The Americas Report

The Americas Report
From the Menges Hemispheric Security Project
Center for Security Policy Vol. Nº 4 – Issue 33–August 14, 2008
Argentina
Cuba
Dominican Republic
Ecuador
El Salvador
Bolivia
Brazil
Canada
Chile
Colombia
The Americas Report is the continuation of the work of Dr. Constantine C.
Menges’ original Americas Report. For almost two years that report chronicled the
efforts of the Castro-Chavez axis and their allies in their efforts to undermine the new
spirit of democracy and freedom in Latin America, in favor of autocratic forms of regimes
throughout the Western Hemisphere. The report also monitors events in the area as they
effect regional and US security in this era characterized by the emergence of terrorist groups
of global reach seeking international influence. The current Americas Report and the
Menges Hemispheric Security Project of which it is a part will continue to support genuine
democracy, free trade and the fostering of strong inter-American relationships as well as
exposing growing tyrannies in the area.
Nancy Menges
Editor in Chief - “Americas Report”
Costa Rica
Nicaragua
Panama
Paraguay
Nicole M. Ferrand
Editor - “Americas Report”
For any questions, comments, or those interested in receiving this report or
seeking to have their email removed from our list please contact Nicole Ferrand
at: [email protected] or [email protected].
Peru
Guatemala
New Feature – Visit our Blog at: http://themengesproject.blogspot.com/
The United States
and leave us your comments!
Haiti
Honduras
Mexico
Highlighted Story- China’s Control of the Panama Canal Revisited.
By Yojiro Konno with Nancy Menges.
China’s increasing influence in the Western Hemisphere has
been of growing interest to lawmakers on Capitol Hill. In fact, on
June 11, 2008, the House Foreign Affairs Subcommittee on the
Western Hemisphere held a hearing entitled “The New Challenge:
China in the Western Hemisphere.” i In the hearing, experts on Latin
America pointed out that total trade between China and the Latin
American and Caribbean region skyrocketed from $8.2 billion to $102
billion in less than ten years. Furthermore, those testifying mentioned
that Chinese President Hu Jintao’s visit to several Latin American countries
in 2004 underscored China’s increased presence in the hemisphere. During
his visit, Hu stated that China would invest $100 billion in the region over
the next decade.
Uruguay
Venezuela
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Over the past years, several Latin American countries that had no diplomatic
ties with the People’s Republic of China have now established them. For instance, in
2007, Costa Rica aborted its ties with Taiwan and established diplomatic relations with the
People’s Republic of China, primarily for economic and financial reasons. ii However, the
most important indicator of China’s growing influence is its control over the ports at both
ends of the Panama Canal. China has been operating these ports since 2000 and their
influence inside Panama has grown as indicated by a bill submitted last year to the legislature
that mandates teaching Mandarin in all Panamanian public schools. iii
Currently the Panama Ports Company, iv a subsidiary of Hutchison Whampoa
Ltd., v has exclusive and extensive rights to control both ends of the Panama Canal.
Hutchison Whampoa is a Chinese company owned by Hong Kong billionaire, Li KaShing, who has strong ties with Beijing. Considering Li’s close ties with the Chinese
government, it is highly plausible that Hutchison Whampoa has the potential to act as
Beijing’s political agent and that their possession of the ports at either end of the Panama
Canal constitutes a serious U.S. national security issue.
Li Ka-Shing: owner of Hutchison Whampoa Source: SMH.
Chinese President, Hu Jintao. Source: Top News.
Brief Overview of the History of Panama Canal
The Panama Canal was established in 1914 under the leadership of the United States.
The Hay-Bunau Varilla Treaty in 1903 granted a right to the United States to build and
administer the canal and the surrounding areas indefinitely. However, because this treaty was
signed without the consent of the Panamanians, it became a contentious diplomatic issue
between Panama and the United States. The Panamanian dissatisfaction toward U.S. control
over the Canal Zone reached a peak in January of 1964, when riots over sovereignty of the
Canal Zone broke out. Responding to such protests, in 1977 President Carter signed the
Neutrality Treaty and the Panama Canal Treaty. Under the Neutrality Treaty, Panama
became obliged to guarantee the neutrality of the Canal Zone. In exchange, under the
Panama Canal Treaty, the US promised to withdraw from the Canal Zone by the end of
1999 and guaranteed that Panama would assume full sovereignty over the area in 2000.
Hutchison Whampoa’s Control over the Panama Canal and Panama Law No.5
However, in 1996, Panama decided to auction the rights to manage the canal
to a private company. Despite the fact that the Chinese company’s bid came in
fourth after the Japanese firm, Kawasaki/I.T.S., the U.S. firm, Bechtel, and the
Panamanian American company, M.I.T, vi Panama awarded the contract to China’s
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Hutchinson Whampoa. A published report claimed that “Panama preemptively closed the
bidding, secretly changed the rules,” and “simply awarded the contract to Hutchison
Whampoa.” vii According to Constantine Menges, who headed the Latin American desk at
the NSC during the Reagan Administration, “China was determined to win the bidding
process and used corrupt means to influence the government of Panama in its
favor.” viii In fact, a 1996 cable to the U.S. Embassy in Panama reported that just before the
bidding, Beijing gave $400 million to Hutchison Whampoa through a state-run investment
company, China Resources Enterprise, ix a company which was identified by Senator Fred
Thompson as “an agent of espionage—economic, military, and political—for China” and
“has reportedly served as an intelligence-collection front for China.” x William J. Hughes,
the U.S. ambassador to Panama, and Senator Trent Lott objected to the ‘unorthodox’
bidding process and called for an investigation, but in vain. (See “The Americas
Report” April 10, 2008. Article by Nicole M. Ferrand.)
Thus in January of 1997, through a state-contract called “Panama Law No.5,” xi
Panama officially granted the right to control the canal xii to Hutchison Whampoa.
