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Already some companies have strongly(30-45%) downgraded their Latin-American subsiduries
first halve year results, due to Asian turmoil hitting Latin Americas currencies and intrest rates
and that of emerging markets in general.
Latin Americas countries are traditionaly heavy "on credit"-consuming economies, eg consumer
goods are bought on credit in stead of cash-payments, and as such these countries hold the
highest ranks in the World for 'buying on credit'.
With their high rising intrest-rates, enabled to have a buffer against the declining of their currencies,
and because its lenders demand higher risk/rewards ratios on top of the already high intrest-rates,
as this region is not highly rated for its credability(Peso-crisis 1994), the effects on regions current
and future economics forecasts can be classified as at least a long term dip, both in present and
next years growth figures.
Western Industrialised companies having economic ties with this region will be efected in both
income from as in exports to this region.
On the other hand goods produced in and imported from the region will be very low priced, due
to falling of its currency-levels, and therefore will lower the importing of inflation, eg goods 'sell'
prices can also remain low, wich puts a downside pressure on the world-wide held cpi-indexes,
the consumer-price indexes.
Therefore partialy, inflation levels will not go up because of these low imports, but the competition
will strongly increase, between products from the region and local produced products, efecting the
Western Industrialised World-countries economics in general and their local companies in particular.
Regards,
Ton Maas
Ms-IRB@xxxxxxxxx
-----Oorspronkelijk bericht-----
Van: alert@xxxxxxxxxxxx <alert@xxxxxxxxxxxx>
Aan: alert@xxxxxxxxxxxx <alert@xxxxxxxxxxxx>
Datum: maandag 20 juli 1998 6:09
Onderwerp: Weekly Analysis -- July 20, 1998
>_________________________________________
>
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>author of "The Intelligence Edge,"
>speak on data security
>9:00-11:30am, Thursday, July 23
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>http://www.stratfor.com/
>Discover how Shredder and Sanitizer
>fit into a comprehensive INFOSEC program.
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>9:00-11:30am, Thursday, July 23
>J.W. Marriott, Washington, D.C.
>http://www.stratfor.com/
>_________________________________________
>
>
>Global Intelligence Update
>Red Alert
>July 20, 1998
>
>Colombian Rebels Threaten Latin America's Stability and Economic Promise
>
>In a week in which Japan, Russia and the Middle East promise to hold center
>stage, we would like to turn our attention instead to an area which is
>going to be a major trouble spot: Latin America. It has been only two
>weeks since we focused our weekly report on the re-emergence of the
>revolutionary Left in Latin America, but we are sufficiently concerned that
>we think it wise to focus here again. In part this is because it is our
>mission to report on events before they happen. Long-term readers know
>that the Japanese and Russian crises were amply forecast by us and that we
>deal extensively with the Middle East. Since these events are unfolding
>pretty much as we expected, there is little for us to add. The media or
>policy makers, however, have insufficiently appreciated the Latin American
>situation.
>
>* Latin America's Economic Promise
>
>For the past few years we have been extremely bullish on Latin America for
>economic reasons. We continue to be. However, countervailing politico-
>military trends are emerging that force us to reevaluate our position.
>This reevaluation has global significance. We have felt that Latin America
>would be the emerging arena for strategic speculation. It is critical that
>the global economy has such an arena. For the past century, various
>geographic regions have emerged where risks and rewards were substantially
>greater than in the rest of the world. These fast growth, "hot" regions
>served two purposes. First, dynamic growth in these regions put pressure
>on more mature economies to impose disciplines needed for competition.
>
>Second, these hot regions served to draw high risk capital out of mature
>economies, serving, in part, to cap speculative pressures there. This was
>the purpose that Asia served for the past generation. As Asia moves toward
>maturity, a new region must emerge. We had seen two candidates for this
>role: Eastern Europe and Latin America. Because of structural difficulties
>and the proximity of the stagnant German market, we turned away from
>Eastern Europe and focused on Latin America. Latin America was both
>emerging and close to the world's most dynamic market, the United States.
