, Clinton said Peru had qualified for duty-free treatment of products under the Andean Trade Preference Act. He called it "an important step for Peru in its effort to fight against narcotics production and trafficking. '' Copyright 1993 Kyodo News Service Japan Economic Newswire AUGUST 13, 1993, FRIDAY HEADLINE: Japan welcomes arrests in Peru killings DATELINE: TOKYO, Aug. 13 Kyodo Japan welcomes Peru's capture of two guerrilla suspects in the 1991 slaying of three Japanese agricultural experts, a Foreign Ministry spokesman said Friday. Spokesman Terusuke Terada told reporters Japan highly appreciates the investigative efforts of Peruvian authorities in the case and awaits its settlement through due legal process. Peruvian President Alberto Fujimori announced Thursday that a two- year police probe had brought about the capture of over a dozen Shining Path guerrillas, including those believed responsible for the killings. The two men, along with another guerrilla yet to be captured, are suspected of shooting dead three Japanese agricultural experts who were dispatched to Peru with the Japanese International Cooperation Agency (JICA), a government aid agency. The killings, which took place in the northern city of Huaral in July 1991, led to the withdrawal from Peru of tens of Japanese aid workers, who have yet to return. Copyright 1993 Reuters, Limited August 13, 1993, Friday, AM cycle HEADLINE: U.S. DRUG CZAR PLEDGES TO CONTINUE INTERDICTION BYLINE: By Mary Powers DATELINE: LIMA, Peru New U.S. drug czar Lee Brown said the Clinton administration would place greater emphasis on curbing drug consumption in the United States but not neglect interdiction efforts in drug-producing nations like Peru. "Under the Clinton Administration, I think you will see some differences in the approach to the drug problem than our predecessors," Brown told a press conference following a meeting with President Alberto Fujimori in Government Palace. "We believe there should be a greater emphasis in consumption in America, that means the Clinton administration will place greater emphasis on education, prevention and treatment." He said interdiction efforts in Peru, the world's largest producer of the raw material for cocaine, had shown progress over the last year and would not be neglected. "This trip, my first foreign travel, is designed to see first hand what is going on in the region, to determine what works and what needs to be done," he said. Brown, who in June was named Director of the Office of National Drug Control Policy, arrived Friday in the course of a week-long visit to Panama and drug-producing Andean nations. A former police chief in New York and Houston, Brown said he had held "frank and productive talks" with Fujimori who has gained a reputation for his outspoken views on how to combat Peru's drug problem. Brown said Fujimori "shared his vision" of developing alternative crops to substitute the cultivation of the coca leaf in the Upper Huallaga Valley and other coca-growing areas. He declined to say if Peru could expect any new aid or if assistance would be cut back. Brown, who was in Panama and Colombia earlier this week, was due to leave for Bolivia Sunday after visiting the U.S.-built Santa Lucia anti-drug base in the Upper Huallaga Valley Saturday. Copyright 1993 Reuters, Limited August 13, 1993, Friday, BC cycle SECTION: Money Report. Bonds Capital Market. Financial Report. Domestic Money. HEADLINE: PERU CONGRESS ENDS DEBATE ON DRAFT CONSTITUTION DATELINE: LIMA, AUG 13, REUTER Legislators have approved the draft of Peru's new constitution and Congress will begin debate next week on whether to submit the text to a referendum, a leading congressman of President Alberto Fujimori's party said. The 80-member legislature late on Thursday ended debate on 226 articles of the draft constitution which will replace the 1979 constitution currently in place, said Carlos Torres y Torres Lara, vice-president of the Congress. "Minor additions and editing changes could be made next week but there will be no major modifications," he said. Congress next week begins debate on four possible mechanisms to submit the text to a final vote, Torres y Torres Lara said. "The four possibilities are a referendum on the whole text, a referendum on the most controversial points, a vote on the whole text plus the controversial points or no referendum," the legislator of the official Nueva Mayoria-Cambio 90 party said. But constitutional experts said Fujimori pledged before the Organization of American States and in his 1992 State of the Nation address to submit the entire text to a referendum, as specified in a law calling last year's congressional elections. "There is no possibility of changing the rules of play. The people understood they were electing representatives to draw up a draft constitution which would be submitted for their final approval," said Cesar Balega, an expert in constituional law. As approved, the draft constitution is seen as opening the way for Fujimori's reelection in 1995. Opposition legislators say it concentrates too much power in the president's hands. Fujimori dissolved Congress and declared emergency rule in April 1992, saying congress had blocked his attempts to fight leftist guerrillas and reform the economy. Responding to international pressure, he called elections for a new Congress in November 1992, which gave him a majority he did not previously enjoy. Copyright 1993 Reuters, Limited August 13, 1993, Friday, BC cycle SECTION: Bonds Capital Market. HEADLINE: MINERO PERU ANNOUNCES SALE OF ILO COPPER REFINERY DATELINE: LIMA, AUG 13 (REUTER) The state-owned mining firm Minero Peru announced the sale in late November of its copper refinery in the southern port of Ilo, where Southern Peru Copper Corp refines its mineral into copper blister. The refinery is to be sold through an international tender and Minero Peru will require interested parties to assume certain minimum commitments in developing the refinery, an advertisement by the Minero Peru privatization committee said. The refinery, located some 1,100 kms (660 miles) south of Lima, has capacity to process 190,000 tonnes of blister a year. The advertisement said the sale would be open to national and international investors through a pre-qualification process. Radio Programas del Peru, in a report from its correspondent in Ilo, quoted chief of the Minero Peru privatization committee Rafael Toledo as saying that Southern Peru was interested in buying the refinery. Neither Southern Peru nor Minero Peru officials were available for comment. Southern, with two mines in nearby Cuajone and Toquepala, produces two thirds of Peru's copper. Toledo was also quoted as saying there would be a 10 percent reduction in personnel at the refinery prior to the privatization. Minero Peru plans to sell the Cerro Verde copper mine on October 13 and has announced the sale of two copper deposits for the end of the year. Later it will auction off a gold deposit at San Antonio de Poto and a zinc refinery at Cajamarquilla. Copyright 1993 The New York Times Company The New York Times August 13, 1993, Friday, Late Edition - Final SECTION: Section A; Page 6; Column 1; Foreign Desk HEADLINE: Grisly Find in Peru Puts Army in a Deep Shadow BYLINE: By NATHANIEL C. NASH, Special to The New York Times DATELINE: CIENEGILLA, Peru Just outside this narrow eucalyptus-lined river valley in the foothills surrounding Lima, a road leads into an area that seems to be just a garbage dump. Swarms of flies invade any vehicle that comes near. But the editor of a local weekly newsmagazine, investigating a tip, recently found that the path was a depository not only for human waste, but also for human remains. In four shallow graves, boxes of bones that had been burned and broken into pieces were excavated in July, the first time in years that secret graves had been found near the capital. President Under Fire For President Alberto K. Fujimori, the discovery cast a harsh light on his Government's human rights record and his apparent difficulties in clearing up questions about disappearances and suspected executions by military hit squads. The questions raised come at a critical time in Mr. Fujimori's 16-month effort to convince the world that he is moving Peru back to a democracy. With the support of the military, he seized power on April 5, 1992. The United States has said that before any significant aid is given to Peru, the Government must clear up nine specific cases of suspected rights abuses by the military and police. [But in Washington, President Clinton told Congress on Thursday that Peru qualified for duty-free treatment of its products under the Andean Trade Preference Act, "an important step for Peru in its effort to fight against narcotics production and trafficking," The Associated Press reported.] Accusations of Executions Though the President and the police say the bones that were found were the remains of victims of Shining Path, the Maoist guerrilla group, Western diplomats, human rights groups, journalists and opposition members of Congress disagree. They say the bones are those of at least some of the nine students and a teacher who disappeared from a Lima university in 1992 and were allegedly killed by a military execution squad that had carried out at least three similar operations. One skull bone had a hole from .38-caliber bullet. Government scientists and the chief prosecutor's office have refused to comment pending their investigation. "Many are speculating they are the bones of the students from La Cantuta University, but there is nothing certain," said Ricardo Uceda, editor of Si, who broke the story after receiving a map showing the location of the graves and a bag of bones that his source said came from the site. "But the Government is doing some funny things with this case, including claiming that my source was linked with Shining Path." 'Disappearances' Are Fewer Peru, which had one of the highest rates of disappearances, has seen the number drop significantly this year. "At one time last year, we were getting 25 reports a month of missing people," said one Western official. "Now we hardly get any." A corresponding decline in summary executions of suspected guerrillas by the military is attributed to a military tribunal process in which unidentifed judges quickly sentence accused subversives to long prison terms. Army commanders know now that once they capture a Shining Path soldier, he or she is not going to be walking the streets the next week. But despite an improved human rights record, President Fujimori seems unwilling to clear the air on past abuses, primarily because they might involve two of his staunchest supporters, Gen. Nicolas de Bari Hermoza, chief of the Army, and Vladimiro Montesinos, head of intelligence. A Lackadaisical Approach Though the Army is investigating the killings at La Cantuta University, few consider the investigation serious. When Mr. Uceda brought a formal request for the Government to investigate the bones found in Cienegilla, he found officials less than eager to uncover what had happened. The national prosecutor, Blanca Nelida Colan, rejected any help by foreign experts in genetic mapping, saying the law prohibited intervention by foreigners in murder cases. Lawyers say no such law exists. One of President Fujimori's staunchest supporters in the Congress, Martha Chavez, accused Mr. Uceda of criminal actions in disturbing evidence, since he admitted partly excavating a grave to verify his information. Finally, a week after news of the graves became public, Peru's anti- terrorist police, Dincote, who are widely credited with capturing the Shining Path leader, Abimael Guzman Reynoso, last September, announced that the graves were the work of guerrillas trying to discredit the military. Dincote officials produced what they said was the original of the map sent to Si magazine, and an accused terrorist, Juan Mallea, who they said was the author of the map. A Hole in the 'Confession' "I can say flatly that my source is well known, and he is well known as not being linked to terrorists," Mr. Uceda responded. Within days journalists discovered that Mr. Mallea was a taxi driver, known by his neighbors as a devout evangelical Christian, who had been persuaded by the police to make the confession. Also, his handwriting was said to bear no resemblance to that on the map sent to Mr. Uceda. Western officials say the Government's findings will have little credibility unless international experts are permitted to work on the case. But few think that will be permitted. "There is an concerted attempt by the Government to hide or manipulate this case, and it doesn't help the image of Fujimori at all," said Jose Ugaz, a human rights lawyer. "I think at this point it will be very hard to get an honest investigation, not with this Government at least." Copyright (c) The Bureau of National Affairs, Inc., 1993 BNA WASHINGTON INSIDER Aug. 13, 1993 International Trade CLINTON DESIGNATES PERU AS BENEFICIARY UNDER ANDEAN TRADE PREFERENCES ACT WASHINGTON (BNA) -- President Clinton Aug. 12 issued a proclamation designating Peru as a beneficiary under the Andean Trade Preferences Act. In an Aug. 11 letter, Clinton stated that such designation will entitle Peruvian products, except those statutorily excluded, to duty-free treatment for a period ending on Dec. 4, 2001. "Designation is an important step for Peru in its effort to fight against narcotics production and trafficking. The enhanced access to the U.S. market provided by the ATPA will encourage the production of and trade in legitimate products," the president said. Clinton stated that his decision to designate Peru results from consultations concluded in July between the administration and Peru regarding the ATPA's