Panama Law No. 5 also promised that at the end of the Panama Canal Treaty, “the areas,
facilities, and installations” occupied by the Panama Canal Commission and the United
States shall be turned over to Hutchison Whampoa (Clause 2.23.g). In other words,
Hutchison Whampoa controls not only the ports at both ends of the canal, but also
the surrounding areas the United States used to control, including the former U.S.
Rodman Naval Station (Clause 2.1) and the former U.S. Albrook Air Force Base. xiii
The length of the lease to Hutchinson Whampoa is 25 years with an automatic renewal for
another 25 years (Clause 2.9).
According to Panama Law No.5, Panama gave extensive and exclusive rights to
Hutchison Whampoa. The document says, “During the life of this contract and its
extension, THE COMPANY shall have the exclusive right to develop, construct,
operate, administer and manage THE Ports” xiv (Emphasis added). Hutchison
Whampoa’s rights include: a right to “fence in, at any time, and entirely at its discretion, the
area referred to here in as the Bonded Area xv (Clause 2.1)”; a right to “subcontract all of its
rights and activities granted by this concession contract, without the need for approval by
THE STATE”; and a right to “carry out operations, transactions, negotiations, and activities
in general, be they local or international, with any person or public, private or mixed entity.”
That is, taking such extensive rights into accounts, it seems possible for Hutchison
Whampoa to host and hide Chinese spying activities in the Canal Zone.
Hutchison Whampoa and Owner Li Ka-Shing’s Connections with Beijing
The owner of Hutchison Whampoa, Li Ka-Shing, has extensive ties with
Beijing. In fact, a government document explicitly mentioned that Li “has
significant economic and political ties to China.” xvi For instance, Li and a son of the
former Chinese President Jiang Zemin are jointly developing real estate properties inside
Tiananmen Square for the communist party. xvii In addition, in 1994, the Clinton
administration provided Li’s bio, along with the bios of the top communist leaders, to the
CEO of Loral Aerospace prior to the Ron Brown trade trip to Beijing; xviii Li was the only
civilian included in the bios. xix Li has also helped the People’s Liberation Army (PLA)
purchase satellites in the past and mediated several satellite deals between the U.S. Hughes
Corporation and China Hong Kong Satellite (ChinaSat), xx a company owned by the Chinese
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Ministry of Post and Telecommunications. xxi One U.S. government document stated that Li
Ka-Shing “is willing to use his business influence to further the aims of the Chinese
government.” xxii
A report by the RAND Corporation in 1997 pointed out that Li Ka-Shing was
negotiating for PLA wireless system contracts. xxiii Li was also a member of the board of
directors of the China International Trust and Investment Corporation (CITIC), xxiv a bank
of the Chinese army that provides money for Chinese weapon sales and Western technology
purchases. xxv Indeed, William Triplett, co-author of Red Dragon Rising, described Li as “the
Banker for the Chinese Military.” xxvi The fact that Hutchison has exclusive contracts with
the state-owned China Ocean Shipping Company (COSCO) also suggests that Li Ka-Shing
has a close relationship with Beijing. xxvii COSCO is known for its failed attempts to acquire
the former Long Beach Naval station in California. xxviii Furthermore, according to a RAND
report, a COSCO ship attempted to smuggle over 2,000 fully automatic machine guns into
the United States in 1996. xxix
In 1991, Li Ka-Shing also attempted to gain control over Subic Bay, a strategic port
in the Philippines that had been vacated by the United States. Due to warnings from U.S.
Marine Corps personnel, Philippine President Ramos vetoed Hutchinson's take over of
Subic Bay and Li Ka-Shing was unable to obtain the port. xxx
In 2003, Li attempted to take over the largest U.S. telecommunications
company, Global Crossing Ltd. According to the New York Times, xxxi Global
Crossing once agreed to make a deal with Hutchison Whampoa. However, Hutchison
Whampoa decided to withdraw from the bid a few days after a review committee of foreign
investment in U.S. companies announced that it had begun an investigation of the deal.
Because a Chinese company with strong connections with Beijing was about to buy
communication networks used by the federal government and other critical private sectors,
members of congress and some governmental officials had raised national security concerns.
Global Crossing provides services to the federal government, more than 35 percent of
Fortune 500 companies, 700 carriers, mobile companies, and internet service providers. xxxii
Global Crossing controls 20 percent of all the fiber-optic cable in the United States and is a
major bidder for U.S. Defense communications contracts. xxxiii Given Li Ka-Shing’s close
ties with Beijing, as well as his attempts to control important U.S. infrastructure and
a strategically important port in the Philippines it should make those responsible for
U.S. national security question the national security implications of Hutchison
Whampoa’s control over the Panama Canal.
In addition, Beijing seems to treat Li Ka-Shing in a special manner. For example,
Beijing has given Li exclusive rights of first refusal over all mainland Chinese ports south of
the Yangtze River. “This involves a close working relationship with the Chinese military and
businesses controlled by the People’s Liberation Army,” said Al Santoli, a former national
security advisor to the House of Representatives. xxxiv Further, Li’s bio provided by the
Clinton Administration mentioned that Li was convicted of insider trading in 1984 but never
punished. xxxv
National Security Implications of Chinese Control of the Panama Canal
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Now that Hutchison Whampoa controls both ends of the Panama Canal there are
three major national security concerns that come to mind. These include; possible covert
Chinese spying activities, strategic denial in the case of a serious conflict between
China and the U.S., and strengthened Chinese political power that could threaten
U.S. national interests. First, since Hutchison Whampoa has exclusive rights over the canal
areas as Panama Law No.5 guarantees, the Chinese company could easily provide cover for
Chinese espionage. This concern becomes more realistic when one considers China’s recent
spying activities xxxvi and Li’s special relationships with Beijing and the PLA.
