BORDER WAR BETWEEN ECUADOR AND PERU THE ANDES, FEBRUARY 10, 1995 pproximately 130 casual- ties-the numbers are dis- puted-have been reported so far in the armed conflict between Ecuador and Peru which erupted over long-disputed territory on January 26. Conflict has periodi- cally broken out on the anniver- sary of the signing of the 1942 Rio Protocol border pact, which ended the last war between the two countries in which Peru claimed victory. This year, the dispute over control of some 340 square kilometers of oil-rich jun- gle which straddles the border near the Cenepa River intensified because the internal politics of both countries are currently fav- orable to the expression of belli- cose national pride. The conflict has helped Peruvian president Alberto Fujimori hold on to his leading position in the polls in the run-up to this April's presi- dential elections, while the initial movement of troops was ordered by Ecuador's Sixto Durin-Ballen, a weak president without a Con- gressional majority, whose popu- larity has been on the decline as a result of the effects of his neo- liberal adjustment policies. In mid-February, negotiations to resolve the dispute were held in Rio de Janeiro between the vice foreign ministers of both nations and representatives of Argentina, Brazil, Chile and the United States-the four guaran- tors of the Rio Protocol. Peru- vian Vice Foreign Minister Eduardo Ponce presented a pro- posal in hopes of reaching a last- ing compromise between Ecuador's demand for access to the Amazon via the Cenepa river and Peru's right to preserve its territorial integrity. Ponce's plan was a response to a gesture by Durn-Ballen, who broke with 35 years of political tradition by recognizing most of the Rio Pro- tocol terms, contesting only the 80 kilometers of border that were never physically marked. -Giovanni E. Reyes and InterPress Service MEXICO "RESCUED" AT THE BRINK WASHINGTON, D.C.; MEXICO CITY, FEBRUARY, 1995 n January 31, President Bill Clinton announced a plan-- which did not require legislative approval-to use $20 billion from the U.S. Exchange Equal- ization Fund to help counter the dramatic fall-out of the sudden, sharp devaluation of the Mexi- can peso that took place in the last week of December. The Administration also pressured the International Monetary Fund (IMF) to loan Mexico $17.5 bil- lion, $10 billion more than the multilateral institution had pledged on January 26. The funds from the Exchange Equalization Fund and the increased commitments from the IMF and the European-based Bank for International Settle- ments (BIS) amount to a total pool of credit guarantees of $50 billion. The announcement of Clinton's plan helped calm the financial markets in the United States and Mexico, which had fallen sharply because of the uncertainty about whether the U.S. legislature would ultimately approve the assistance package. The peso devaluation came in two stages. The first stage, announced on December 20, lasted only one day. On that date, then-finance minister Jaime Serra Puche announced that the Zedillo Administration would discontinue the Salinas Adminis- tration's policy of supporting the Mexican currency at a level of 3.46 pesos per dollar. Under Salinas, whenever the peso approached that level, the Banco de M6xico-the central bank- would buy pesos in order to prop up the Mexican currency. The Zedillo Administration decided to raise the intervention level to 4.00 per dollar. The decision came after the Central Bank was forced to spend an estimated $4 billion of its reserves to support the peso dur- ing a two-day period on Decem- ber 19 and 20. The move backfired, however, since the devaluation caused massive speculative selling of the peso on the foreign- exchange markets. In response, on December 21, the Zedillo Administration was forced into the second stage, announcing plans to abandon the policy of intervening in the market to sup- port the peso and allowing the Mexican currency to float freely against the dollar for 60 days. Along with this decision, busi- ness and labor representatives agreed not to seek price or wage increases during the 60-day peri- od. This agreement, however, was superseded by an emer- gency economic plan announced on January 3, which was itself in shambles by early February. One of the most significant problems President Ernesto Zedillo will have to begin to address is a huge growth in Mexico's foreign debt, which is due to reach an estimated $164 billion. This total-which does not yet include the loans from the Clinton package-represents both the largest debt in Mexican history and the highest debt in Latin America. According to some estimates, the total debt- of which the public sector is expected to incur $108 billion- represents about 50% of Mexi- co's GDP for 1995. In addition to payments of principal and interest on the inter- national loans, the government has also been forced to