designation criteria. Clinton noted that he retains the authority under the act to suspend, withdraw, and limit the benefits of the act if a beneficiary's policies are no longer in conformity with the designation criteria. "The United States will keep abreast of developments in Peru that are pertinent to the designation criteria," he stated. Bolivia, Colombia, and Ecuador have already been designated as beneficiaries under the act, which is aimed at encouraging legal exports and discouraging the illicit trafficking of narcotics. The Andean Trade Preferences Act (HR 1724), signed into law Dec. 4, 1991, authorized the president to provide duty-free benefits for a 10-year period to eligible products from the Andean nations of Peru, Bolivia, Ecuador, and Colombia. Eligible articles would have to meet rules-of-origin requirements similar to those applicable to the Caribbean Basin Initiative. "The Administration looks forward to working closely with the Government of Peru and with the private sectors of the United States and Peru to ensure that the wide-ranging opportunities opened by the ATPA are fully utilized," Clinton said. The proclamation is effective with respect to articles entered, or withdrawn from warehouse for consumption on or after the 15th day after the date of publication in the Federal Register. Copyright 1993 Agence France Presse Agence France Presse August 12, 1993 SECTION: News HEADLINE: Six South American leaders to attend swearing in of Wasmosy DATELINE: ASUNCION ASUNCION, Aug 12 (AFP) - Six South American leaders said they would attend the swearing in ceremony of Juan Carlos Wasmosy as president of Paraguay here Sunday. The presidents of Argentina, Bolivia, Brazil, Chile, Peru and Uruguay will attend the investiture of Wasmosy who was elected May 9 with 40 percent of the vote in an election supervised by 300 international observers. Joao Baena Soares, the secretary general of the Organization of American States and Enrique Iglesias, president of the Interamerican Development Bank also said they would attend. Wasmosy, an engineer, succeeds General Andres Rodriguez who was elected president in May 1989 after leading the coup in February 1989 that toppled his father-in-law, military leader Alfredo Stroessner. Wasmosy and his vice president, Angel Roberto Seifart, will be sworn in on a large stage in Asuncion's Plaza de Armas. Copyright 1993 Agence France Presse Agence France Presse August 12, 1993 SECTION: News HEADLINE: Amnesty urges Sweden to give asylum to Peruvian facing deportation DATELINE: LONDON LONDON, Aug 12 (AFP) - Amnesty International urged the Swedish government Thursday to grant asylum to a young Peruvian woman it is about to deport, saying she risked being killed in her native land. The human rights organisation appealled to the Swedish authorities in a statement issued here to "abide by their international obligations for the protection of refugees and to give (Monica Castillo Paez) protection in Sweden". Earlier Thursday, Swedish police detained Paez, 20, after a hearing in which her final request for asylum or a residence permit was refused. Paez fled Peru in late 1990 fearing for her life after her brother, Ernesto Rafael Castillo Paez had "disappeared" following his detention by the police in October that year, Amnesty said. Ernesto Paez is "now presumed dead". A lawyer looking into his case lost an arm in a letter-bomb explosion in 1991, Amnesty added. "Amnesty International believes that in Peru (Monica Paez) would be at risk of arrest, 'disappearance', torture or extrajudicial execution," said the statement. Shortly after her brother's arrest, the police came to Paez's home several times looking for her. Copyright 1993 Chicago Tribune Company Chicago Tribune August 12, 1993, Thursday, NORTH SPORTS FINAL EDITION SECTION: NEWS; Pg. 2; ZONE: N HEADLINE: U.S. calls Panama a 'conduit' for drug cash BYLINE: By Nathaniel Sheppard Jr., Tribune Staff Writer. DATELINE: PANAMA CITY The Clinton administration's top drug policy official accused Panama Wednesday of falling short in efforts to stem narcotics money laundering. It was Washington's first strong criticism of Panama's anti-narcotics efforts since the U.S. invasion four years ago that ousted dictator Manuel Noriega, now in prison in Florida for drug trafficking. During a stopover while traveling to the cocaine-producer nations of Colombia, Bolivia and Peru, Lee Brown, director of the Office of National Drug Control Policy, said Panama had become a major transit point for cocaine destined for the U.S. and a center for drug money laundering. While praising Panamanian officials for narcotics seizures that "have risen dramatically" since the government of Guillermo Endara came to power Dec. 20, 1989, Brown said: "Panama remains a tempting conduit for financial transactions by Colombian drug cartels. It is both a transit point for money and the site of conversion of funds within the financial system and the Colon Free Zone." Brown specifically criticized the free zone, a duty-free warehousing and sales center for goods shipped to the U.S. and Latin America, for a high volume of cash transactions. About a year ago, authorities confiscated $7 million in cash in a shipment sent through the zone labeled as merchandise. There have been subsequent seizures of tons of cocaine hidden in merchandise headed for the U.S. While seizures have increased, traffickers have taken advantage of holes in Panama's enforcement capabilities. Two cocaine-processing laboratories reportedly were uncovered late last year by authorities in Darien province, near the Colombia border. And Brown revealed the existence of coca cultivation in Panama when he complimented authorities for the first-ever aerial eradication of coca plantations in Darien earlier this year. Publicly, U.S. and Panamanian officials boast of good cooperation in the fight against drugs. But tensions have simmered for for nearly four years. Under strong pressure from the U.S., Panama ratified a mutual legal assistance treaty in 1991. The U.S. had made ratification a condition of aid promised to Panama for rebuilding and paying off creditors after the U.S. invasion. Panamanian officials point out that the U.S. Senate still has not ratified the treaty. In a polite but pointed reference, Vice President Guillermo Ford asked Brown Tuesday: "Please tell President Clinton that we are hoping the U S. Senate will rapidly ratify the (treaty) that Panama ratified more than two years ago that would permit a relation at all (government) levels so that we can control and combat the problem of drugs." Some U.S. senators, fearing corruption, have expressed concern about signing a treaty that would entitle Panamanian officials access to confidential information on suspected traffickers and money launderers. Despite the setback, diplomats are prodding Panama to sign the United Nations' Geneva Convention Against Illicit Traffic in Narcotic Drugs. The convention would mandate reforms in the secretive banking system that has brought billions of dollars in deposits to Panama, and in the country's system of setting up corporations whose principals can remain anonymous. "At stake is not only the reputation of banks and businesses, but the image of Panama," Brown said. "Bad money will eventually drive out good money. Legitimate business could grow reluctant to operate in an environment tainted by even the hint . . . of illegal activity." Panama is not the only problem the Clinton administration faces as its tries to forge a national drug strategy. In Costa Rica, the U.S. faces setbacks because of a dispute over extradition policy. In a decision that puts extradition of 24 U.S.-wanted fugitives in question, Costa Rica's Constitutional Court invalidated that country's extradition treaty with the U.S. The court based its action on the case of a Mexican physician kidnapped and brought to the U.S. to stand trial for the murder of a Drug Enforcement Administration agent. And in South America, Brown must try to revive sagging support for U.S. anti-narcotics efforts. He is expected to stress the administration's planned emphasis on reducing domestic demand for narcotics. The Bush administration focused on the supply side of narcotics and pressured producer nations to reduce coca production, but provided few workable economic alternatives for peasant farmers. Copyright 1993 Inter Press Service Inter Press Service August 12, 1993, Thursday HEADLINE: AID: EC DIGS INTO EMERGENCY RESERVES AS WARS ESCALATE WORLDWIDE BYLINE: by Alecia McKenzie DATELINE: BRUSSELS, Aug. 12 The European Community (EC) is paying out unprecedented amounts in emergency humanitarian aid, especially as conflicts in various parts of the world show no signs of abating. This year, for instance, the executive European Commission had initially allocated 60 million ecus ($72 million) for former Yugoslavia in its humanitarian aid budget, but that amount ran out in just three months. Another 150 million ecus ($180 million) had to be found from the reserve budget and other areas, according to the European Community Humanitarian Office (ECHO). In only the last two months, the Commission has also allocated two million ecus ($2.4 million) to Angola; 650,000 ecus ($780,000) to Somalia; 3.49 million ecus ($4.1 million) to Liberia; one million ecus ($1.2 million) to Lebanon and three million ecus ($3.6 million) to the Israeli occupied territories. Besides helping civilian victims of armed conflicts, the Commission has also given aid to countries struck by natural disasters such as floods and earthquakes. This list includes Nepal, Ecuador and Peru over the past two months, ECHO says. The volume of the demands for aid has meant that establishing ECHO was a necessity for the European Community. The Humanitarian Office was set up just over a year ago with the task of giving emergency aid and food aid. Its aim was to "enhance the efficiency of the Community's own humanitarian aid and ensure a better coordination with other donors and humanitarian organizations", according to EC ministers for development who welcomed ECHO's establishment. With modestly furnished offices in a shiny new Commission building in Brussels, ECHO is being kept busy with the on-going conflicts in Bosnia- Hercegovina, Somalia, Liberia, Afghanistan and Azerbaijan. Since the war began in former Yugoslavia, ECHO has allocated more than 500 million ecus ($600 million) in emergency humanitarian aid to the victims, according to Bernadette Costers, in charge of the office's press information. Since April, it has given about five million ecus (six million dollars) to victims in Azerbaijan. Last year, ECHO spent 423 million ecus ($507 million) in emergency humanitarian aid. In comparison, the total budget for 1993 is 436.8 million ecus ($523 million) -- including the emergency reserve, which has already been dipped into. The funds come from money allocated under the Lome Convention -- a special aid and trade agreement with the African, Caribbean and Pacific Group of States (ACP) -- and from the Community's budget. But the EC is beginning to feel the pinch. Manuel Marin, the European Commissioner responsible for development cooperation and humanitarian aid, recently warned that the aid budget had almost run out and he urged EC member states to do more. The 12-member states, which have their own problems with recession and rising unemployment, have acknowledged that further progress needs to be made in "strengthening cooperation and coordination between the Community and its member states", according to a Development Council resolution last May. The resolution also called for special attention to be given to disaster preparedness, early warnings and "appropriate interventions so as to limit the effects of the catastrophes", and it urged the Community to work with NGO's in implementing emergency aid. ECHO's work actually involves all this. When a disaster occurs in a country, the ECHO staff learns about it through EC delegations, U.N. agencies, non-governmental organizations or government officials. All requests for aid get a thorough examination and ECHO identifies the organization that can best implement the aid in the particular country. It may help the United Nations High Commissioner for Refugees to rent trucks, for instance, for transporting emergency food aid. In regions where there is civil war, most requests for aid come via U.N. agencies or NGOs such as "Medicins Sans Frontieres" and "Save the Children Fund." "In civil wars, it's natural that the requests for aid come from NGOs," says Costers. "Politics has nothing to do with our decision. We are neutral." Copyright 1993 Inter Press Service Inter Press Service August 12, 1993, Thursday HEADLINE: ECUADOR: DUMPING GROUND FOR EXPIRED PRODUCTS FROM THE NORTH BYLINE: by Sergio Gaete DATELINE: QUITO, Aug. 12 Expired and low-quality food products which could put the people's health at risk now abound in Ecuador, experts warn. The Ecuadorean Institute of Standards (INEN) has denounced the existence of more than 160 products of dubious quality and origin which entered the country illegally. "It is the policy of some countries to send products which are almost expired to Third World nations," INEN director Federico Urresta said. He said the labels on the illegal products do not even show their contents, "which could mean that they have banned chemical contents which could be dangerous to human health." "The products come mainly from Europe and the United States and are distributed in Ecuador's main cities under the very noses of local authorities," said a Quito-based businessman who asked not to be identified. "They arrive in trucks, with elegantly dressed salesmen who offer canned and other products at half the price," said the man who sells goods of