Secondly, in the event of a serious military conflict with the United States, such
as one over Taiwan, it would be highly possible for Beijing to use Hutchison
Whampoa to effectively interrupt U.S. intervention. As former Secretary of Defense
Casper Weinberger puts it, Hutchison Whampoa’s control of the canal is a national security
threat because “The Company would not be able to survive if they don’t do something the
Chinese government tells them to.” xxxvii Admiral Moore, a former chairman of the Joint
Chiefs of Staff, claims that in case of military conflict in the Pacific, a large number of
logistic ships need uninterrupted access to the canal to support deployed forces. xxxviii If the
use of the canal were denied, those ships would need to travel an extra 9,000 miles around
South America and would not be able to sustain combat effectiveness in the Pacific. xxxix “It
is not ‘managing traffic’ under normal circumstances with which I am concerned,” said
Moore, “it is the ability of a potential enemy to disrupt traffic so as to block military
supply, which in times of conflict is 80 to 90 percent dependent upon sea lift capability for
there to be any sustained forward effort.” xl It is also important to remember that Chinese
denial of the use of the canal would significantly damage the U.S. economy; the
United States is the largest user of the canal and 15-20 percent of total U.S. trade, including
40 percent of grain exports and 670,000 barrels of oil per day, come through the canal. xli
Chinese Control of the Panama Canal as Part of a Larger Global Strategy
Third and most importantly, Chinese control of the canal is only part of a larger
Beijing strategy to strengthen its geo-strategic positioning around the globe. The
Center for Security Policy reported in 2002 that China is working hard to acquire strategic
“choke points” around the world, including the Caribbean’s Bahamas, Subic Bay in the
Philippines, the Mediterranean’s Malt, the Persian Gulf’s Straits of Hormuz, the Panama
Canal xlii , and even cyberspace, xliii outer space, and U.S. telecommunications. xliv In addition,
on April 20, 2008, “The Americas Report” stated that Hong Kong-based Hutchinson Port
Holdings (HPH) had expressed interest in the Manta Port in Ecuador. In October, 2006
HPH gave a 1 million dollar bond to the Manta Port Authority and in November, 2006,
HPH was the only final bidder and the Manta Port Authority (MPA) gave HPH operating
concessions in exchange for $486 million (added to $55 million promised by the MPA) to
upgrade facilities over the next 30 years. Hutchinson Port Holdings is the port-operating
subsidiary of Hong Kong’s Hutchison-Whampoa which in 2001 bought out Philippinesbased port operator ICTSI, which had various Latin American interests in Argentina,
Mexico and the Bahamas. Manta is a desirable port for HPH as it is the closest port to Asia
on Latin America’s west coast. Also, Hutchison Whampoa Ltd. has a significant presence at
the Lazaro Cardenas seaport in Mexico, as well as other Mexican ports. China has been
very effective in securing strategic locations which they clearly understand will give them the
upper hand in the event of any future confrontation with the U.S.
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Therefore, strengthened Chinese strategic positioning has U.S. national
security implications, as conflicts with China are foreseeable. The Congressional Research
Service has reported that China has three main long-term goals which include “asserting
China’s regional military leadership while displacing U.S. regional military influence,
prevailing in regional rivalries, and encouraging eventual U.S. military withdrawal from the
region [Western Pacific].” xlv These goals are clearly incompatible with U.S. national security
interests. xlvi The Taiwan situation and competition over natural resources could also lead to
conflicts in the future.
To conclude our loss of the Panama Canal was a major strategic blunder by the
Carter Administration that was followed up in 1997 by the Clinton Administration’s
failure to assure that the bidding process was open and fair. Since China, through
Hutchison Whampoa, now has almost total sovereignty over the Canal, the Neutrality Treaty
agreed to by President Carter has little significance in terms of protecting future U.S.
interests. In the event of a future conflict between China and the U.S., it will be China not
Panama that will be calling the shots. (Please find footnotes at the end of the Report).
* Yojiro Konno is a senior sociology major at Grinnell College, IA. He is interested in public
policy and is currently an intern at the Center for Security Policy.
*Nancy Menges is co-founder of the Menges Hemispheric Security Project at the Center and
Editor-in-Chief of the Americas Report.
New Feature – From the Menges Hemispheric Security Project, we look forward to
hearing from you at our blog: http://themengesproject.blogspot.com/
Regards,
The Staff of “The Americas Report.”
News Stories –The following are a summary of several news stories found in different media
outlets. To access the information, we have provided the hyperlink below each news story.
Chávez wants subcontinent to be renamed Indo-America – El Universal.
Hugo Chávez said on Monday that the subcontinent must cease to be called
Latin America and should be renamed Indo-America, to honor the roots of its native
inhabitants. “Let us start using this term (...); such concept of Latin America was imposed
on us,” Chávez said. By saying Indian America or Indo-America ‘we are including the black
American and the white European because we do not exclude anyone. (...) For that reason,
everyday I speak less and less of Hispanic America, or Latin America. We are from IndoAmerica, from Afro-America. That is what we are, instead of any other name,” Chávez said.
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President Chávez closed the First Indigenous Congress. Photo: Reuters.
http://english.eluniversal.com/2008/08/12/en_pol_art_president-chavez-wan_12A1902161.shtml
SEE: Hugo’s Arms Spree. By Peter Brookes – New York Post.
Latin America’s troublemaker-in-chief, Venezuelan President Hugo Chavez, has threatened
the recently reactivated US Fourth Fleet with two squadrons of newly arrived Russian Su-30
fighter planes, part of a $3 billion arms package he bought in 2006. Engaging in his unique
brand of saber-rattling, Chavez said: “Any gringo ship that sails into brown [i.e., coastal] waters
will itself turn brown and go to the bottom, because they'll not get through.” It gets worse. Postsummit reports indicate there might be another $1 billion or so in advanced Russian Tor
M-1 air defense systems, T-90 battle tanks and Kilo-class diesel submarines in the
pipeline. But that’s only the tip of the arms iceberg: The Russian press is reporting that
arms sales to Venezuela over the next 10 years may top another $5 billion, including
heavy-lift air transport, air-air refueling tankers (for the fighters) and long-range airdefense systems. Naturally, Chavez insists the buildup is necessary to defend against the US
invasion that he’s been saying is just around the corner for at least several years now. Read More:
http://www.nypost.com/seven/08072008/postopinion/opedcolumnists/hugos_arms_spree_123385.htm
SEE: The autocrat of Caracas – The Economist.