raise interest for short-term securities even beyond their previously high rates in order to keep them attractive to private investors, especially foreigners. The decline in the value of the Mexican peso since the currency crisis exploded has caused monumental losses for foreign investors. Wall Street investment experts, for example, estimate that U.S. investors in stocks and bonds may have lost between $8 and $10 billion between mid-December and the end of January. According to economists at DRI/McGraw-Hill interviewed by the New York limes, U.S. investors represent $45 billion to $50 billion of the $73 billion in total foreign investment now in Mexico. Of the U.S. holdings, roughly $15 billion is in direct investment in factories, machin- ery and buildings, which are largely immune to devaluation, particularly if their goal is to make goods for export from Mexico. The remaining $30 bil- lion to $35 billion, however, is in stocks, government bonds and other forms of interest-bearing peso securities, the value of which is directly affected by devaluation. The largest losses since mid- December were reported by U.S. investors in Mexican stocks, since they suffered not only from the peso's devaluation, but also from falling stock prices. Their total holdings were esti- mated at roughly $20 billion as of December 1, but the value of those investments plunged to just $13.5 billion by December 26. In addition, the remaining $12 billion to $15 billion in peso notes and bonds held by U.S. investors registered an estimated loss of about $3 billion as a direct result of the devaluation. Investors in stocks and bonds in other "emerging markets" immediately began selling off their holdings out of fear that the currency crisis in Mexico would trigger similar problems else- where. Indeed, should a wave of devaluations hit the South Amer- ican countries, investors would also suffer monumental losses as they did in Mexico, because most of the foreign investment that has poured into other nations in the region in the last four years is also concentrated in Continued on page 44 CONTINUED FROM PAGE 2 "portfolio holdings" in stocks and bonds, which would drop in value with devaluation. Of the $115.4 billion in new foreign investment that entered the region in 1992 and 1993, for example, only 27% was in direct investments, with the remainder in stocks and bonds. -SourceMex MEXICANS BLUDGEONED BY THE CRISIS OAXACA, JANUARY 30, 1995 The inhabitants of this provin- cial capital of some 300,000, like all but the richest of Mexicans elsewhere, are being bludgeoned by the latest economic crises and the Zedillo government's efforts to restore investor confidence. The austerity measures of the current Program for the Economic Emer- gency, like the pact of the previous Salinas Administration, are much more effective than are the con- trols on inflation. So, once again, the greatest sacrifice is being demanded from those who can least afford it. In this city, where the cost of liv- ing was already one of the highest in the republic, prices have gone up an average of 25% to 30% in just one month following the mid- December devaluation of the peso. The minimum wage, however, was allowed to rise only 7%. In wage zone C, which includes Oaxaca, it is now less than 14 pesos per day, which at roughly 5 pesos to the dollar equals $2.80. Oaxaqueiios are now paying 13% of the daily minimum wage (DMW)-1.80 pesos-for a small taco at a street stand, 18% of the DMW-2.50 pesos-for a liter of ultrapasteurized milk, and 21% of the DMW-3 pesos-for a local daily newspaper. A men's guaya- bera shirt, on sale, costs a week's minimum wage, 250.24 pesos. The middle classes are also hurt- ing, and right where their status lies. Construction materials rose an average of 25%, and home mort- gages went up 15% to 48% per year. Interest on bank credit cards is up 30% to between 50% and 60% per year. For those who wish to drown their despair, however, the picture is not overly bleak. With 14 pesos-a day's minimum wage-one can buy a bottle of rea- sonably drinkable Mexican caber- net sauvignon. -Ronald Waterbury U.S. TROOPS TRAIN IN GUATEMALA GUATEMALA CITY, FEBRUARY 6, 1995 The U.S. Defense Department is going ahead with its annual Strong Roads program in Guatemala, despite a recent surge of interna- tional condemnation of human rights violations by the Guatemalan army. Between Janu- ary and June 1995, some 3,700 U.S. Army reservists and National Guard troops will work with the Guatemalan army building roads, hospitals and schools as part of their annual training. The 88th U.S. Army Reserve Command from Ft. Snelling, Min- nesota is leading this year's Strong Roads program, dubbed "Task Force Timber Wolf." Rotating groups of approximately 300 U.S. soldiers will spend two weeks each in the southern Guatemalan provinces of Jutiapa and Jalapa. Guatemala's Strong Roads project is part of the Defense