different brands from various countries. Mexican cheese, Italian sauce, juices, sausage, chocolates, sweets, fruit jams, powdered milk and liquors are some of the expired products which INEN said are made available to the country's 10.5 million inhabitants. Urresta said some products also come from Asia. "But there are also products from Chile and Colombia which do not pass through our health standard tests," he said. "Consumers are the only ones who can stop this illegal market." Last weekend, two people died in Quito after drinking adulterated liquor. Experts say the products were able to enter the country because the Ecuadorean government, which completed its first year term this week, began a fast-track process of opening up its market "to recover lost time" and "modernize" the country's free market economy. Last October, it eliminated barrier tariffs with Colombia and Bolivia. In February, it did the same with Venezuela in compliance with the process of Andean economic integration. Peru, the fifth partner in the group, withdrew from all its commercial compromises for 16 months starting last August. At present, Ecuador seeks to join the Group of Three (G-3) countries composed of Mexico, Colombia and Venezuela. It is also negotiating to reduce tariffs and increase trade with Brazil, Chile, Paraguay and Uruguay. In February, INEN and its Colombian counterpart agreed on 112 norms to monitor the quality of products produced in their countries. These include 28 security norms and quality seals, as well as proper registration with health authorities. Though an Ecuadorean law protects consumers, the Health Ministry and the local governments are not protecting the people enough, Urresta said. "If the Health Ministry had the infrastructure and if it wanted to, in two weeks it could clean the market of all these illegal products," he said. "If this is done every two weeks, no businessman will dare buy products which do not respect the standards imposed by INEN, since they could be imprisoned and their shops could be permanently closed down," he added. To counter the consumption of adulterated products, INEN sends its experts to give lectures to teachers and students. "But it is difficult to evaluate the results," said Luis Vallejo, coordinator of INEN's Department for Consumer Protection. Urresta said many products which cannot enter Mexico because of the country's strict rules are being sent to Central America and from there, to the rest of Latin America. "Industrial countries do not send us their best products. They send the worst," he said. Copyright 1993 Inter Press Service Inter Press Service August 12, 1993, Thursday HEADLINE: PERU: CONGRESS TO INVESTIGATE RAPE OF POLITICAL PRISONER DATELINE: LIMA, Aug. 12 Peru's Congress will investigate chargesby a political prisoner claiming to have been gang raped and impregnated by police, while in captivity, opposition deputy Roger Caceres announced today. The investigation is being conducted by the Congressional Human Rights Commission, which Caceres heads. The commission has asked the interior ministry to strengthen its investigation into the rape of Maria de la Cruz, a 20 year old arrested for alleged ties to the Maoist rebel group "Sendero Luminoso." If de la Cruz's allegations are true, some 40 members of the anti-terrorist police force could be tried for raping the prisoner. On Jan. 6, de la Cruz went to Lima to testify on behalf of a family member accused of being a member of Sendero Luminoso. The family member was later convicted and condemned to life imprisonment for terrorism. "My daughter went without fear, she had nothing to hide, but after several hours of interrogation they told me she would be held for a few days," the girl's mother, Julia Pari, said. Pari said she hired a lawyer to defend her daughter, but the police repeatedly refused to let him see or interview de la Cruz. Several days later, de la Cruz told her mother that, between Jan. 7 and 10, she was blindfolded and taken to a beach south of Lima, along with five other female prisoners, where they were raped and abused by police members. "They undressed me, raped me and then put me in the water before raping me again," de la Cruz told her mother. According to prison authorities, de la Cruz is currently seven months pregnant. Doctors estimate that de la Cruz conceived somewhere between Jan. 7 and 17, while in police custody. De la Cruz remains in a maximum security prison in Lima, despite the fact that military courts acquitted her of all connection to Sendero Luminoso. Nevertheless, a military prosecutor has appealed the decision and de la Cruz must now take her case to the Supreme Court of military justice. Copyright 1993 Inter Press Service Inter Press Service August 12, 1993, Thursday HEADLINE: PERU: U.S. PRESIDENT APPROVES TRADE BENEFITS DATELINE: WASHINGTON, Aug. 12 President Bill Clinton has notified Congress he will designate Peru as a beneficiary of the 1991 Andean Trade Preference Act (ATPA) under which some exports to the United States will be given duty-free treatment. In a letter released today by the White House, Clinton said the move was "an important step for Peru in its effort to fight against narcotics production and trafficking." State Department officials said Peru's eligibility for the ATPA coverage followed word that Lima was close to a final settlement within a long- running investment dispute involving U.S. firms. The ATPA, for which Colombia, Bolivia and Ecuador have already qualified, was approved by Congress as part of former President George Bush's "War against Drugs." Proponents of the measure argued that favourable trade treatment for legitimate Andean exports to the United States would help wean the region's economies and many of its farmers off coca cultivation and drug trafficking. In his letter, Clinton noted "enhanced access to the U.S. market will encourage the production of and trade in legitimate products." But lawmakers, worried about possible Andean competition with products also made in their constituencies, slapped a number of key exceptions to goods qualifying for duty-free treatment when the Act was passed. Such products as textiles and apparel, shoes and other footwear, leather products, petroleum, canned tuna and rum are all excluded from ATPA coverage. "The exclusion list is so broad that Clinton's decision is unlikely to contribute much to a boost in the economy," said one Congressional aide. Copyright 1993 Reuters Limited The Reuter European Business Report August 12, 1993, Thursday, BC cycle HEADLINE: RUSSIAN GOLD-DIGGERS LEAVE COUNTRY IN DROVES DATELINE: MOSCOW, Aug 12 Russia's top precious metals official warned on Thursday that gold- diggers were leaving the chaotic domestic industry in droves for better pay in Angola, Peru, Australia or China. "We are losing our cheap workforce. They are all leaving, and digging other countries' gold at much better pay," said Yevgeny Bychkov, head of the state committee for precious metals. "Of course we're trying to find common ground with these people, but how can we establish order in our gold industry if there is no order all across the country?" he told the financial daily Delovoi Mir (Business World). Bychkov reflected on Russia's gold wealth under dictator Joseph Stalin: "We once had 2,049 tonnes of gold under Stalin. What happened to it? We used it to buy food, grain and even women's stockings." "In one newspaper I read the United States has nearly 8,000 tonnes of gold reserves. Ours are just about 200 tonnes, no more," Bychkov said, adding: "But our gold is kept in special storages strong enough to survive an atomic bomb attack." Details about the gold reserves were kept top secret in the former Soviet Union, but after its collapse in 1991 the figures were made public. Bychkov said in May that his committee had 200 tonnes in reserves and the Russian central bank had some 133 tonnes. Russian gold output this year is officially forecast at around last year's level of 146 tonnes. Copyright 1993 Reuters, Limited August 12, 1993, Thursday, BC cycle SECTION: Bonds Capital Market. HEADLINE: PERU'S INTERBANC TO BE SOLD IN DECEMBER DATELINE: LIMA, AUG 12 Peru's Interbanc will be sold off in December in a privatization process that began with the receipt of technical bids from five investment banks seeking to promote the sale. Luis Hidalgo, privatization committee chief for Interbanc and Banco Continental, said he was pleased with the response from five of the dozen investment banks invited to participate. "We will evaluate the technical proposals of each bank and after opening the envelopes with the economic bids, we should decide on the winner by the last week in August," he said. The banks which presented bids were Merrill Lynch & Co Inc , Donaldson Lufkin and Jenrette, Credit Commercial de France , ING Bank of Amsterdamse Poort and Swiss Bank Corporation . The winner would be charged with evaluating the banks and developing a strategy for the sale of Banco Continental and Interbanc, Peru's second and fourth largest respectively. The Banco Continental sale is set for the first quarter of 1994. Hidalgo said several banks he did not name, had informally expressed interest since the privatization was announced. Asked about President Alberto Fujimori's statements that he wanted foreign banks to come to Peru to help bring down bank interest rates, Hidalgo said there would be no discrimination against national banks in the privatization process. But he added: "The stategy of the sale is to attract the banks with the highest level of technology and professionalism possible in order to improve the quality of services offered in Peru's banking system and stimulate competition." The sale of the banks is part of an aggressive privatization program launched by Fujimori's government in March 1992. Copyright 1993 Reuters, Limited August 12, 1993, Thursday, BC cycle SECTION: Money Report. Bonds Capital Market. HEADLINE: LATAM DEBT MOSTLY BREEZES HIGHER WITH U.S. BOND DATELINE: NEW YORK, AUG 12 Fixed-income Latin American assets continued to breeze higher in the secondary market Thursday fanned by a new rally in the U.S. Treasury market. "It's been what we expected, strength in fixed-income assets," a Latin American debt trader said. "We're watching the long bond and reading the research that says (the yield) is headed down." Before a semi-annual auction Thursday, the when-issued 30-year U.S. bond hit a new intraday record of 6.32 percent. The gains spilled over into Mexican, Argentine and Venezuelan fixed-income par bonds, which were all firmer at midday. The most significant news of the day appeared to be that Canada's Prime Minister Kim Campbell opposed some side deals on the North American Free Trade Agreement that have been worked out with Mexico and the United States. The news weakened the price of Telefonos de Mexico shares in the U.S. but debt traders said it had little impact in the Brady bond market. Mexican floating-rate discount bonds were 1/4 weaker than Wednesday's close at 82-1/2 percent. The pars were up 3/8 at 72-1/4. Argentine pars climbed 1/8 to 56-1/8 and FRBs were up a 1/4 at 72-1/8. Traders have noted a renewal of investor interest in Argentine assets. Venezuelan pars and DCBs were up 3/8 at 69-5/8 and 67-1/2 percent respectively, after approval of a special powers bill Wednesday night in the Senate which gives interim President Ramon J. Velazquez authority to pass 10 pieces of economic legislation held up in Congress. Peru debt was 5/8 stronger at 40-5/8. It had sold off Wednesday after Kidder Peabody released a research report saying it was over-priced. "I just think they're wrong," a trader said. Brazil fixed-rate EXIT bonds rose 1/4 to 59-5/8 percent and IDUs were up 1/8 at 74-1/8. A trader of Brazilian debt said the economy was threatened by an inflation rate that he expected would jump to between 33-34 percent a month shortly. "That puts a lot of pressure on the finance minister (Fernando Henrique Cardoso) to do something in terms of unorthodox measures," the trader said. "That worries me." On the other hand, he said, international reserves are strong enough for the country to be able to afford its own Brady deal without support from the International Monetary Fund. -- Henry Tricks (212) 603-3389 Copyright 1993 Reuters, Limited August 12, 1993, Thursday, BC cycle SECTION: Financial Report. Domestic Money. Bonds Capital Market. HEADLINE: PERU PENSION FUND LAW MODIFIED TEMPORARILY BYLINE: By Mary Powers DATELINE: LIMA, AUG 12 The government temporarily changed the investment limits allowed under a private pension fund law to overcome a problem with a shortage of investment vehicles in Peru's fledgling capital markets, a government official said. Enrique Diaz, assistant director of the Superintendency of Pension Fund Administrators (AFPs), said investment limits have been raised on fixed income instruments until mutual funds are operating and government and corporate bonds are available in the market. "With this change, the AFPs will be able to invest in a reduced number of instruments but they will later be required to diversify," Diaz told Reuters. Decrees this week said AFPs will be allowed to invest up to 40 pct in central government securities, 25 pct in central bank securities, 60 pct in certificates of deposit, 30 pct in financial sector bonds and five pct in short-term financial instruments. The limits for other securities, including corporate bonds and stock exchange securities, have been reduced to 15 pct and eight pct respectively. In the original law, the AFPs were allowed to invest up 30 pct in stock exchange operations and 25 pct in corporate bonds while the limits on the fixed-income instruments were lower. The investment limit for foreign securities remains unchanged at five pct. The