The Chavez’s regime has published 26 decrees, many of which mimic the
constitutional changes rejected in the referendum. Some of them will further tighten the
state’s stranglehold on the economy. The decrees will further increase the state’s powers,
hobble opponents and limit the scope of private enterprise. Because the opposition
boycotted the last legislative election, Mr. Chávez’s supporters dominate the National Assembly.
Nevertheless, after his re-election he obtained the power to pass laws on his own for a period of
18 months. The latest crop of decrees were issued on the day before this power was to expire, in
such a rush that their full texts were not published until later. Under one decree a chavista militia
will become a new branch of the armed forces. Another tightens state control over food
production and distribution, threatening those accused of hoarding with up to ten years in jail. A
third makes it easier for the government to take over private companies in general. Another
creates powerful new regional officials. They will rival state governors, who are due to be chosen
in November in an election in which the opposition hopes to dent Mr. Chávez’s near-monopoly
of power. Several of these measures violate the constitution of 1999, which Chávez himself
sponsored. “Here we have no constitution, no law and the president does exactly what he
wants,” Luis Miquilena, a former ally who broke with the president, told the Wall Street Journal.
Read More: http://www.economist.com/world/americas/displayStory.cfm?story_id=11885670
Venezuela: Chávez says that enacted laws are set to “equal” everybody – El Universal.
Venezuelan President Hugo Chávez said on Tuesday that the directives recently
issued by him are to “make all of us equal,” and rebutted the opposition criticism,
according to which the legal package is endangering democracy. “I am called a dictator
because we are making laws. We are making laws and laws should fit in changes and the world is
changing. Laws are to make all of us equal,” he said during an event in a Caracas working barrio.
Chávez added that the executive orders were approved under the law and are aimed at the
country’s development, DPA quoted.
http://english.eluniversal.com/2008/08/12/en_pol_art_president-chavez-say_12A1903365.shtml
NEWS FLASH: Venezuelan intelligence allegedly gave Antonini U$1 million – El Universal.
The Directorate of Intelligence and Prevention Services (Disip), a Venezuelan
intelligence agency, reportedly transferred USD 1 million to Venezuelan-US businessman
Guido Antonini Wilson as a bribe for him to conceal the true origin of the suitcase with
USD 800,000 that Antonini tried to smuggle in Argentina on August 4, 2007, according to
files in the Florida Southern District Court. Edward Shohat, the defense attorney of
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Venezuelan defendant Franklin Durán, asked Florida Attorney General to provide some
information that he deems relevant to the defendant's allegations. According to Shohat, during a
telephone conversation between Antonini and his partner Wladimir Abad, Antonini mentioned a
sum of money that the Venezuelan intelligence service allegedly sent to him. “They told me that
the Disip sent USD 2 million, out of which USD 1 million is for me, and they can double the
amount,” Antonini reportedly told Abad. Antonini Wilson said that defendants Carlos
Kauffmann and Durán gave him the information. Antonini also said, “They told me -and I have
some e-mails and SMS messages showing this-, more specifically Carlos (Kauffmann) told me
personally “If you (Antonini) do not take responsibility for this (the unsuccessful attempt at
smuggling the cash-filled suitcase in Buenos Aires last year), they (the Venezuelan government)
will destroy us.” The aforementioned e-mails and SMS messages are part of the evidence Shohat
requested from the prosecution.
http://english.eluniversal.com/2008/08/13/en_pol_art_venezuelan-intellige_13A1905041.shtml
Chavez preparing the field for Nov state and city elections – MercoPress.
Columns marched through the capital Caracas to protest a package of laws that
expand Venezuelan President Hugo Chavez powers while a delegation from opposition
parties delivered a document at the Organization of American States stating that the
latest decisions are a “coup” against the rule of law and the Constitution. Shouting chants
and waving balloons reading “play fair” protestors complained that some of the laws resemble
the constitutional reforms sought by President Chavez and which voters rejected at the polls last
December. Chavez approved the package of 26 laws on July 31, the last day of special legislative
powers granted him by the National Assembly. The Venezuelan president said the new rules,
which increase government control over food production and commerce and create civilian
militias, among other things, will strengthen the country’s institutions. The political parties’
document is addressed to OAS Secretary General Jose Miguel Insulza and refers to the legal
system in Venezuela which will now depend from the will of the president and “is not
guaranteed by an independent judicial branch.” “We are warning OAS that this is a direct attack
on the rule of the law and the rights of Venezuelan citizens,” said Antonio Ledezma president of
the opposition party Alianza Bravo Pueblo.
http://www.mercopress.com/vernoticia.do?id=14208&formato=HTML
Venezuelan government hikes regulated prices on some commodities – El Universal.
Venezuela has raised the maximum sale prices of some food staples such as beef
meat, wheat bread, pasta and corn oil. In addition, it excluded tuna and oatmeal from price
controls. New food prices that were published in the Venezuelan Official Gazette are below the
price usually paid by consumers in some stores which circumvent government regulation amid
rampant inflation affecting Venezuelan economy, Reuters reported. The Venezuelan government
launched this year a massive program of food imports to fight against the problems of supply which have generated a sporadic domestic shortage of food, and increased prices of milk and rice
- and put staples back to the shelves.
http://english.eluniversal.com/2008/08/12/en_eco_art_venezuelan-governmen_12A1902689.shtml
Argentina’s official inflation: even most faithful misbelieve – MercoPress.
