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Arg1996

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<s>[INST] Roque Fernandez's honeymoon with investors will [/INST] end, and a more vibrant economy will be expected. </s>

<s>[INST] Anything more than standard austerity measures will [/INST] require political skills that the mild-mannered Mr. Fernandez does not have. </s>

<s>[INST] He will need political support [/INST] of a kind only a president can supply. </s>

<s>[INST] Carlos Saul Menem came to power [/INST] in 1989, and his government has radically changed Argentina. </s>

<s>[INST] The country is caught in a transition [/INST] from a highly distorted state run economy to a more liberal economy. </s>

<s>[INST] If Mr. Menem truly wants to leave a meaningful [/INST] legacy, he must resist the ever-present temptation of anything-goes populism and become a genuine, deep reformer. </s>

<s>[INST] Mr. Menem has the political capacity; doing anything less will [/INST] risk all that he has already achieved to restore Argentina as a serious place to do business. </s>

<s>[INST] ___ Document 122 of 500 Argentine Finance Chief Faces Dilemma --- New Minister [/INST] Must Boost Growth Without Reviving Inflation Author: By Jonathan Friedland Publication info: Wall Street Journal , Eastern edition [New York, N.Y] 29 July 1996: A8. </s>

<s>[INST] accountid=28034 Abstract: Argentina's new economy minister, Roque Fernandez, not only has a [/INST] tough act to follow in his charismatic predecessor Domingo Cavallo, he faces the same policy straitjacket that ultimately cost Mr. Cavallo his job. </s>

<s>[INST] Mr. Fernandez, 49 years old, Argentina's central bank chief for the past five years, was appointed [/INST] to the new post Friday after President Carlos Menem sacked Mr. Cavallo for his inability to invigorate Argentina's weak economy, while satisfying the tough budgetary demands of the international financial community. </s>

<s>[INST] Mr. Fernandez's deputy, Pedro Pou, [/INST] was named as his successor at the central bank. </s>

<s>[INST] The low-key economist, trained at the University [/INST] of Chicago, won't find it any easier to speed up a recovery. </s>

<s>[INST] Mr. Fernandez "is hemmed in by the same constraints that faced Cavallo," says Geoffrey Dennis, Latin American equity strategist at Bear [/INST] Stearns & Co. Full text: BUENOS AIRES -- Argentina's new economy minister, Roque Fernandez, not only has a tough act to follow in his charismatic predecessor Domingo Cavallo, he faces the same policy straitjacket that ultimately cost Mr. Cavallo his job. </s>

<s>[INST] Mr. Fernandez, 49 years old, Argentina's central bank chief for the past five years, was appointed [/INST] to the new post Friday after President Carlos Menem sacked Mr. Cavallo for his inability to invigorate Argentina's weak economy, while satisfying the tough budgetary demands of the international financial community. </s>

<s>[INST] Mr. Fernandez's deputy, Pedro Pou, [/INST] was named as his successor at the central bank. </s>

<s>[INST] The low-key economist, trained at the University [/INST] of Chicago, won't find it any easier to speed up a recovery. </s>

<s>[INST] Mr. Fernandez "is hemmed in by the same constraints that faced Cavallo," says Geoffrey Dennis, Latin American equity strategist at Bear Stearns & [/INST] Co. Over the weekend, Mr. Menem and his new minister pledged little change in the government's market-oriented economic policies and reiterated strong support for its cornerstone, a convertibility program that requires each Argentine peso in circulation to be backed by a dollar in reserves. </s>

<s>[INST] This program, introduced by Mr. Cavallo in 1991, killed hyperinflation and, together [/INST] with aggressive privatization of government properties, set off a growth spurt that for four years made Argentina one of the world's best-performing economies. </s>

<s>[INST] But the constitutionally enshrined convertibility program has prevented the government from using monetary policy [/INST] to prod the economy out of a nasty recession that began with the flight of investors from the region after Mexico devalued its currency in December 1994. </s>

<s>[INST] That's been especially painful [/INST] because the government can't use spending either. </s>

<s>[INST] Along with a harsh 4.4% contraction in the [/INST] country's gross domestic product last year came a sharp reduction in the tax take. </s>

<s>[INST] Despite a major crackdown on evasion since Mr. Menem [/INST] came to office in 1989, when hard times hit last year many Argentines stopped paying taxes. </s>

<s>[INST] The result: a $2.5 billion [/INST] budget deficit for the first half of 1996. </s>