modification will last for 60 days. "Instruments like government bonds and corporate bonds will be consolidated in the coming weeks," Diaz said. He said the modification was necessary because AFPs were required on August 5 to begin investing some $ 1.7 million in pension funds already collected. The private pension fund system was launched in late June. So far some 150,000 Peruvians have affiliated themselves with eight APFs registered in the market, officials say. Diaz said the superintendency expects some one million Peruvians to join an AFP within the next year. Government and stock market officials said that as pension funds grow in the coming weeks, the instruments in which to invest will appear in the market. "The demand for the instruments is going to create the supply," said an official at the Economy and Finance Ministry. But an official of a bank which has backed one AFP expressed concern that the Economy MInistry, which has been authorized to issue $ 100 million in bonds for debt restructuring in the private sector, had delayed placing the bonds in the market. Diaz said another problem that the commission charged with risk-rating has yet to begin operating so instruments which require a rating, like stocks, have to be kept at a minimum. Diaz said he expected specialized firms to start up soon in Peru which will rate the firms and then submit the information to the commission for approval. Copyright 1993 Reuters, Limited The Reuter Library Report August 12, 1993, Thursday, BC cycle HEADLINE: PERU ARRESTS GUERRILLAS SAID TO HAVE KILLED JAPANESE DATELINE: LIMA, Aug 12 Peruvian President Alberto Fujimori on Thursday announced the capture of guerrilla teams he said had slain three Japanese engineers two years ago. The Shining Path guerrillas involved were said to be members of ''annihilation squads.'' Fujimori, a son of Japanese immigrants, said a two-year police probe had found that 10 Shining Path guerrillas were linked to the murder of the aid technicians in an agricultural centre in the northern city of Huaral in July 1991. ''The order to attack was given by the so-called 'Comrade Oscar or Marcial,' a member of the central committee of the Shining Path,'' Fujimori told a press conference at the headquarters of Peru's anti-terrorism police (DINCOTE). Comrade Oscar is still at large, Fujimori said. Ten members of Shining Path ''annihilation squads'' from several surrounding towns had descended on the centre after Maria Victoria Fajardo, daughter of a local farmer who often visited the centre to obtain seeds, gained entry, he said. He said the shootings had been executed by three guerrillas named Daniel Ramirez, Placido Bardin and Nelson Ramirez, each one charged with pulling the trigger against one engineer. Several of them would be displayed to the press on Friday, he said. The killings, one of several Shining Path attacks against foreign religious or cooperative workers, led Japan to retire dozens of aid workers serving in Peru at the time. Nevertheless, Tokyo has maintained its economic cooperation which increased sharply under Fujimori's government. Copyright 1993 The Chronicle Publishing Co. The San Francisco Chronicle AUGUST 12, 1993, THURSDAY, FINAL EDITION SECTION: EDITORIAL; Pg. A22; FORUM HEADLINE: The Poverty Connection Editor -- I would like to respond to Libertarian Geoffrey Erikson's letter (Chronicle, August 2) in defense of neo-liberal economic policies -- or ''free market reforms'' -- in Latin America today. Erikson claims that only Latin American countries ''that practice free market reform are . . . crawling out of Third World poverty toward affluence.'' This assertion belies the stark facts on the ground in many Latin American countries. Under an economic austerity program implemented by President Alberto Fujimori of Peru in 1990 at the behest of the World Bank and International Monetary Fund (IMF), more than 5 million Peruvians fell below the extreme poverty level within two years. Half of Peru's population now lives in poverty and real per capita income is below 1970 levels. In Nicaragua, a World Bank-IMF structural adjustment program imposed by President Violeta Chamorro has pushed the country's unemployment rate up to 60 percent. Three years after the end of its civil war, Nicaragua's economy remains trapped in stagnation, spreading poverty and suffers -- like Peru -- one of the highest infant mortality rates in the world. Across Latin America, governments have slashed social expenditures for health care, education and other social programs in order to reduce their budgets as instructed by the World Bank and IMF. The result in many countries has been more poverty, decaying infrastructures and increased hunger and homelessness affecting tens of millions of people across Latin America. Erikson declares that it ''is typical of the Left to point fingers at obvious injustices and blame capitalism'' without showing any connection between the two. I hope that I have helped Mr. Erikson to see the connection. Proprietary to the United Press International 1993 August 12, 1993, Thursday, BC cycle SECTION: International HEADLINE: Peruvian security force members face drug charges DATELINE: LIMA More than 200 members of the Peruvian security forces have been charged with drug-related offenses since 1980, but very few have been convicted, according to a congressional report released Thursday. The report, prepared by a congressional commission on narcotics trafficking, said that of the 202 members of security forces charged, 129 were police officers, 59 members of the army, eight from the navy and six members of the Peruvian air force. The report said 138 of those charged had been dismissed from their duties and the rest were still serving. One of the major concerns raised by the commission was that of the 129 police officers charged, only one was convicted. ''This means either that almost all of the police and military are honest, or there exists great impunity,'' said Julio Castro, a member of the opposition Democratic Left Movement and chairman of the commission. Only 81 of those charged had served in the Huallaga region in northeast Peru, the center of drug trafficking operations in the country, the report said. It said 6,143 members of the security forces had served in the region between 1980 and 1993. ''It is a surprise that the majority of those prosecuted were never in the major drug trafficking zone,'' Castro said. He said the fact indicated that deficient control mechanisms for preventing drug-related corruption among the armed forces and the police. The report said that before 1990, when new measures restricted to two years the time members of security forces can spend in drug trafficking areas, some officers had served for as long as 11 years in the Huallaga region. The 59 army members prosecuted include two generals. A total of 25 of the army members were retired from active service. The Defense Ministry told commission members that the most common offense within the army involved members accepting bribes to allow drug- laden planes to land and take off. Proprietary to the United Press International 1993 August 12, 1993, Thursday, BC cycle SECTION: International HEADLINE: Alleged guerrillas charged in killings of Japanese technicians DATELINE: LIMA President Alberto Fujimori announced Thursday the arrest of three alleged Shining Path guerrillas in connection with the 1991 murders of three Japanese technicians. Fujimori said Daniel Ramirez Martel, Placido Bardial Alca and Maria Fajardo, alleged members of the Shining Path rebel movement, were arrested by the government's special anti-terrorist unit and would be presented in public on Friday. Following the July 12, 1991 slayings, the Japanese government ordered all the country's technicians working in Peru to return home immediately, but Fujimori said Thursday he would the Japanese in an attempt to persuade them to reverse the decision. The three technicians were shot dead in Huaral, 65 kilometers (40 miles) north of Lima where they were working at a horticultural center. Fujimori identified one of the three -- Daniel Ramirez Martel -- as the third-in-command of the Shining Path's number three sub-zone. A fourth alleged assassin, Nestor Ramirez Falero, is still a fugitive, authorities said. arh-emki The Xinhua General Overseas News Service Xinhua General News Service AUGUST 12, 1993, THURSDAY HEADLINE: chinese npc vice-chairman meets visitors from peru DATELINE: beijing, august 12; ITEM NO: 0812137 ni zhifu, vice-chairman of china's national people's congress (npc) standing committee and president of the all-china federation of trade unions (acftu), met with and feted a delegation from the general trade union confederation of Peru (cgtp) here this evening. the delegation, headed by teodulo hernandez valle, secretary general of the cgtp, arrived here yesterday as guests of the acftu. in addition to beijing, they are also scheduled to visit dalian and shanghai. Copyright 1993 Inter Press Service Inter Press Service August 11, 1993, Wednesday HEADLINE: ANDEAN GROUP: WAR ON DRUGS YIELDS FEW RESULTS, U.S. ADMITS DATELINE: SANTA FE DE BOGOTA, Aug. 11 The U.S. undersecretary of state for global affairs, Timothy Wirth, has admitted that the huge sums of money spent by the United States on the war against drugs, have yielded few results. Wirth ended a two-day visit to Colombia today, where he discussed anti- drug efforts with government officials and conducted aerial inspections of areas where illegal crops are being destroyed. Wirth met with Colombian officials to explore alternative forms of U.S. assistance to combat illegal drugs and to discuss other issues such as environmental aid, technology transfer, commerce, and human rights. On August 9 Wirth flew over the department of Huila, one of the main areas where opium poppies are cultivated. He was accompaniedby the U.S. ambassador to Colombia, Morris Busby, and Colombian Foreign Minister Nohemi Sanin. Afterwards, Ambassador Busby stressed his country's interest in intensifying its war against drugs in the Andean subregion, and said the U.S. would assist Colombia in the effort both financially and technologically, through the Andean Trade Preference Agreement (ATPA). The ATPA agreement allows Andean states participating in the war against drugs to export certain products to the U.S. without paying tariffs. In Colombia's case, the tariff exempt items include coffee, flowers, textiles, and leather goods. The U.S. has budgeted $13.041 billion for the war on drugs, of which $478 million is earmarked for Colombia, Bolivia, and Peru. According to the U.S. ambassador, the administration of President Bill Clinton wants to redouble efforts to reduce demand for and production of illegal drugs. The ambassador said special emphasis would be placed on the crop substitution program and the department of Huila would receive $3.5 million for this project. Copyright 1993 Inter Press Service Inter Press Service August 11, 1993, Wednesday HEADLINE: HUMAN RIGHTS: UNITED STATES FREEZES AID TO PERU DATELINE: LIMA, Aug. 11 The United States congress has announced that it will freeze $105 million in aid to Peru until the country's human rights situation improves. The Lima representative of the U.S. Agency for International Development (USAID), George Watchteheim, said today that although some improvement had been noted, the U.S. Congress is not yet prepared to release the funds earmarked for debt payment assistance. The official said that even if congress observes rapid improvements in Peru's human rights situation and decides to release the aid, this would not take place until the first week in September, after the summer recess. Despite the present freeze, the possibility of eventually receiving the $105 million in U.S. aid, enabled the government of President Alberto Fujimori to successfully negotiate the refinancing of its foreign debt with the Paris Club. The aid freeze does not affect other loans from the U.S. to Peru, which include $91.2 million in food assistance, $37 million for projects already in progress, and $35.8 m.Million for research into future programs. Another $25 million has been earmarked for efforts to combat drug trafficking through an assistance program which has been in place since 1983. Referring to requests for funds to finance programs to eradicate coca plantations and substitute these with other crops, Watchtenheim said this decision would depend the U.S. Government's overall anti-drugs strategy. Copyright 1993 Inter Press Service Inter Press Service August 11, 1993, Wednesday HEADLINE: PERU: EC TO DONATE FUNDS FOR AMAZONIAN FLOOD VICTIMS DATELINE: LIMA, Aug. 11 The European Community is to donate $282,000 to assist victims of the heavy flooding in the Peruvian Amazon, according to Sabato Della Monica, the EC's representative in Peru. The donation was approved by EC countries to provide relief for some 300,000 flood victims, mainly farmers, who lost homes and crops after exceptionally heavy rains flooded large areas of Peru's north east jungle region, especially Iquitos, Requena, Yurimaguas and Amazonas. The Amazon area occupies 60 percent of Peru's territory and has more than two million inhabitants, mostly small farmers. The EC funds will be spent on farming equipment, implements and seeds to cultivate the arable land devastated by the floods, Della Monica said. The "Caritas" organization of Spain and its subsidiary in Peru will coordinate the purchase, transport and distribution of the aid. Copyright 1993 Reuters, Limited August 11, 1993, Wednesday, BC cycle SECTION: Financial Report. HEADLINE: LIMA EXCHANGE, PROMPERU SIGN INVESTMENT ACCORD DATELINE: LIMA, AUG 11, REUTER The Lima stock exchange (BVL) and Promperu, a government body formed to promote Peru's image overseas, signed