Enough is enough. Even the most loyal of Argentine President Cristina
Fernandez de Kirchner officials are rebelling against the latest consumer prices index
released on Monday by the Statistics and Census Office, Indec. The official July retail
inflation was 0.4%, less than a fourth of private sector estimates which range between 1.5
and 1.8%. The whip of the government’s group in the Lower House Agustin Rossi went
even further and repeated words from the recently named cabinet chief, Sergio Massa, who
on taking office said “We must inject credibility to Indec,” adding that “you can’t have
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statistics which only generate mistrust in society.” “At some point the government must
realize we need a real Economy minister and we must cease manipulating data. It’s time to
come to earth,” said Senator Gerardo Morales head of the opposition in the Senate. “What is
more baffling is that government insists in making us believe that inflation is 12% annually,
as the head of the Home Trade Department Guillermo Moreno tried to convince us, when
the rest of the economy is working on the assumption of 25 to 30%,” underlined Morales.
From the banking sector the reaction was similar. “Indec has become a daily offense,
nobody takes it seriously. It’s hilarious; it harms the image of an administration
which is trying to achieve reasonable things, but with shortcomings?” said Guillermo
Francos, CEO of Banco Provincia, a leading financial institution. Jose de Mendiguren, a
member of UIA was also blunt about the latest July release. “Costs at my industry have been
increasing at 25% annually, that is my true Indec and there's no way I can avoid it.”
http://www.mercopress.com/vernoticia.do?id=14232&formato=HTML
SEE: Argentina: Exit Kirchners? – Latin Business Chronicle.
It is no longer a question of “if,” it is now a question of “when” the Kirchners will be
ousted. Article by Walter T. Molano. Although there were initial hopes that the president would
strike a more conciliatory tune after she lost the conflict with the agro sector, her actions showed
the contrary. Former President Nestor Kirchner's henchmen, Planning Minister Julio de Vido
and Interior Commerce Secretary Guillermo Moreno, were never replaced. An attempt by the
newly appointed Chief of Staff, Sergio Massa, to restore confidence in the INDEC and
Administration were quickly sidelined. Given the intransigence of the Kirchners, it is only a
matter of time until they are ousted. Unfortunately, abrupt changes of power in Argentina tend
to be chaotic. This is the reason why the markets are bracing for a default, even though the
country's macroeconomic indicators are sound.
To continue reading: http://www.latinbusinesschronicle.com/app/article.aspx?id=2642.
Venezuela charges high interest rate on Argentina’s bonds – El Universal.
The two major Argentinean newspapers, Clarín and La Nación, said they were
stunned by the high interest rate the Venezuelan government has charged recently to
buy USD 1 billion in Argentinean sovereign debt bonds. Both newspapers explained that
Argentina is paying an interest rate ranging from 14 to 15%, which is higher than the interest rate
Buenos Aires paid in 2001 when the Latin American country was hit by economic turbulence
following the economic measures implemented by then Finance Minister Domingo Cavallo.
Argentina is to pay a 14.87 percent interest rate, whereas the interest rate Peru is paying to place
sovereign bonds with the same maturity as the Argentinean titles ranges from 5 to 6 percent.
http://english.eluniversal.com/2008/08/07/en_eco_art_venezuela-charges-hi_07A1890761.shtml
Argentina to buy 2008/98 bonds to help calm markets – MercoPress.
The Argentine government announced the purchase of 2008 and 2009 bonds, --plus
interest payments in advance-- in an effort to ease markets which have shown great
anxiety over the political situation and economic slowdown of Argentina, particularly last
week. “This action is sustained on the opportunity offered by the market value of national debt
paper registered in the last few days and which don’t correspond at all with the solidity of
economic and social fundamentals of the country,” said a release over the weekend from the
Economy ministry. Bonds to be purchased include issues in Argentine pesos and in US dollars.
http://www.mercopress.com/vernoticia.do?id=14209&formato=HTML
Morales ratified but the political scenario stalemates – MercoPress.
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Bolivian president Evo Morales was ratified in his post with a comfortable
support in the range of 60% in Sunday’s recall vote which also included the vice
president and governors of all of the country’s provinces. However the results seem
to confirm the political map of confrontation between President Morales and the
provinces, some of which particularly the richest are pushing for greater political and
financial autonomy. Although the official announcement from the Electoral Tribunal is
not expected until Monday or later, two different exit polls confirmed 60% and 56.7% for
the president, with 3 to 5 percentage points margin, and were announced on television
private channels. According to the rules of the recall vote, Mr. Morales and his vice president
Alvaro García Linera needed at least 53.7% of votes cast, which was the result when the
ticket was elected back in December 2005. The main opponents of Morales, Ruben Costa
from Santa Cruz; Mario Cossío from Tarija; Ernesto Suárez, Beni and Leopoldo Fernández,
Pando were also ratified with ample margins while those of La Paz and Cochabamba were
expecting results. Alberto Luis Aguilar from Oruro (pro Morales) lost the recall vote.
http://www.mercopress.com/vernoticia.do?id=14207&formato=HTML
Bolivian Opposition Agrees to Meet With Morales – VOA News.
Five Bolivian opposition governors have agreed to meet with President Evo Morales
in La Paz for a dialogue on the political crisis that threatens to divide the country. The
governors made their decision Wednesday after meeting among themselves in the city of Santa
Cruz. Mr. Morales invited them for talks after voters confirmed his mandate in Sunday's
nationwide recall referendum. Election officials said Wednesday that with most ballots counted,
Mr. Morales has won 67 percent support.
http://www.voanews.com/english/2008-08-13-voa57.cfm
ALBA Nations Expand Cooperation – Prensa Latina.
Venezuelan ambassador to Managua Sergio Rodriguez announced that the
construction of an oil refinery in Nicaragua is on schedule. According to Rodriguez, a
wide cooperation program is being developed within the framework of Petrocaribe. As part
of the ALBA (Bolivarian Alternative for the Americas) cooperation program, the first
shipment of Nicaraguan heifers was sent to Venezuela. Another shipment is due within the
next few days. Nicaragua is also selling beef to Venezuela’s local state markets known as
Mercal. Milk and chicken will soon add to Nicaragua’s exports, he said. Some 1,600 patients
have flown to Venezuela to undergo eye surgery and there are many other health and
cooperation projects being developed.
http://www.plenglish.com/article.asp?ID=%7B3B76E410-B5E3-4F82-B9F7-EF27838B222E%7D)&language=EN
Mexico Confronts Violent Crime Wave – VOA News.