<s>[INST] To prevent the country from failing to meet targets agreed with the International Monetary Fund last [/INST] year, Mr. Cavallo lately had cut back everything from the number of government departments to the tax-free status of lunch vouchers, which form an important part of urban private-sector pay packages. </s>

<s>[INST] He also was feverishly working international capital markets, raising about $5 billion so far [/INST] in 1996 in such currencies as Italian lire and Dutch guilders in a bid to lower government debt-service levels and to keep the economy greased. </s>

<s>[INST] Mr. Cavallo's exertions have produced a modest recovery, but nowhere near enough [/INST] to meet the 5% full-year growth projection he's been touting or to pare an unemployment rate that stands at a near-record 17.1%. </s>

<s>[INST] Unions, clergy and lately, even top members of Mr. Menem's ruling Peronist Party, [/INST] have slammed Mr. Cavallo for catering too much to the demands of the international investors and doing too little to alleviate the pain at home. </s>

<s>[INST] Investors will be keeping their fingers crossed "that Menem in his heart doesn't want to throw away what Cavallo has accomplished" by bringing back [/INST] the freespending ways that wrecked the Argentine economy in the 1980s, says Ernest Brown, Latin America economist at Morgan Stanley & Co. Over the next few days, analysts will be watching bank deposits, which have surged far above their pre-Mexico crisis high on glimmers of a recovery. </s>

<s>[INST] Argentines are usually quick to demand dollars and bolt when they are nervous [/INST] about the course of policy, says Jorge Mariscal, a strategist at Goldman, Sachs & Co., adding, "but so far, we haven't seen a panic". </s>

<s>[INST] On Friday, the Merval stock index fell 4% while the price [/INST] of Argentina's Brady bonds closed down 2.5%, but up slightly from their low after Mr. Cavallo's departure was announced. </s>

<s>[INST] --- Argentina's Dilemma Unemployment Is Still High Average unemployment rate 1996* 12.1% [/INST] 1995 18.6% 1994 11.4% 1993 9.6% *Most recent official estimate Source: Ministry of Economy Credit: Staff Reporter of The Wall Street Journal </s>

<s>[INST] ___ Document 158 of 500 Larcenous Legacy: A New Latin America Faces a Devil of Old: Rampant Corruption --- Free [/INST] Markets and Democracy Have Done Little to Stem Growing Tide of Scandal --- Creaky Wheels of Justice Author: By Matt Moffett and Jonathan Friedland Publication info: Wall Street Journal , Eastern edition [New York, N.Y] 01 July 1996: A1. </s>

<s>[INST] accountid=28034 Abstract: Raul Salinas de Gortari has [/INST] emerged as an icon of Latin American corruption, even in cyberspace. </s>

<s>[INST] The brother of Mexico's former president recently became the star of the [/INST] Internet's "Almoloya Page" -- named for the high-security prison where Mr. Salinas is being held on charges of illegally amassing $120 million. </s>

<s>[INST] "You are the worst," reads one [/INST] of the more printable electronic-mail messages sent to him. </s>

<s>[INST] Elsewhere in Latin America, a [/INST] host of major cases involving alleged graft are unfolding. </s>

<s>[INST] A dozen Argentine officials have been indicted on [/INST] charges of committing a multimillion-dollar fraud in connection with an International Business Machines Corp. </s>

<s>[INST] Scores of Venezuelan financiers face criminal charges of [/INST] looting hundreds of millions of dollars from banks that have gone belly up. </s>

<s>[INST] Brazilian authorities are investigating allegations of fraud [/INST] at one collapsed financial institution that will cost taxpayers an astounding $5 billion. </s>

<s>[INST] In Ecuador, the vice president and economic strategist, Alberto Dahik, [/INST] fled to Costa Rica after an Ecuadorean court issued a warrant for his arrest on charges of embezzlement. </s>

<s>[INST] Unfortunately, Latin America's justice system has [/INST] proved itself woefully inadequate to police this newly globalized economy. </s>

<s>[INST] In Argentina, 95 officials linked to [/INST] the government of President Carlos Menem have faced corruption investigations. </s>

<s>[INST] There have been three convictions, while the rest [/INST] of the inquiries have been dismissed or are stuck in the legal pipeline. </s>

<s>[INST] A recent survey by the magazine Veja of Brazil's 100 biggest [/INST] white-collar crime cases of the 1990s revealed that only five of the alleged perpetrators had ever gone to jail. </s>

<s>[INST] The remaining cases were still [/INST] in the courts, or had been dropped. </s>

<s>[INST] Even after former President Fernando Collor de Mello was impeached [/INST] by Brazil's Congress on corruption charges in 1992, the Supreme Court subsequently found insufficient evidence to convict him. </s>