>
>Now, however, we see this entire process threatened by politico-military
>instability. We do not see this instability as of merely regional
>significance. If it expands, it could deeply affect Latin America's
>economic possibilities, undermining its potential as a global economic
>engine and profoundly impacting the global dynamic.
>
>* Colombian Situation Threatens Regional Stability
>
>Colombia has become the politico-military pivot in Latin America. Its
>rebels are the most powerful in Latin America. They have fought the
>government to a standstill and may well hold the military edge. Their
>relationship with narcotics traffickers is a model for other Latin American
>revolutionary groups, as it promises generous financing and international
>networking needed to mount guerrilla operations. The Colombian
>revolutionaries have attempted to mount a post-Cold War insurrection, that
>is, one without major external strategic support. If they prove
>successful, Latin America will, we believe, enter a new and less stable
>era. This will profoundly affect the prospects for economic development
>regionally, with global ramifications. It is therefore important to take a
>detailed look at the Colombian situation.
>
>The Colombian military outnumbers the country's rebels by just six to one.
>From the standpoint of revolutionary warfare, this places them in an
>advantageous position. The military has significantly more territory and
>infrastructure to defend than the rebels, and are therefore more widely
>dispersed. Moreover, because the rebels are well financed, they have been
>able to acquire appropriate, sophisticated technologies needed to
>coordinate complex operations. This has allowed them to wage a campaign
>that has backed the government against the wall. Indeed, it has forced the
>government to seek a peace treaty.
>
>* Rebels Control the Peace Process
>
>Last week, the National Liberation Army (ELN) and prominent members of
>Colombian society concluded a meeting in Germany intended to lay the
>groundwork for peace talks between the government and the rebels. There
>are two schools of thought on the recent progress in the peace process: In
>one, the rebels are sincere in their desire for ending the armed conflict.
>In the other, that the rebels are content with their position, and are
>using the peace talks to buy time so as to consolidate their hold over
>areas already under their control.
>
>In either case, what is important is that the psychological atmosphere is
>focused on the rebels. The question being discussed by everyone is what
>the ELN intends. This is a breakthrough position for any revolutionary
>group, as it lends a psychological legitimacy to their position. Their
>motives have become more important than the government's. This has defined
>the dynamic of the peace talks. There were reports last week, for example,
>that the United States government had asked to be permitted to send
>observers to the peace talks. The rebels turned them down. The
>government's views were not relevant.
>
>Not surprisingly, given the atmosphere, the talks appear to be going well.
>The rapid progress apparently being made in negotiations between the two
>sides, combined with the ease with which President-elect Pastrana and the
>rebels are relating, brings up another question: was there a preexisting
>agreement or understanding between Pastrana and the rebels that is only now
>playing itself out? The success of the meeting in Germany has raised the
>specter of the rebels taking a legitimate role within the government. A
>coalition government including rebel ministers is no longer out of the
>question.
>
>* A Division of Colombia Legitimizing the Drug Trade?
>
>Even more striking is speculation that the ELN and the Revolutionary Armed
>Forces of Colombia (FARC) may seek to become the legal ruling bodies in the
>areas currently under their control. This scenario is an extension of a
>proposal that was previously made by the ELN, in which they would
>administer the municipal budgets in areas under their control. While this
>proposal would immediately involve the rebels in Colombia's governance, it
>would mark an acceptance of the de facto division of the country. This
>would challenge Bogota's sovereignty, threaten Colombia's neighbors, and
>upset the United States as it would provide territorial integrity to
>narcotics operations.
>
>While such an arrangement may bring a form of peace to Colombia, it would
>ultimately end Colombia's war on drugs. As the Colombian government still
>maintains some degree of control over Colombia's populous and economically
>productive regions, the rebels would be left with territory, but no source
>of revenue -- except drugs. With the Colombian military excluded from the
>rebel-dominated regions east of the central mountains, and the rebel
>political authority dependent on drug revenues for funding their
>municipalities, there would be no one left fight the war on drugs. While
>peaceful coexistence with the narcotics industry could help further
>decrease violence in Colombia, it will win no friends with the U.S.