an accord aimed at attracting more foreign investment in the stock market. "This important accord will assure a continuous flow of information between Promperu and the Lima stock exchange and make possible an effective labor of promoting foreign investment in Peru," industry minister Alfonso Bustamente told a press conference. Under the accord the BVL will provide Promperu with information on the companies traded on the exchange and other opportunities in the area of privatization, said BVL president Jose Luque Otero. "We are interested in seeing that the image of the new Peru, the Peru with a free market, clear investment rules and without terrorism reaches investors overeseas," Luque Otero said. Trading on the exchange, where some 300 companies are quoted, has risen steadily over the last year and latest figures show an average of $ 8 million in daily trading. The BVL general stock market index has risen 101 pct since the start of the year, the figures show. Luque said some 70 percent of the capital invested in the stock market is now foreign, including Chilean, U.S., American, Canadian and Australian. Copyright 1993 Reuters, Limited August 11, 1993, Wednesday, BC cycle SECTION: Money Report. Bonds Capital Market. Financial Report. HEADLINE: KIDDER TURNS CAUTIOUS ON PERU AFTER DEBT RALLY DATELINE: NEW YORK, AUG 11 Kidder Peabody and Co Inc has turned cautious on Peruvian debt and says the rally that the firm partly heralded last November may have reached its peak. In an analysis updating Kidder Peabody's views on Peru, analysts Arturo Porzecanski and Gary Evans praise the government's efforts at pacifying the country and improving the economy. The report says Peruvian debt prices have more than doubled this year. "Such an outstanding performance diminishes the appreciation potential," it said. "In view of the length of time that may be needed to hammer out a Brady deal, and the likely degree of debt and past-due-interest forgiveness, we believe that Peruvian debt obligations have been trading above fair value." Peru is due to start debt talks with a steering committee of creditor banks in the U.S. on August 25. Kidder said the "strategy, timing and efficacy" of the government's negotiations will be fundamental to price movements. It also said the economic appeal of any debt-equity conversion would be important. "Timing is key in analyzing potential price movements, with any significant delay in the debt-restructuring and debt-to-equity conversion process lowering present values and then putting downward pressure on prices," the report said. It said one of the key unknowns is treatment of Peru's interest arrears, which -- at more than 90 percent of the stock of principal -- are much higher than any other country that has tried to negotiate a Brady deal. It laid out three scenarios for Peruvian negotiations. The country has a 50 percent chance of achieving a deep discount, a 40 percent chance of making no progress in the talks, and a 10 percent chance of a swift Dominican Republic-type deal, it said. Last November, Kidder issued a report saying Peru had "turned the corner" and predicted that its debt price was on the verge of a big rally. Since that report, Peruvian debt has risen over 150 percent, the report said. Copyright 1993 Reuters, Limited August 11, 1993, Wednesday, BC cycle SECTION: Money Report. Bonds Capital Market. Domestic Money. HEADLINE: LATAM DEBT IN CATCH-UP WITH US BOND, PERU SLIDES DATELINE: NEW YORK, AUG 11 Most Latin American Brady bonds stumbled and then rallied Wednesday in a belated response to the latest surge in the U.S. Treasury market, traders said. Peru debt slumped, however, after a Kidder Peabody and Co report showed the company had taken a cautious attitude to Peruvian assets and considered them overpriced. The debt was off its lows in late trade. Traders said the rise in Mexican Bradies was a case of simple catch-up with the 30-year Treasury bond. In Argentina they said there were signs of decent buying. "Sometimes the Bradies are very quick (to catch up with U.S. Treasuries) and other times they nap. Today was just catch-up day," a head LDC trader said. The 30-year Treasury bond rose less than 1/4 of a point Wednesday and was overtaken by the Brady bond price increases. When the long bond rallied sharply Tuesday, the Bradies were left far behind, however. Mexican assets may also have been buoyed by speculation in the Mexican press that the country is getting close to clinching side agreements for the North American Free Trade Agreement with the U.S. and Canada. Several traders note that the NAFTA remains no done deal, however, One factor mentioned by two traders for the Brady bond rally is the potential for yet further declines in the yield on the 30-year U.S. Treasury bond. They noted a commentary by Lehman Brothers economist Steven Slifer who anticipates the bond could yield as low as 5.5 percent by mid- 1994. It closed Wednesday at a record low of 6.44 percent. "A supportive long bond always helps any market," a trader said. Mexican pars closed up 3/8 at 74-7/8 percent bid, and discounts were up 1/4 at at 82-3/4 percent. Argentine pars rose 1/2 to 56 percent, and FRBs were 5/8 firmer at 71-7/8 percent. Traders said the market has begun discounting a disappointing rating of Argentina by Moody's Investors Services Inc last Friday, and that investors were holding their heads up again. "In Argentina there was a bit of real buying. It's not just playing catch- up, there's real money going back in," a trader said. Peruvian loans sank to 39-1/4 percent bid shortly after Kidder's report, but it pared some of those losses and closed 1-1/4 off at 40 percent. "There were some bargain hunters -- if you can call Peru a bargain at 40 percent. Call them bottom fishers," one trader said. Another said he disagreed with Kidder's report and said the buying at the day's lows suggested people still think the country is well priced in the 40 percent range. -- Henry Tricks (212) 603-3389 Copyright 1993 The Times Mirror Company Los Angeles Times August 11, 1993, Wednesday, Home Edition SECTION: Part A; Page 1; Column 1; Foreign Desk HEADLINE: COLUMN ONE; FIGHTING TO SAVE THEIR OWN; IN BELIZE, IT'S THE JAGUAR. IN COLOMBIA, IT'S THE ANDEAN CONDOR. LATIN AMERICANS ARE MORE AGGRESSIVELY PRESERVING IMPERILED SPECIES AFTER YEARS OF RELYING ON OTHERS. BYLINE: By WILLIAM R. LONG, TIMES STAFF WRITER DATELINE: SILVA JARDIM, Brazil The tawny, doll-sized monkeys with bushy manes and beseeching eyes showed no alarm when three men invaded their tropical forest. Instead of fleeing, the golden lion tamarins circulated overhead, lolling from branch to branch, some venturing down to within a few feet of their visitors. "They are super-calm. They're just curious," explained Fernando de Moraes, the manager of a 13,000-acre reserve where Brazilian environmentalists, with international support, are trying to save the tamarin from extinction. But it isn't just the monkeys the activists want to save: To protect the tamarin, they must also preserve its natural habitat -- and hundreds of other animal and plant species that depend on one another for survival in the wild. This makes the cute, friendly animal a perfect "flagship species," a living emblem of the endangered lowland rain forest northeast of Rio de Janeiro along the Atlantic coastline. North Americans have long been familiar with the concept of flagship species, used in the fight to preserve the whooping crane and the brown pelican. Now the idea has taken hold in Latin America: It's the vaquita porpoise in the Gulf of California. The jaguar in Belize. The Andean condor in Colombia. The giant river otter in Peru. The Spix's macaw in Brazil. The huemul deer in southern Argentina and Chile. Throughout this region, a rapidly spreading movement is relying on flagship species to rally government, public and international support for conservation causes. These imperiled animals have also received heightened attention from what has become a driving force in the Latin American conservation movement: Local "NGOs" or non-governmental organizations that have sprung up like mushrooms in a humid forest during the past several years. "I think Latin America is leading the developing world in the rapid increase of NGOs," said Thomas Lovejoy, an environmentalist with the Smithsonian Institution in Washington. "There has been an explosion in public awareness and new conservation organizations." The regional boom in such grass-roots groups has been sparked partly by environmental activism in the United States and Europe. Many of the Latin American groups work closely with international counterparts, drawing on their expertise. Environmentalists began to pop up when military regimes started to ease their repression in the late 1970s and early 1980s. As democracy returned to country after country, the green groups multiplied. In Brazil, where concern has focused on the Amazon forest, more than 1,000 of them have been formed since the armed forces gave up power in 1985. "It had to do mostly with the empowerment of private organizations with democratization," said Lou Ann Dietz of the World Wide Fund for Nature. The emergence of environmental groups has not halted the devastation in the region. Deforestation, erosion, water pollution and other forms of ecological damage continue to mount in Latin America. Preservation efforts also continue to be too costly for many countries plagued by poverty. And while the number of parks and preserves has grown, many are "paper" efforts and offer flora and fauna little real protection from squatters, loggers and poachers. But the environmental movement's impact is growing as the groups gain experience and influence. In Mexico, the Monarch Butterfly Foundation is working with the government to save preserves for the migrating insects. The Peruvian Assn. for the Conservation of Nature led a successful drive to create a 678,000-acre park where the endangered yellow-tailed woolly monkey finds refuge. Such organizations often can act while government agencies are bogged down in bureaucracy. "In almost all our projects, if there weren't NGOs, they wouldn't work," said Maria Iolita Bampi of the official Brazilian Environment Institute. Ilmar Santos, director general of the 5-year-old Biodiversitas Foundation, said Brazilian organizations like his spend much of their time assisting and cajoling the government. "If the government did things perfectly, NGOs . . wouldn't have a job," Santos said. Many Latin American environmentalists have realized the import of working with residents of threatened areas, helping communities with economic problems and enlisting cooperation in conservation projects. To educate local communities and the public, the approach of designating flagship species is useful, said Russell A. Mittermeier, president of the U.S.- based Conservation International. "Flagship species grab people much more than the general concept of saving ecosystems," he noted. In Silva Jardim, a rural town 75 miles from Rio de Janeiro, environmentalists have worked with ranchers and residents for a decade, promoting preservation of the tamarin and what remains of its forest habitat, which once covered these coastal lowlands. When the project began in 1983, about 250 tamarins lived in the 13,000-acre Poco das Antas Biological Reserve. Today, there are about 300, the most the forest can support. Another 120 monkeys have been reintroduced into native woods on 10 area ranches. Those animals came mostly from foreign zoos, participants in a related, captive-breeding program for the species; some 550 golden lion tamarins live in zoos around the world. "Through the reintroduction, we are protecting private forests," said Denise Rambaldi, a forestry engineer and educator in the tamarin project. "When you protect the golden lion tamarin, automatically you are protecting the forest and all of the other species in the forest." Rambaldi said ranchers cooperate with the project because they understand the importance of preserving forests to also protect the soil and water. But the prestige of the local flagship species also plays a role. "The lion tamarin is known throughout the world, so for them it is very chic to say they have lion tamarins on their ranch," she said. The project must incorporate many more private woods to fulfill its goal of preserving 57,000 acres -- the amount of forest scientists say is needed to support the 2,000 tamarins that will guarantee the varied genetic pool required to preserve the species. Among foreign groups and government agencies participating in the project are the World Wide Fund for Nature, the Smithsonian, the Friends of the National Zoo and Wildlife Preservation Trust Fund International. The Brazilian groups include the Brazilian Foundation for the Conservation of Nature and the Primate Center of Rio de Janeiro. IBAMA, Brazil's environmental protection agency, also is active. That array is typical of the kind of cooperative approach that often is most successful in working with flagship species. Notable examples of flagship species projects abound: Brazilians are trying to save three kinds of blue macaw, the Spix's and the Lear's in the northeast and the hyacinth in the Pantanal wetlands. The muriqui, largest monkey in the Americas, is another flagship species for the preservation of the estimated 10% that remains of the coastal forest. Brazil's IBAMA has established a center on Itamaraca Island, near Recife, for protection of the Brazilian coastal manatee, endangered by hunting. Common elements in the many projects include a growing awareness that in Latin America, environmental problems -- and their solutions -- go beyond a single species, ecosystem or country. Times staff writer Juanita Darling in Mexico City and special