<s>[INST] Full text: Raul Salinas de Gortari has [/INST] emerged as an icon of Latin American corruption, even in cyberspace. </s>

<s>[INST] The brother of Mexico's former president recently became the star of the [/INST] Internet's "Almoloya Page" -- named for the high-security prison where Mr. Salinas is being held on charges of illegally amassing $120 million. </s>

<s>[INST] "You are the worst," reads one [/INST] of the more printable electronic-mail messages sent to him. </s>

<s>[INST] In reality, Mr. Salinas, who is [/INST] suspected of selling favors to industrialists, has plenty of competition. </s>

<s>[INST] In Latin America's rollicking era of free-market [/INST] economics and anything-goes ethics, scandal is one thing that comes cheap. </s>

<s>[INST] Venezuela's top court last month found former Venezuelan President Carlos Andres Perez guilty [/INST] of misusing a $17 million secret fund, making him the first major Latin American economic reformer to be convicted in a corruption-related case. </s>

<s>[INST] Elsewhere in Latin America, a [/INST] host of major cases involving alleged graft are unfolding. </s>

<s>[INST] A dozen Argentine officials have been indicted on [/INST] charges of committing a multimillion-dollar fraud in connection with an International Business Machines Corp. </s>

<s>[INST] Scores of Venezuelan financiers face criminal charges of [/INST] looting hundreds of millions of dollars from banks that have gone belly up. </s>

<s>[INST] Brazilian authorities are investigating allegations of fraud [/INST] at one collapsed financial institution that will cost taxpayers an astounding $5 billion. </s>

<s>[INST] In Ecuador, the vice president and economic strategist, Alberto Dahik, [/INST] fled to Costa Rica after an Ecuadorean court issued a warrant for his arrest on charges of embezzlement. </s>

<s>[INST] This parade of corruption allegations points to a paradox in Latin America's reform process: [/INST] It had long been an accepted article of faith that free-market economics, combined with greater democratization, would make the region's business and government activities more transparent. </s>

<s>[INST] It is just that the players have changed, [/INST] from bureaucrats and military dictators to a new class of closely allied entrepreneurs and politicians. </s>

<s>[INST] "It used to be most of corruption was petty stuff like paying off a tax [/INST] inspector or offering a bribe to get a paper stamped," says James Wygand, managing director of the Brazilian office of Kroll Associates, the New York private investigative firm. </s>

<s>[INST] "Nowadays, it's more opportunistic, institutionalized [/INST] and very close to the style of organized crime. </s>

<s>[INST] Indeed, with billions of dollars of foreign [/INST] investment flooding the region, the temptations for malfeasance are greater than ever before. </s>

<s>[INST] Unfortunately, Latin America's justice system has [/INST] proved itself woefully inadequate to police this newly globalized economy. </s>

<s>[INST] In Argentina, 95 officials linked to [/INST] the government of President Carlos Menem have faced corruption investigations. </s>

<s>[INST] There have been three convictions, while the rest [/INST] of the inquiries have been dismissed or are stuck in the legal pipeline. </s>

<s>[INST] A recent survey by the magazine Veja of Brazil's 100 biggest [/INST] white-collar crime cases of the 1990s revealed that only five of the alleged perpetrators had ever gone to jail. </s>

<s>[INST] The remaining cases were still [/INST] in the courts, or had been dropped. </s>

<s>[INST] Even after former President Fernando Collor de Mello was impeached [/INST] by Brazil's Congress on corruption charges in 1992, the Supreme Court subsequently found insufficient evidence to convict him. </s>

<s>[INST] If anything, Latin America's chronically underfunded [/INST] judiciary works perversely to promote corruption rather than punish it. </s>

<s>[INST] A recent study by the InterAmerican Law and Economics Association found that many [/INST] litigants felt compelled to take illicit measures to expedite business-related cases, whose average length has nearly doubled to around 2.5 years during the past decade. </s>

<s>[INST] Payoffs to the court represented 8% [/INST] to 12% of total legal costs, the study found. </s>

<s>[INST] Latin America is discovering that yoking a modern [/INST] globalized economy onto a creaky judicial and regulatory apparatus is a blueprint for trouble. </s>

<s>[INST] In Brazil, many banks and brokerage firms have [/INST] been billowing with foreign capital since the country eased investment restrictions in the early 1990s. </s>

<s>[INST] The 500 regulators who monitor Brazil's 3,000 financial [/INST] institutions are stretched so thin that they generally don't examine transactions of under $20 million. </s>