Mexican President Felipe Calderon is pushing his congress for tougher
sentences for a number of categories of crime related to kidnapping, in an effort to
fight the criminal organizations that have made Mexico one of the worst countries in
the world for that crime. Eleven citizens’ organizations have announced massive
nationwide marches to condemn Mexico’s crime wave. Organizers say the August 30
marches will represent a demand by the citizenry for effective government action against
kidnappers and other violent criminals. Speaking to reporters Sunday, Alberto BazBaz, the
Attorney General for the state of Mexico, near Mexico City, announced the arrest of
members of a kidnapping gang. Such successes merit media attention because they are rare.
Reforma newspaper columnist Sergio Sarmiento, a former kidnapping victim, expresses
10
doubt about President Calderon’s life-sentence proposal, although he lauds the president for
good intentions. Sarmiento and many crime experts argue that what Mexico really needs is
effective and reliable police.
http://www.voanews.com/english/2008-08-11-voa49.cfm
Colombians petition for third Uribe term – Reuters.
Colombian President Alvaro Uribe edged a step closer to a third consecutive
term on Monday after supporters handed in five million signatures petitioning for a
referendum to allow the U.S. ally’s re-election. Uribe, popular for beating back terrorism
with his policies, has been evasive about whether he would seek to remain in office. But
critics worry a third Uribe term will undermine Colombia’s democratic system. Flanked by
security guards in Bogota, three armored trucks delivered the five million signatures to
election officials to petition for the vote on a constitutional amendment that would allow a
third presidential term. “We may have a lot of capable politicians, but none is more capable
than Uribe,” Luis Guillermo Giraldo, a former senator who organized the petition, told
Reuters. “And he has proven himself, in democratic security, in foreign investment.” Should
Uribe agree to run, the proposal faces hurdles as electoral officials must verify the signatures
before it can be sent to Congress and the constitutional court. If approved, a vote could be
held in the second half of 2009.
http://www.reuters.com/article/latestCrisis/idUSN11390556
SEE: FARC Dissidents Assist Colombia. By Juan Forero. – The Washington Post
As a military campaign by the government of President Álvaro Uribe increasingly
weakened the 44-year-old rebel movement, the FARC has little leverage in negotiations
for trades. The group now faces a movement of up to 1,000 jailed dissidents. Instead of
remaining true to the FARC, many jailed rebels want to use their upstart movement,
called Hands for Peace, to help the state weaken the rebel group further. In exchange, they
are being permitted by the government to enter into special judicial proceedings that were
designed to spur their mortal enemies, right-wing paramilitary groups, to disarm. Under a recent
government decree, the rebels could be freed from jail or have their long prison terms reduced if
they outline their involvement in unsolved crimes while making amends to their victims. Learn
More: http://www.washingtonpost.com/wp-dyn/content/article/2008/08/01/AR2008080103117.html
Paraguay, “a devastated country,” says elected president – MercoPress.
Paraguay’s elected president former bishop Fernando Lugo said he receives a
“devastated country with no institutions,” and claimed there is a plan to destabilize
his administration which takes office next August 15. Deep engrained corruption, the
need to change the energy policy and the alleged conspiracy were identified by Mr. Lugo as
his three main immediate challenges. Mr. Lugo supported by a wide ranging coalition
managed to defeat last April the hegemony of the Partido Colorado which has ruled the
landlocked, second poorest country in South America for over six decades. The incoming
president also anticipated he would press for a “fair price” for energy from the two huge
hydroelectric dams Paraguay shares with its powerful neighbors, Brazil and Argentina.
11
Elected President Lugo will take offices next Friday. Source: Infobae.
http://www.mercopress.com/vernoticia.do?id=14197&formato=HTML
Uruguay confirms economic policy and names new minister – MercoPress.
Uruguayan president Tabare Vazquez confirmed Monday that Economy
minister Danilo Astori would be leaving his post next September 15th but at the same
time emphasized that there would be no changes to the current macroeconomic
policy to which his administration has been successfully committed. Astori announced
his post would be taken over by the former head of the Development Corporation, Alvaro
Garcia, an accountant, university professor and currently advisor to Uruguay’s Planning and
Budget Office which depends directly from President Vazquez. There will be no
modifications to the current macroeconomic policies of the country in respect to what has
been done so far.
http://www.mercopress.com/vernoticia.do?id=14215&formato=HTML
Mercosur concerned with growing surge of Chinese imports – MercoPress.
Argentina and Brazil have established a standing consultation round to
monitor the strong increase in Chinese imports which is causing concern in both
countries manufacturing sectors, according to Brazilian sources. “We’re concerned
because the increase in imports from China and other Asian countries could impact on
specific sectors or our economies”, said Brazilian Development Minister Ivan Ramalho
whose office is in permanent contact with his Argentine counterpart Industry Secretary
Fernando Fraguío. The announcement was made following the regular bilateral meetings to
address trade issues, exchange information and solving differences that could emerge from
the almost 30 billion US dollars annual commerce between Argentina and Brazil. The
purpose of the consultation round is “to identify problems that could lead to an increase of
Asian imports and try to find a joint approach to the particular issue and correct it.”
http://www.mercopress.com/vernoticia.do?id=14235&formato=HTML
Energy short Chile looks for potential alternative sources – MercoPress.