Department's multimillion-dollar Humanitarian and Civic Assistance Program tar- geting Latin America and other strategic areas. Critics of Strong Roads, such as the Network in Solidarity With the People of Guatemala (NISGUA), say the project lends credibility to an army that has killed or "disap- peared" tens of thousands of peo- ple. The United States has long acknowledged that the Guatemalan army violates human rights. The Bush Administration cut off mili- tary aid to Guatemala in 1990 after members of the Guatemalan secu- rity forces were implicated in the rape and torture of nun Dianna Ortiz and the murder of rancher Michael Devine, both U.S. citi- zens. And according to the State Department's annual report for 1994, human rights violations in the country increased substantially last year. But the U.S. Embassy in Guatemala says Strong Roads is providing a positive model for the Guatemalan army as it prepares for the postwar era. Grassroots organizers in Guatemala say they welcome help in reconstructing their country, but say that help should come in the form of civilian, not military pro- jects. The current peace talks between the Guatemalan National Revolutionary Unity (URNG) and the government have highlighted the issue of the military's involve- ment in civilian affairs. The Civil Sectors Assembly, a civilian advi- sory body which includes both far-right politicians and widows of those killed by the army, told the United Nations, "The army should not take part in develop- ment projects or any other activi- ties outside the defense of national sovereignty." -Laura Proctor BOUTROS-GHALI WARNS OF CONTINUED IMPUNITY IN HAITI PORT-AU-PRINCE, FEBRUARY 3, 1995 As the United Nations gets ready to deploy 7,000 troops to Haiti on March 31 to replace the U.S.-led force, the Haitian public has grown increasingly frustrated at the impunity enjoyed by ex-mil- itary personnel and members of paramilitary organizations, none of whom have been brought to justice for the serious human rights abuses they committed during the military dictatorship. In a January 17 report to the United Nations, Boutros Boutros- Ghali remarked that the Haitian situation is still volatile, aggravat- ed by angry discharged Haitian soldiers and by the continued activities of paramilitary groups. The UN Secretary General wrote that while "politically motivated violence and human rights abuses" are down, "there are reports of violent attacks by former section chiefs, attaches or alleged FRAPH members..., murders are reported almost daily," and bands of former attachs or FRAPH members have "sought to intimidate...local popu- lar organizations." The violence, he wrote, is "committed by gangs armed with high-caliber firearms, which indicates a probable link to former paramilitary networks." Boutros-Ghali urged the U.S.-led forces to step up efforts to disarm the civilian population, especially the paramilitary forces, before the turnover. No investigations have been launched yet into the 1993 murder of prominent Aristide supporter Antoine Izmery or the more recent attacks on Aristide supporters in Le Borgne, Raboteau or Cit6 Soleil, despite well-documented investiga- tions by local and international human rights organizations, includ- ing the OAS/UN International Civilian Mission. Meanwhile, the U.S. government continues to dominate the "restruc- turing" of the justice system and selection of candidates for the new The world matters. Give it a read. I1O1[1ii] 1101fE111. 209 Co(ll . St. m liiiitm on T 0T4001 '02/65, 2.523 * FAX W2/652-3T3,i Introductory subscriptions $20. Special rates for studtlnts, low-income upoll request. National police. un January 2u at the Embassy, the United States "graduated" two dozen judges from a U.S-run course. In the last week of January, U.S. officials oversaw the examination of over 2,000 police candidates, in many places with no Justice Ministry presence. On the basis of their scores from these exams designed in Washington, D.C., about 300 men and women were chosen to enter the U.S.-run police academy. -Haiti Info and NotiSur Sources: Giovanno E. Reyes is a graduate student in Latin American history at the University of Pittsburgh. InterPress Service is an international news service based in Italy. Its dispatches can be read on-line in the Peacenet confer- ences: ips.espanol and ips.english. SourceMex and NotiSur are available on- line from Latin American Data Base, Latin American Institute, University of New Mexico, Albuquerque, NM 87131; (800) 472-0888. Ronald Waterbury, who teaches anthropol- ogy at Queens College, CUNY, is currently on research leave in Oaxaca, Mexico. Laura Proctor works for the news agency CERIGUA in Guatemala City. The Haitian Information Bureau (HIB) publishes Haiti Info, a bi-weekly news bulletin, in Port-au-Prince. For subscrip- tion information: HIB, do Lynx Air, Box 407139, Ft. Lauderdale, FL 33340; (e-mail: hib@igc.apc.org).