correspondents Adriana von Hagen in Lima, Peru, and Steven Ambrus in Bogota, Colombia, contributed to this report. Celebrity Species Here is a sampling of flagship species in the ecological spotlight in Latin America: VAQUITA PORPOISE As a result of efforts by various non-governmental organizations, the Mexican government has created a 2.3-million-acre reserve in the northern Gulf of California and Colorado River delta -- the only area where a small porpoise known as the vaquita is found. Fishermen had been catching juvenile vaquitas in their nets, and the mammals were also suffering from the decreased flow and contamination of Colorado River waters. Estimates of the surviving porpoise population were as low as 100. "People were horrified because it was just disappearing before our eyes," said Evelyn Wilcox, World Wildlife Fund marine coordinator for Latin America. A local group has begun working with gulf fishermen, and the WWF and Conservation International are helping. "The reserve will not only preserve the endangered species but also protect an array of commercial fish," said Alejandro Robles, director of Conservation International's office in Guaymas, on the gulf. ENGLISH MONKEY Known as the uacari in Portuguese, this large primate has white fur and a bald, bright-red head. It lives in a system of big islands and small lakes in Brazil's eastern Amazon region, and it is threatened with extinction by hunters. "They eat it and they sell it," said Paulo Lyra, a WWF officer in Brazil. The state of Amazonas has established the 2.8-million-acre Mamiraua Ecological Station but has provided no guards or money to protect it. So the WWF and Brazilian environmentalists, with financial help from the British government, are setting up a conservation association to work with rural residents. Other rare species in the preserve include the recently discovered blackish squirrel monkey, the umbrella bird, two species of fresh water dolphin and the endangered Amazon manatee. The residents in the past have allowed outsiders in to hunt English monkeys and other animals, fish and cut wood, Lyra said. "But now the population is going to look after the place." MONARCH BUTTERFLY Seven years ago, the Mexican government created five mountaintop sanctuaries to protect the winter home of the monarch butterfly, which migrates 5,000 miles to summer in the United States and Canada. Today, two of those sanctuaries are deforested and the other three have been ravaged by loggers. Like loggers in the Pacific Northwest who resist preservation of the spotted owl, the 24 peasant communities located near the Mexican reserves fear that their livelihood is endangered by attempts to protect the monarch. Last winter, 70% of the monarch population was wiped out. The government blamed a cold snap, but biologists said the shrinking oyamel fir forests provided the butterfly too little protection against the weather. Lincoln Brower, a zoologist who has studied the butterfly for nearly two decades, called last winter a warning: "If we ignore it, we will lose them forever." The Mexico City-based Monarch Butterfly Foundation, which assists the government with four sanctuaries, is leading an effort to reforest and to persuade peasants that there is more money to be made in ecotourism than logging. JAGUAR The flagship species for Belize's 108,000-acre Cockscomb Basin Forest Preserve is the jaguar, one of Latin America's biggest cats. The preserve is also home to a large variety of other species, including howler monkeys translocated from other areas of the Central American country where they are threatened by deforestation. The government has turned management of the Cockscomb over to the Belize Audubon Society. The WWF helps with funding and technical assistance. The park's rangers are all people from surrounding villages who are familiar with the natural environment and how local people use and abuse it. "They are aware of threats to the area," said Pamela Hathaway, a WWF project officer for Central America. ANDEAN CONDOR Working with the San Diego Zoo and other private groups, the Colombian government is reintroducing Andean condors into the country's high Cordilleras, where hunting and human encroachment had reduced the bird's population to an estimated 30. Since 1989, 26 young zoo-bred males have been set free at three locations. The male condors have been fed and monitored and now are ready for breeding with several females introduced in the past year. The goal is to establish a growing and self-sufficient population of the big birds; that will also require careful conservation of their natural environment. GIANT RIVER OTTER The world's largest otters, measuring up to six feet and weighing as much as 70 pounds, were formerly found in rivers and lakes throughout South America's humid tropics. But poaching for the international fur trade has left only 1,000 to 3,000 of the animals. About 100 of them are protected in Manu National Park, a Massachusetts-sized wildlife reserve created in southeastern Peru in 1973. Christof Schenck, who studies Manu's otters for the Frankfurt Zoological Society and participates in a preservation project for the animals, said the otter serves as an indicator of how healthy the ecosystem is. "Whenever giant otters still find living conditions, i.e., healthy water and a rich choice of fish, the rain forest environment is still intact," Schenck said. BLUE MACAW Brazil is trying to save three kinds of blue macaw, the Spix's and the Lear's in the northeast and the hyacinth in the Pantanal wetlands. The Spix's, native to the semiarid interior of Bahia state in northeastern Brazil, near the Sao Francisco River, is the rarest bird in Latin America. Only one of the parrots, a male, is known to survive in the wild, although many live in zoos around the world. After the wild bird was found near the town of Curaca in 1990, the government's environmental protection agency IBAMA formed an international committee of official agencies and private groups to promote the regeneration of the Spix's. The committee includes U.S.-based Conservation International, the International Council for Bird Preservation, the WWF and three Brazilian groups. Environmentalists are conducting an education campaign to promote conservation among residents of the area and are planning to help them build fences to keep livestock from eating tender shoots that propagate trees needed for the macaw's survival. And next year, biologists plan to reintroduce a captive female Spix's to mate with the wild male. "The male is going to serve as a guide for the female to learn survival in nature," said Marcos Da'Re, an IBAMA biologist working on the project. YELLOW-TAILED WOOLLY MONKEY This endangered Amazon primate, endemic to the cloud forests of northeastern Peru, was discovered by German naturalist Alexander von Humbolt in 1802 and "rediscovered" by an American expedition in 1974. The rediscovery spurred the creation in 1983 of the Rio Abiseo National Park. The yellow-tailed woolly "became a symbol of the need to protect the cloud forest," said Silvia Sanchez, president of the Peruvian Assn. for the Conservation of Nature, which spearheaded the drive to create the 678,000-acre Rio Abiseo park. It is home to many species found nowhere else, such as the hairy armadillo and the Huallaga toucan. But park funding from the WWF and the University of Colorado has run out, and the number of park rangers has dwindled from nine to three. SEA TURTLES The leatherback and other sea turtles along the Atlantic coast of Brazil -- including the loggerhead, the hawksbill the green ridley and the olive ridley -- are making a comeback thanks to a joint public-private project called Tamar. The main partners are IBAMA and the Pro-Tamar Foundation, headed by oceanographer Neca Marcovaldi. The turtles, some weighing as much as 1,500 pounds, were disappearing rapidly. Poachers were stealing eggs and hunting females when they came out of the sea to lay them in the sand. Other turtles were dying after being caught accidentally in fishermen's nets. Tamar works with local fishing communities along more than 600 miles of coast, paying fishermen to protect female turtles and eggs and teaching them how to resuscitate turtles captured in their nets. "It's done with pressure on the chest, almost the same technique you use on people," Marcovaldi said. GRAPHIC: Photo, COLOR, Brazilian environmentalists are trying to save golden lion tamarin monkeys like this one from extinction. FABIO COLOMBINI / Reflexo Texto & Foto Agency; Photo, COLOR, English monkey ; Photo, COLOR, Blue hyacinth macaw ; Map, COLOR, Cockscomb Basin Forest Preserve, Belize. TODD TRUMBULL / Los Angeles Times Copyright 1993 Reuters, Limited The Reuter Business Report August 11, 1993, Wednesday, BC cycle HEADLINE: PERU'S FUJIMORI INAUGURATES YANACOCHA GOLD MINE DATELINE: CAJAMARCA, Peru Saying the project marked the start of Peru's recovery as a major mining nation, President Alberto Fujimori Wednesday launched a large, foreign- financed Andean gold mine venture. The ceremonies marked the first stage of the Yanacocha gold mine in the northern Andes financed by an international consortium with an initial investment of $ 34 million. Yanacocha is a joint venture of subsidiaries of the U.S. Newmont Mining Co., which owns 40 percent; the French state-owned Bureau de Recherches Geologiques et Miniers, holding 26 percent and Peruvian Compania Minera Condesa S.A with a 34 percent stake. Fujimori said the export of bars made up of 60 percent gold and 40 percent silver would increase Peru's export earnings by $ 120 million annually. Mining officials said the yearly output would double Peru's current gold production. Fujimori said the project was made possible by economic reforms and his government's anti-guerrilla strategy. "We now have the legal framework so that foreign firms like Newmont Mining come here with confidence to work alongside Peruvians to help create jobs," Fujimori said on inaugurating the mine. Peru, a nation with huge mineral wealth, has seen its mining output depressed over the last decade by a lack of investment. Yanacocha, an open-pit mine, is located at 13,000 feet above sea level some 300 miles northeast of Lima in Cajamarca department. It plans an output of 80,000 troy ounces in the first year with production to rise steadily. Copyright 1993 Reuters, Limited August 11, 1993, Wednesday, BC cycle HEADLINE: U.S. TOP DRUG FIGHTER URGES ACTION IN PANAMA DATELINE: PANAMA CITY The U.S. government's top drug fighter, Lee Brown, urged Panama Wednesday to step up efforts against illegal trafficking and money- laundering. "To send a strong message to the cartels and their money managers that Panama means business in the war on drugs, offenders must be caught, tried and punished," Brown said at the end of a two-day visit. In an address to top government officials and U.S. businessmen and military staff here, Brown said Panama was "uniquely vulnerable" to money laundering and was a major trafficking route between South America and the United States. He called for tighter customs controls, new rules to ensure the declaration of cash imports over $ 10,000, ratification by Panama of the United Nations' 1988 Vienna Convention on trafficking, and better enforcement of existing anti-drug laws. Brown flies to Colombia later Wednesday and is scheduled to visit Bolivia and Peru later in the week on his first overseas trip since President Clinton named him head of the Office of National Drug Control Policy in June. The three Andean nations are the biggest drug-producers in the region. Brown said the Clinton administration was working out a new approach to the drug problem, based on attacking internal consumption. He said new policies including community-led solutions, alternatives to jail for non-violent offenders, better treatment for addicts and more anti- drug education would be announced later in the year. Copyright 1993 Business Wire, Inc. Business Wire August 10, 1993, Tuesday DISTRIBUTION: Business Editors & Computers/Electronics Writers HEADLINE: International Banking conglomerate reaps savings by integrating telephone and fax calls with data traffic DATELINE: SIMI VALLEY, Calif. Advanced Compression Technology Inc. (ACT) recently announced the installation of an international banking network that is one of the first to combine compressed telephone and fax transmissions with data and LAN communications using a new any-to-any networking system called ACTnet. The international banking organization comprises Atlantic Security Bank (ASB) of Miami, and Banco de Credito del Lima, the largest bank in Peru with more than 230 branches. Together they forecast a 25-percent to 30- percent reduction in telecommunications costs by eliminating long-distance telephone and fax calls charges between sites in Lima, Miami, New York City and Panama City, Panama. "Besides dramatically reducing our telecommunications costs, the network has enabled us to consolidate our data-processing function in Miami and Panama. We eliminated a processing center in Lima, thereby saving $300,000 to $400,000 annually," stated John Partridge, senior vice president and manager for ASB. The new all-digital network links Miami to New York City over a 56 Kbps terrestrial circuit and Lima and Panama City via two 64 Kbps satellite circuits. Employees at any site can now call employees at any other site through the contiguous private network. The new network provides protected access to data from any office in Panama, Peru or the United States. Transfer-of-fund instructions and loan documents are faxed over the network continuously and there is constant phone communications during the course of the business day -- all for a fixed cost over leased digital lines. ACTnet combines data