As global temperatures and energy prices soar, scientists, policymakers and
environmentalists throughout the world are scrambling for solutions. For its part,
Chile could meet as much as half its electricity demands with clean energy,
according to a report released Friday by energy experts from the Universidad de
Chile and Universidad Tecnica Federico Santa Maria. “The reality is that Chile is
growing economically, and we must determine how to support that without risking our
natural heritage,” said report co-author Jorge Pontt. As much as 40% of Chile’s electricity
demand could be met by environmentally friendly energy sources by 2025, according to the
study, funded by the two universities and several national and international nonprofit
12
foundations and environmental groups. “The prevailing policy in Chile has always been to
wait for foreigners to do the research, and then to copy it,” Pontt said on Friday. “But now,
we’re seeing where that gets us. If we had seized on the opportunities to enter into the
renewable energy field years ago, we wouldn’t be paying such a high price for energy today.”
http://www.mercopress.com/vernoticia.do?id=14233&formato=HTML
US mayors worried about political ineligibility in Venezuela – El Universal.
The United States Conference of Mayors expressed on Wednesday its concern
about political banning in Venezuela and deemed it “an affront to Venezuelans’
democratic principles.” Manuel Díaz, Miami Mayor and president of the organization,
voiced his colleagues’ position in a letter sent on Tuesday to US President George W. Bush
and released on Wednesday, Efe reported. “US mayors are worried to look at ongoing
events in Venezuela. It is important to express our concern and show our support to those
candidates and democratic principles in our hemisphere,” said the Miami Mayor. According
to Díaz, the disqualification of 272 candidates, with the blessing of the Supreme Tribunal
of Justice (TSJ), despite the lack of formal complaints against these politicians, attests to the
court’s lack of independence.
http://english.eluniversal.com/2008/08/13/en_pol_art_us-mayors-worried-ab_13A1906769.shtml
SEE: Don’t let Castros fool you. By Frank Calzon. – The Miami Herald.
Sen. Arlen Specter, R-Pa., is known for his thoughtfulness and his interest in
foreign affairs. He wants to go to Havana to talk with Raúl Castro (and perhaps Fidel
as well) and then to Venezuela to talk with Hugo Chávez. The senator suffers from that
all-American predisposition to talk about disputes and find a compromise. Yet things are
very different here: When control of the White House switches parties, the victors don’t
send army trucks to 1600 Pennsylvania Ave. to pick up the losers and execute or imprison
them. America's blind faith in reason and compromise doesn’t always transfer well to the
realm of world affairs. Happy outcomes are not inevitable, as is attested by the history of
totalitarian rule in the 20th century, today's catastrophes in Sudan and Zimbabwe and
China's brutal occupation of Tibet. This will be Specter’s fourth trip to Cuba to talk to a
regime that refuses to talk with Cubans about their complaints, but has no qualms about
talking with foreigners. Specter’s pilgrimage isn’t likely to hurt, but what is to be
accomplished? Read More: http://www.miamiherald.com/opinion/other-views/story/638094.html
***
Mission of the Center for Security Policy
To promote world peace through American strength
The Center for Security Policy has, since it’s founding in 1988, operated as a non-profit, non-partisan
organization committed to the time-tested philosophy of promoting international peace through American
strength. It accomplishes this goal by stimulating and informing national and international policy debates,
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The Center is aided immeasurably in the performance of its mission thanks to the active participation of a
sizeable network of past and present, civilian and military security policy practitioners. By drawing on the
13
experience, judgment and insights of these accomplished individuals, the Center is able to maximize the
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The Center for Security Policy and the Menges Hemispheric Project needs your support - Your
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Menges Hemispheric Project • Email: [email protected]. • Direct: 914-325-9504. 1901 Pennsylvania Avenue, NW.
Suite 201. Washington, D.C. 20006 • (202) 835-9077 • Fax (202) 835-9066 www.CenterforSecurityPolicy.org
i
House Committee of Foreign Affairs. June 11, 2008. “New Challenge: China in the Western
Hemisphere.” (http://www.internationalrelations.house.gov/hearing_notice.asp?id=1004)
ii
Edward Cody. July 9, 2007. “China's Diplomatic Gain Is Taiwan's Loss” Washington Post
(http://www.washingtonpost.com/wp-dyn/content/article/2007/07/08/AR2007070801065_pf.html)
iii
BBC News. December 7, 2007. “Panama schools to teach Chinese.” BBC.
(http://news.bbc.co.uk/mobile/bbc_news/world/americas/713/71312/story7131205.shtml?page_id=16)
iv
Panama Ports Company Official Website (http://www.ppc.com.pa/index_eng.php)
v
Official website of Hutchison Whampoa clearly mentions that Panama Ports Company is a subsidiary of
Hutchison Whampoa (http://www.hutchison-whampoa.com/eng/ports/international/the_americas.htm)
vi
EagleForum.org. 1999. “Red China: Gatekeeper of the Panama Canal.”
(http://www.eagleforum.org/psr/1999/nov99/psrnov99.html)
vii
Menges, Constantine C. 2005. China: the gathering threat. Nelson Current. Page 397.
viii
Menges, Constantine C. 2005. China: the gathering threat. Nelson Current. Page 397.
ix
Smith, Charles R. February 12, 2002. “Chinese Billionaire Wants Global Crossing.” NewsMax.
(http://archive.newsmax.com/archives/articles/2002/2/11/184102.shtml)
x
Smith, Charles R. August 6, 2002. “Li Ka-Shing Seeks U.S. Contract.” NewsMax.
(http://archive.newsmax.com/archives/articles/2002/8/5/181935.shtml)
xi
Actual Texts from American Defense Center (http://www.americandefensecenter.org/documents.aspx)
and ConservativeUSA (http://www.conservativeusa.org/panamalaw5.htm)
xii
The document calls the two ports (Balboa and Cristobal) and surrounding areas combined as “The
Existing Ports”
xiii
Menges, Constantine C. 2005. China: the gathering threat. Nelson Current. Page 397.
xiv
“The Ports” in the document includes lands, facilities, and installations of “The Existing Ports” as well
as “The Future Extension.”
xv
“The Bonded Area”: combined areas of “The Existing Ports” and “The Future Extension”
xvi
SoftWar. June 24, 2008. “Li Ka-Shing.” (http://www.softwar.net/kashing.html)
xvii
Smith, Charles R. August 6. 2002. “Li Ka-Shing Seeks U.S. Contract.” NewsMax
(http://archive.newsmax.com/archives/articles/2002/8/5/181935.shtml)
xviii
SoftWar. June 24, 2008. “Li Ka-Shing.” (http://www.softwar.net/kashing.html)
xix
Smith, Charles R. August 6. 2002. “Li Ka-Shing Seeks U.S. Contract.” NewsMax.
xx
Smith, Charles R. August 6. 2002. “Li Ka-Shing Seeks U.S. Contract.” NewsMax
xxi
Federation of American Scientists. June 20, 1998. “Zhongxing / Chinasat.”