<s>[INST] This neglect would prove extremely costly in the [/INST] case of one large bank, Banco Nacional, which was declared insolvent last November. </s>

<s>[INST] Now federal authorities allege that Nacional was able to conceal [/INST] losses mounting to $5 billion for several years by making thousands of small transactions in 600 false accounts. </s>

<s>[INST] One former vice president of Nacional has [/INST] been charged in the case, and dozens of senior managers are under investigation. </s>

<s>[INST] The steady drumbeat of scandal is eroding the credibility [/INST] of the entire liberalization process -- despite its limitations, Latin America's best hope to abandon underdevelopment. </s>

<s>[INST] Opponents of liberalization have adroitly used scandals to hold up a [/INST] host of urgently needed measures, from Mexico's sale of state-run petrochemical plants to the entire market-oriented agendas of Brazil and Ecuador. </s>

<s>[INST] "We're suffering this inertia in reform, created by an opposition that lives [/INST] off scandal and a government that lives off excuses," says Brazilian economist Eduardo Giannetti, who wants economic reform to move faster. </s>

<s>[INST] This slowdown in rolling back the final remnants of state [/INST] economic control is also slowing Latin America's recovery from the slump caused by last year's Mexican peso crisis. </s>

<s>[INST] Most residents of Latin America would probably agree that the reduced state role [/INST] in the economy has probably reduced petty corruption, the payoffs long required for everything from installing a phone to importing a spare part. </s>

<s>[INST] And at least now there is a [/INST] greater probability that ethical abuses will be brought to light by the media. </s>

<s>[INST] The privatization of state-owned television and [/INST] radio stations has whipped up a new ratings-driven competitiveness for exposes. </s>

<s>[INST] An Argentine news program recently riveted viewers with a Candid Camera-style [/INST] tape of a local official accepting a shopping bag full of cash from a businessman seeking a nightclub license. </s>

<s>[INST] There is also a significant [/INST] element of opportunism fueling the wave of scandals. </s>

<s>[INST] "In Brazil some of the most corrupt politicians are the ones [/INST] screaming bloody murder about corruption," says Henrique de Campos Meirelles, president of the Bank of Boston in Sao Paulo. </s>

<s>[INST] "They are opposed to economic reform and [/INST] want to have a big state because there's more money to spend". </s>

<s>[INST] Throughout the region, many self-appointed anticorruption crusaders tend [/INST] to be supporters of statist policies, who possess doubtful credentials and self-serving motives. </s>

<s>[INST] As the Argentine newsweekly Noticias [/INST] said: "Everyone accuses and everyone is accused. </s>

<s>[INST] It may not be too cynical to view the accusations [/INST] and counter-accusations as having a basis in differing styles of corruption rather than differing standards of ethics. </s>

<s>[INST] Traditionally, Latin American corruption grew out of the broad [/INST] discretion wielded by bureaucrats in economies where the state did everything, from licensing imports to operating cantinas. </s>

<s>[INST] The scale and sophistication of old-style graft was, to [/INST] some degree, restrained by the fact that the economies were small and closed to most outside investment. </s>

<s>[INST] And some of the region's authoritarian leaders took a [/INST] strong hand against large-scale malfeasance -- at least when it occurred outside their inner circle. </s>

<s>[INST] When this heavily centralized model collapsed with the Latin American [/INST] debt crisis of the early 1980s, the region embraced the era of free markets and free elections. </s>

<s>[INST] Few might have foreseen that the new political freedoms would also "democratize" corruption, "by [/INST] opening the system to an aggressive bourgeois that had historically been deprived of political spoils," says Eduardo Gamarra, political scientist at Miami's Florida International University. </s>

<s>[INST] What's more, liberalizing both political and economic systems at the same time created [/INST] a built-in conflict: Governments were auctioning off whole industries to the private sector while, for the first time, relying heavily upon it for campaign financing. </s>

<s>[INST] At Mexico's infamous 1993 "Billionaires's Banquet," 25 industrialists who had profited from [/INST] then-President Salinas's economic reforms, attended a political fundraiser with Mr. Salinas where they were approached for contributions totaling hundreds of millions of dollars. </s>

<s>[INST] The proposed contributions, which were to go toward the presidential campaign of [/INST] Mr. Salinas's successor, were part of an effort by Mexico's ruling party to rely on private financing rather than public money. </s>

<s>[INST] Even at local levels, where governments are ceding [/INST] many functions to the private sector, astounding sums can flow into campaign coffers. </s>