from AS/400 hosts and PC LANs with digitized and compressed telephone and fax calls, then translates that information into Frame Relay packets. All traffic is then routed through the network to any connected site. Inter-company and inter-affiliate voice and fax calls, as well as data communications, now bypass the public telephone network and avoid costly international toll charges. After traversing the network, both telephone and fax calls can go off the network at the remote site, incurring only local call charges. Advanced Compression Technology Inc. of Simi Valley manufactures and markets systems that integrate voice, fax, data and LAN communications for cost-efficient wide area networking. CONTACT: Advanced Compression Technology Inc., Simi Valley Marilyn F. Marme, 805/527-2281 (phone) 805/520-8099 (fax) Copyright 1993 Reuters, Limited August 10, 1993, Tuesday, BC cycle SECTION: Financial Report. HEADLINE: CHILE COPPER FIRM MADECO TO INVEST $ 97 MLN DATELINE: SANTIAGO, AUG 10 Chile copper manufacturing company Manufacturas de Cobre SA (Madeco) plans to invest $ 97 million between 1993 and 1997 to improve production capacity by 96 percent, El Diario newspaper said. Madeco said an increase in installed production capacity will allow it to improve its market share in Argentina, Brazil and Peru, El Diario said. Madeco posted first half net profit of 6.71 billion pesos in 1993 against 4.37 billion pesos in the same period of 1992. Copyright 1993 Reuters, Limited August 10, 1993, Tuesday, BC cycle SECTION: Financial Report. HEADLINE: MINERO PERU MOVES BACK SALE OF CERRO VERDE MINE DATELINE: LIMA, AUG 10 State-owned Minero Peru has moved back the sale of its Cerro Verde copper mine to October 13 at the request of most of the 19 firms which pre-qualified to submit bids, the official El Peruano newspaper said. El Peruano quoted an official of Minero Peru's privatization committee, Rafael Toledo, as saying that prospective bidders had made the request in order to conclude their analyses of the mine and verify its reserves. Latest studies show Cerro Verde in the southern region of Arequipa has 380 million tonnes in reserves and a potential output of 40,000 tonnes of copper ore a day. Toledo told El Peruano that the delay would give the privatization committee more time to determine the investment required to boost output and to set the base price, which was due to be announced on Tuesday. He said both figures would be announced "in the coming days." Privatization officials failed to return phone calls. The economic publication Semana Economica meanwhile reported that the committee expects several of the 19 firms to submit bids since "12 are constantly visiting the company and seeking information." But Semana Economica said bidding could be affected by the September 30 sale of Chile's El Abra, which has major copper deposits. Many of the same firms are expected to take part in that sale. Cerro Verde is Minero Peru's second privatization. Late last year, Mantos Blancos, a Chilean subsidiary of Anglo American Corp , acquired the Quellaveco copper deposit for $ 12 million, committing to invest up to $ 560 million. Minero Peru will also sell a gold deposit at San Antonio de Poto, a refinery at Ilo, two small copper deposits and Peru's largest zinc refinery at Cajamarquilla. Copyright 1993 Reuters, Limited August 10, 1993, Tuesday, BC cycle SECTION: Money Report. Bonds Capital Market. HEADLINE: NO PERU CABINET CHANGES SEEN NOW -PRIME MINISTER DATELINE: LIMA, AUG 10, REUTER No changes in Peru's cabinet are forseen for the time being, Prime Minister Oscar de la Puente said. De la Puente, who said on the eve of Peru's National holiday two weeks ago that there would likely be new cabinet members, gave no explanation as to why President Alberto Fujimori had changed his mind or when changes might be made in the future. Copyright 1993 Reuters, Limited August 10, 1993, Tuesday, BC cycle SECTION: Money Report. Bonds Capital Market. HEADLINE: PERU'S CAMET IN CHILE FOR BUSINESS SEMINAR ON PERU DATELINE: LIMA, AUG 10, REUTER Peru's economy minister Jorge Camet traveled to Chile Tuesday to participate in a seminar on doing business in Peru and hold talks with Chilean finance minister Alejandro Foxley, a ministry spokesman said. Camet, who flew to Santiago with his chief adviser Roberto Abusada, the head of the Committee on Privatization Carlos Montoya and other officials, was due to speak Wednesday at the seminar called "Business Opportunities in Peru." A growing number of Chilean firms have shown interest in investing in Peru, business and privatization sources say. Copyright 1993 Reuters, Limited August 10, 1993, Tuesday, BC cycle SECTION: Money Report. Bonds Capital Market. HEADLINE: PERU PRESIDENT TO GET POWER TO NAME TOP MILITARY DATELINE: LIMA, AUG 10, REUTER Peru's president will have the power to appoint generals of the army, air force, and police and navy admirals under an article approved in a new draft constitution. The measure, approved after a heated session of Congress late on 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. Nevertheless, 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. Congressmen of the official Nueva Mayoria-Cambio 90 party argued the military promotions are a function which corresponds to the president, adding that allowing congressional participation led to lobbying by the military. But opposition legislators said the new system gives the president too much power and fails to provide a system of check and balances in a system where the military has long yielded influence. "Congress is giving up an ability which it had for 170 years," Enrique Chirinos Soto of the rightist Renovacion party said. The draft constitution, which is due to be finished within the next two weeks, is due to be submitted to a popular referendum in the coming months. Copyright 1993 Reuters, Limited The Reuter Library Report August 10, 1993, Tuesday, BC cycle HEADLINE: FUJIMORI MEETS CHINESE DEPUTY FOREIGN MINISTER DATELINE: LIMA, Aug 10 President Alberto Fujimori held talks on Tuesday with a Chinese delegation led by deputy foreign minister Liu Hua Qiu on strengthening bilateral relations, a statement from the president's office said. The hour-long meeting at Government Palace was also attended by China's chief delegate for Andean affairs Yin Hen Gnin and adviser for Latin America Wang Ghen Jea, it said. Liu arrived in Peru on Saturday from Bolivia, where he attended the inauguration of President Gonzalo Sanchez de Lozada and was due to travel to Paraguay. China has increased its trade and cooperation with Peru since Fujimori, the son of Japanese immigrants, took power in 1990. The Chinese conglomerate Shougang Corp bought the state-owned Hierro Peru iron firm late last year. The Xinhua General Overseas News Service Xinhua General News Service AUGUST 10, 1993, TUESDAY HEADLINE: u.s. anti-drug chief begins latin america tour DATELINE: santa fe de bogota, august 10; ITEM NO: 0810022 lee brown, director of the united states national police for drug control, begins his tour of four latin american countries today, according to local press. brown, who took office on july 1, will visit panama, colombia, bolivia and peru on his first tour of latin america, aiming to reaffirm the clinton administration's efforts to fight against the traffic of drugs. in an interview with reporters the night before his departure, brown said that he will consult with his counterparts in the four countries and explain the anti-drug strategy of the clinton administration. Copyright 1993 Inter Press Service Inter Press Service August 10, 1993, Tuesday HEADLINE: PERU: POLITICAL PARTIES HAGGLE OVER MILITARY PROMOTIONS BYLINE: by Abraham Lama DATELINE: LIMA, Aug. 10 Peru's opposition has criticized a draft law that allows the head of state to decide on promotions in the armed forces, saying it will only serve to increase President Alberto Fujimori's power and that of the military. Congress approved the bill yesterday by 48 to 17. It removes the parliament's right to have the final say on military promotions. These will be decided by the president if a new constitution including this and other reforms is approved at a referendum slated for October. The decision provoked strong opposition from Fujimori's adversaries, who were unable to block it since they are in the minority in congress. They see it as a further move to authoritarianism through constitutional reform. "To give the president the power to decide on promotions is giving too much personal influence to members of the military," said opposition legislator Roger Caceres. Henry Pease, of the Democratic Leftist Movement, said that "promotions of officers will no longer involve the democratic participation of parliament, but instead will be arbitrary decisions made by the armed forces and the president." Independent Congressman Enrique Chirinos Soto normally backs Fujimori, but in this case he is strongly opposed. "The parliament is abdicating the right that it has had for 170 years and the result will be an imbalance of power between the executive and legislative branches," he said. Since Peru won independence from Spain 172 years ago, military promotions for the rank of colonel to general have been decided by the Senate. But the rule remained a dead letter when military regimes ruled the country, a reality Peru has experienced for nearly half of its 172 years. Legislators from the ruling Cambio 90 Party defended the reform as a means of divorcing the army from politics. "Military promotions must continue to be a strictly administrative and institutional issue, separate from deliberationsby the political parties," said ruling party politician and constitutional lawyer Carlos Ferrero Costa. Gilberto Siura, president of the Commission for the Defense of Congress, pointed out that the current constitution recognizes the president of the republic as the supreme head of the armed forces, and "therefore, one of his functions is to ratify military promotions." Military leaders, who according to many are the real power behind Fujimori, have made no comments regarding the decision, but their position in favor of the constitutional reform is well known through statements by retired generals who serve as spokespersons. "The decision will help to depoliticize the armed forces, in that members of the military will no longer need to lobby the parties for support, offering future political loyalty in order to receive promotions," said retired General Gaston Ibanez. The opposition disagrees. "On the contrary, the armed forces will be more politicized than ever, but all power will lie in the hands of the president who, according to Fujimori's plans for constitutional reform, will gain even more power," said opposition leader Lourdes Flores, member of the Popular Christian Party. Social Democrat Jose Barba Cabellero is not only opposed to the president's right to approve promotions, but also suggests that "the new constitution should establish the right of members of the military to disobey an order by the government which is unconstitutional." Countered ruling party parliamentarian Martha Chavez, "That would legalize the right of military rebellion against civilian governments. The military could have a coup against the government using the argument that the government is violating the constitution." Copyright 1993 American Lawyer Media, L.P .. The Recorder August 10, 1993, Tuesday SECTION: COMMENTARY; International Transactions; Pg. 8 HEADLINE: Southern Similarities; The pendency of NAFTA highlights deals with Mexico, but there's a certain style required for creating cross-border joint ventures anywhere in Latin America BYLINE: MARIO L. BAEZA; Mario L. Baeza is an attorney with Debevoise & Plimpton in New York. The pendency of the North American Free Trade Agreement has spurned heightened interest within the international community in pursuing joint ventures with well-positioned Mexican companies. U.S. companies as varied as Corning Glass, Wal-Mart Stores, PepsiCo,, the Ford Motor Co., Southwestern Bell, the Compaq Computer Corp., and the General Electric Co. all have entered into joint ventures with Mexican companies expecting to meet pent-up demand within Mexico for their products and services. The road international businesses travel to joint ventures can be rocky, but it is one often worth traveling. What follows is a step-by-step guide to move you through the process of structuring a joint venture in Latin America. The focus is on Mexico, but many of the issues apply to structuring transactions throughout Latin America, especially in Venezuela, Argentina and Peru. DISCLOSURES AND CONFIDENTIALITY Mexican business executives have become increasingly accustomed to requiring very tough confidentiality agreements as a condition to moving beyond preliminary discussions. In many cases, these confidentiality agreements are even tougher than the standard U.S.