(http://www.fas.org/spp/guide/china/comm/chinasat.htm)
xxii
Menges, Constantine C. 2005. China: the gathering threat. Nelson Current. Page 397.
xxiii
SoftWar. July 9, 2008. “Rand Corporation Report Chinese Military Commerce and U.S. National
Security.” (http://www.softwar.net/rand.html)
Smith, Charles R. February 12, 2002. “Chinese Billionaire Wants Global Crossing.” Newsmax.
(http://archive.newsmax.com/archives/articles/2002/2/11/184102.shtml)
xxiv
SoftWar. June 24, 2008. (http://www.softwar.net/kashing.html)
xxv
Smith, Charles R. February 27, 2003. “Global Double Crossing.” NewsMax.
(http://archive.newsmax.com/archives/articles/2003/2/26/182009.shtml)
14
xxvi
Smith, Charles. December 8, 1999. “‘Dirty’ War in Panama.” (http://ads.wnd.com/news/printerfriendly.asp?ARTICLE_ID=17277)
xxvii
Smith, Charles R. March 6, 2003. “Billionaire Fails in Bid for Global Crossing.” NewMax.
(http://archive.newsmax.com/archives/articles/2003/3/5/162452.shtml)
xxviii
Smith, Charles R. March 6, 2003. “Billionaire Fails in Bid for Global Crossing” NewsMax.
(http://archive.newsmax.com/archives/articles/2003/3/5/162452.shtml)
xxix
SoftWar. July 9, 2008. “Rand Corporation Report Chinese Military Commerce and U.S. National
Security.” (http://www.softwar.net/rand.html)
Smith, Charles. May 25, 1999. “Chinagate's smoking gun.” WorldNetDaily.
(http://pqasb.pqarchiver.com/latimes/access/29879182.html?dids=29879182:29879182&FMT=ABS&FMT
S=ABS:FT&date=Jun+02%2C+1998&author=PAUL+RICHTER&pub=Los+Angeles+Times&desc=Long
+Beach+Deal+Put+in+Jeopardy+by+China+Fears&pqatl=google)
xxx
Smith, Charles. May 25, 1998. “The Panama-China connection: Port company at canal has close ties to
Lippo group” The World Net Daily. (http://www.worldnetdaily.com/index.php?pageId=3251)
xxxi
Glater, Jonathon D. May 1, 2003. “TECHNOLOGY; Hong Kong Partner Quits Joint Bid for Global
Crossing.” New York Times.
(http://query.nytimes.com/gst/fullpage.html?res=9B05E2DD1F3DF932A35756C0A9659C8B63 )
xxxii
Global Crossing Official Website. July 8, 2008. “About us”
(http://www.globalcrossing.com/company/company_landing.aspx)
xxxiii
Smith, Charles R. February 12, 2002. “Chinese Billionaire Wants Global Crossing.” NewsMax.
(http://archive.newsmax.com/archives/articles/2002/2/11/184102.shtml)
xxxiv
Menges, Constantine C. 2005. China: the gathering threat. Nelson Current. Page 397
xxxv
SoftWar. “Li Ka-Shing.” (http://www.softwar.net/kashing.html)
xxxvi
Demetri Sevastopulo. Feb. 11, 2008. “Four arrested in US-China spy cases.” Financial Times.
(http://www.ft.com/cms/s/0/c0a576d0-d8cd-11dc-8b22-0000779fd2ac.html)
xxxvii
Menges, Constantine C. 2005. China: the gathering threat. Nelson Current. Page 397
xxxviii
Ed Oliver and Joseph Farah. November 9, 1998. “The Panama Canal debate rages: Admiral,
ambassador square off in Senate testimony.” WorldNetDaily.
(http://www.worldnetdaily.com/news/article.asp?ARTICLE_ID=16790)
xxxix
Ed Oliver. October 18, 1998. “Admiral: I see big trouble in Panama.” WorldNetDaily.
(http://www.worldnetdaily.com/news/article.asp?ARTICLE_ID=16751)
xl
Ed Oliver and Joseph Farah. November 9, 1998. “The Panama Canal debate rages: Admiral, ambassador
square off in Senate testimony.” WorldNetDaily.
(http://www.worldnetdaily.com/news/article.asp?ARTICLE_ID=16790)
xli
Menges, Constantine C. 2005. China: the gathering threat. Nelson Current. Page 396
xlii
The Center for Security Policy, cited in Slate Magazine Online. July 9, 2008.
(http://fray.slate.com/discuss/forums/post/1357239.aspx)
xliii
“China’s Cyber-Militia” May 31, 2008. National Journal
(http://www.nationaljournal.com/njmagazine/print_friendly.php?ID=cs_20080531_6948)
xliv
Glater, Jonathon D. May 1, 2003. “TECHNOLOGY; Hong Kong Partner Quits Joint Bid for Global
Crossing.” New York Times.
xlv
Ronald O’Rourke Page 44. “CRS Report for Congress: China Naval Modernization: Implications for
U.S. Navy Capabilities—Background and Issues for Congress.” Congressional Research Service.
xlvi
Dr. Richard Weixing Hu, a visiting scholar at the Brookings Institution, too, mentions that China wants
the U.S. withdraw from East Asia at the event “Perceptions of U.S. Foreign Policy in East Asia” on June 3,
2008 (http://www.brookings.edu/events/2008/0603_cnaps.aspx)
15