-style agreements. This is because many Mexican companies have never disclosed to third parties the kind of information necessary for a prospective foreign joint- venture partner to make its investment decision. Even public Mexican companies have often not been required to disclose to the level of detail required by a joint-venture partner. The emphasis on the confidentiality agreement also arises from the fact that the Mexicans know that many foreign entities are looking at more than one joint-venture candidate and may ultimately invest in their competitor. Under those circumstances, it is understandable that the Mexican company will be reticent to discuss with an uncommitted suitor its market strategy, new products and planned responses to competitive threats. The practical approach I have found is to require the foreign-venture partner to disclose, in stages and along with the Mexican joint-venture partner, its own confidential plans and undertakings. This tends to create trust and to enforce the notion that the joint venture is a two-way street from the outset. The irony is that confidentiality agreements not involving trade secrets or proprietary know-how are difficult, if not impossible, to enforce in Mexico. That is why these agreements are often governed by New York law, with submission-to-jurisdiction clauses in the case of non- U.S. foreign entities. Do not be alarmed if the corporate chart of a Mexican company and its subsidiaries and affiliates looks absolutely Byzantine. It is quite common for Mexican companies to have 100 or more subsidiaries. This is because Mexico does not have the equivalent of ERISA, with its non-discrimination rules applicable to all affiliates within an employer group. Thus, if senior management wants to receive special pension or other benefits, they will typically reside in a separate management company that provides managerial and other services to the group. SPEAKING THE LANGUAGE Language is another important issue at this stage. In Mexico, once you delve below the senior level, English-speaking abilities can drop off precipitously. Moreover, most of the documents you will review will be in Spanish. Spanish speaking and reading skills are therefore essential. A customary request in connection with due diligence is to review five years' worth of audited financial statements of the Mexican entity. But in cases on non-public Mexican companies, these financial statements, even if they're certified, may provide a totally distorted picture of how the enterprise has performed historically, because of the effect of Mexico's hyper-inflation. For example, the fact that revenues and profits in peso terms have gone up by 20 percent each year for five years does not mean much if the Mexican inflation rates were 60 percent in one year, 120 percent in the next, 19 percent in the next, and so on. After taking into account inflation (or the devaluation of the peso relative to the dollar), the revenue and earnings streams could show actual losses rather than gains. Before a foreign entity can understand the true financial condition of an operation, an investment bank or accounting firm will need to walk them through what is known as a B-10 accounting, to reconcile the Mexican financial statements to generally accepted U.S. or international accounting principles. (To get a sense of B-10 accounting and reconciliations, simply read the introductory text to most offering circulars for Latin American issues.) Be forewarned: This restatement and reconciliation can be both time-consuming and expensive. DETERMINING VALUE Assuming that the chemistry is good between the parties to the joint venture and that the due-diligence review has been favorable, the key issues become value and price, and how to determine them. Should value be based on projections that include the effect of the foreign joint-venture partner's management expertise and technology transfers? Or should value be determined without giving effect to the prospective contributions of the foreign joint-venture partner? Tension arises because many Mexican companies suffered tremendously during the lost decade of the 1980s, when there was virtually no available capital (domestic or foreign) and when trade barriers protected inefficiency. From the Mexican point of view, the past is not reflective of a company's true potential or actual value. Similarly, in the case of public Mexican companies, what role, if any, should the trading price of the shares listed on the Bolsa Mexicana de Valores (the Mexican stock exchange) have on price negotiations? In the United States, the price of shares on the stock exchange is often the best determinant of the fair-market value of the enterprise. But in Mexico, like much of Latin America, often only 10 percent to 15 percent of the outstanding stock is traded on the local stock exchange. The rest of the shares are held by family members and friends. How should the highly volatile and imperfect market for a minority of the Mexican company's shares affect the joint-venture price? And, despite the existence of a tough insider-trading law in Mexico providing for treble damages and criminal penalties, the head of the Bolsa acknowledges that there has never been an enforcement action under that law. While the Mexican authorities are working on implementing regulations and procedures, assume that trading on inside information does happen, which may help explain why stock seems to keep rising during the pendency of joint- venture discussions. One final note on value and price: In the case of publicly traded Mexican corporations, a technique called Cruce en Bolsa allows sellers of unlisted and low-basis stocks to sell their shares over the exchange free of capital gains and other taxes. The purpose of this law is to encourage family owned companies to list shares on the Bolsa and to diversify their shareholder base. Most Mexicans will try to structure a transaction that permits for Cruce en Bolsa treatment. But in the case of two-party transactions, this has become almost impossible, though much effort and expense will likely be dedicated to trying. SIZE AND STRUCTURE Obviously, the size of the proposed equity stake has important economic and governance-related implications. There are some critical accounting issues that flow from being in a 50-50 shared-control situation, as opposed to being a controlling shareholder of the venture. Under generally accepted accounting rules applicable to public companies, if a Mexican company is controlled by a U.S. company (through stock ownership or otherwise), the U.S. parent must consolidate the Mexican company in its financial statements. This may be beneficial to the U.S. parent, to the extent that it gets to reflect the assets, equity, revenues and earnings of the joint venture on its consolidated books. If the Mexican joint venture has low debt relative to assets and is profitable, this will generally enhance the parent's balance sheet. The huge downside is that the Mexican joint-venture company will be required to present full-blown audited financial statements prepared in accordance with generally accepted U.S. accounting principles. This can be an enormous and difficult undertaking. If the U.S. joint-venture partner does not control the Mexican joint-venture company, then the equity method of accounting must be used. Under the equity method, the U.S. parent company records its investment in the Mexican joint venture at cost and only reflects certain summary financial information in its profit and loss statements. Depending on the objectives of the U.S. or foreign investor, the difference between enjoying the benefits of full consolidation vs. the equity method can be critical. The key issue to remember is that with a 50-50 sharing arrangement, veto rights over essential decisions or joint decision making are not considered control and will not entitle the U.S. company to consolidate the assets and income of the joint venture. There is one other accounting issue that has created enormous problems. If the investment by the U.S. company in a Mexican joint venture equals more than 20 percent of the U.S. company's assets, then even a joint venture with a private Mexican company will require that the U.S. company submit complete, audited, separate financial statements of the Mexican joint venture, prepared in accordance with generally accepted accounting procedures in the U.S. companies' Securities and Exchange Commission filings. On more than one occasion, this requirement has blown the deal. Mexico permits a wide variety of corporate-governance structures, assuming you are not in an industry reserved exclusively for Mexicans or that requires control to remain in Mexican hands. The foreign joint- venture partner should keep this in mind: Shareholder agreements, like those among shareholders to vote their stock for the election of directors or to vote as a block, are largely unenforceable in Mexico. This has led to a myriad of subtle and creative structures (like multiple classes of stock, tiered trusts, and special economic inducements and penalties) that are designed to give the joint-venture parties the same basic protections usually found in U.S.-style shareholder agreements .. DISPUTE RESOLUTION One critical element of a joint-venture agreement, especially in circumstances of shared control, is the dispute-resolution mechanism. Every day, it seems, we are asked to concoct a new scheme to avoid the breakup of the venture. In one transaction, before buy-out rights could be triggered, the board chairs of the parent companies of each of the joint- venture companies were required to travel to Switzerland and to spend half a day personally trying to resolve the differences. We reasoned that before lower-level executives would request this of their bosses, they would strive mightily to solve their problems. In the end, dispute resolution comes down to a number of key issues: * Who will have the right to buy out whom? * How will price be determined? A current favorite is the "Russian roulette" technique, in which one party comes forward with a price per share, and the other party can either sell to, or buy out, the first party at that price. Alternatives include mediation among three investment bankers. * How will the buyer finance the buy-out, and is it likely that it will be able to do so? * Who controls the business pending financing of the buy-out? * Finally, can the business in reality be torn apart with the foreign partner terminating technology licenses, etc.? U.S. ANTITRUST REGULATIONS One often overlooked complexity in structuring joint ventures is the possible applicability of the pre-merger notification provisions of the Hart- Scott-Rodino Act. You should not that if a U.S. company is acquiring more than $ 15 million or 50 percent of the equity of a Mexican company or new Mexican corporate joint venture, and if the Mexican company has at least $ 15 million of assets located in the United States or sales of $ 25 million in or into the United States, then the parties may have to make an HSR Act filing. In several matters I have been involved in, this required massive submissions of documents to the Federal Trade Commission and to the Department of Justice. In case to follow-up inquiries by the government (the "request for additional information" procedure), responsive documents will typically have to be translated into English. Be prepared. In most cases Mexican companies have not kept track of their business along the lines of U.S.-style requirements. They do not have widely available much of the statistical information a filing may require. In one transaction, our deal was delayed more than six months while the Mexican company complied with the FTC's request for additional information. In conclusion, I would like to make two general observations. First, Mexican business executives are good, tough negotiators. They use as their principal weapons time, confusion, and, when all else fails, El Patron. El Patron is the ultimate controller of the family wealth and power. He is seldom seen in transactions and is always portrayed as quixotic. But he maintains final say on all fundamental decisions and by his distance, and at times seeming indifference, assumes bargaining leverage. (I have spent many a nervous night huddled around a closing table with the parties in complete agreement, all of the documents laid out on the table, awaiting the appearance of El Patron. If he did not show up, there would be no deal and a likely career change for the Mexican executive. The point is that no matter what level of corporate officer you are dealing with, the deal is not done until El Patron signs off.) Second, in my experience, there are two kinds of foreign joint-venture partners: those that believe in "the Mexico Story" and those that are skeptical. The Mexico Story is based on a 30-year examination of the Mexican economy and concludes that (a) the 1982 debt crises and the lost decade of the 1980s were an aberration, (b) corrective macroeconomic policies and fundamental structural changes have been put in place, (c) the Mexican economy has been restored and its future prospects are bright, and (d) NAFTA will become effective in the reasonably near future. In my experience, if the prospective joint-venture partner does not believe in the Mexico Story, at the end of the day, it will most likely not consummate the joint-venture transaction. The Xinhua General Overseas News Service Xinhua General News Service AUGUST 10, 1993, TUESDAY HEADLINE: peru wants better relations with china, fujimori says DATELINE: lima, august 10; ITEM NO: 0810057 peruvian president alberto fujimori today told visiting chinese vice- foreign minister liu huaqiu that he was happy with sino-peruvian relations. fujimori hoped the two countries would further strengthen their relations by expanding economic cooperations and increasing trade. he said the peruvian government attached great importance to its relations and cooperation with china, which he said is an increasingly important country in world affairs. he said peru was interested in increasing imports from china, especially machinery products. he welcomed more chinese enterprises to invest in peru and assured that their interests would be protected. the chinese vice-foreign minister said fujimori's visit to china in 1991 had played an important role in promoting the bilateral relations. liu hoped that both countries would work together to promote their relations. liu arrived in lima on august 7, the second leg of his tour of three latin american countries. he had visited bolivia and will go to colombia.