>Furthermore, with the drug war "lost" in Colombia, Washington will be
>forced to expand its interdiction efforts around Colombia, transferring
>clashes with drug traffickers to Venezuela, Peru, Ecuador, Panama and
>Brazil.
>
>In effect this would legitimize the drug trade. A legitimate government
>and member of the United Nations would now have entered into a formal
>accord which would, in effect, protect drug growing and trafficking in a
>geographically defined region. The alternative, that the rebels would
>agree to attack the drug trade, would cut the financial and political
>foundations out from beneath the rebels. It is simply not going to happen
>no matter what is publicly stated.
>
>* Paramilitary and Colombian Military Response Still Uncertain
>
>Another problem with allowing the rebels to legally rule parts of Colombia
>is the potential reaction of the paramilitary Self-Defense Units of
>Colombia (AUC) to this arrangement. The paramilitaries have ruthlessly
>attempted to exterminate rebels as well as rebel-sympathizers since the
>1970s. The AUC has said that it will not disarm or demobilize until the
>"last guerrilla lays down his weapon." AUC leader Carlos Castano said
>recently that his organization is seeking political legitimacy as well. It
>is possible that they might agree to peace if they are allowed to have
>authority in their own section of Colombia, most likely in the northern
>part of the country.
>
>The U.S. and the paramilitaries are hardly alone in their potential
>opposition to legalized rebel control of regions of Colombia. Opposition
>exists within the Colombian government and military to any such plan, on
>the grounds of sovereignty and security issues. The Colombian military has
>been campaigning for increased support from the U.S. in the last few
>months. General Manuel Jose Bonett has made it clear that the Colombian
>military is in need of financial assistance to equip his forces. Increased
>U.S. assistance might serve to tip the balance back in favor of the
>government.
>
>* History and Economics Weigh Against Peace Process
>
>Despite the recent progress made toward a peaceful solution in Colombia,
>this effort may be an exercise in futility. Peace may not be as close as
>some are hoping at this point. This civil war has been going on for
>decades, and even Pastrana admitted that peace might not be possible during
>his administration. The problem lies in the fact that guerrilla groups
>generate an enormous income from ransoms and drug trafficking. Therefore,
>it is conceivable that the guerrillas may not be willing to trade in this
>lucrative lifestyle for legitimate political power. In fact, with the
>revenue that they receive from their activities, it would mean a step down
>if they were to reenter society. In the last four years, the rebels have
>constantly refused to deal with the government because of the drug-related
>scandal surrounding President Ernesto Samper's administration. Now that
>there is a new president without any connection to Samper, the rebels are
>forced to at least make an overture for peace. In the past, the rebels
>have come to the negotiating table when it served them to do so, and this
>may be no different.
>
>Whether or not the rebels are indeed committed to resolving the
>longstanding conflict in Colombia, it is clear that they have the
>advantage. Pastrana has agreed to demilitarization, something that has
>backfired on the government in the past. The Colombian army is stretched
>to its limits, despite a 6-1 numerical advantage over the rebels. The
>rebels have given up very little so far in strategic terms. They have
>agreed to stop kidnapping minors, the elderly and pregnant women, but will
>continue to kidnap others unless another source of income becomes available
>to them. They have also agreed to stop sabotaging the country's oil
>pipelines for the moment. However, they have not agreed to give up any of
>their territory, or to disarm, while the government is giving up ground by
>demilitarizing. Clearly, the rebels have a distinct advantage over the
>government.
>
>* Colombia as a Regional Exemplar
>
>Rebels in Mexico, Peru, and throughout the region are watching the
>unfolding events. While aspects of Colombia are unique, the model will be
>emulated. Venezuela is also uneasily watching events. Venezuela is the
>leading exporter of oil to the United States. With historically low oil
>prices threatening internal stability, the last thing Venezuela needs is
>invigorated Colombian narco-guerrillas contemplating an expansion of the
>Orinoco river route for their product. Finally, long-standing links
>between Colombian cartels and drug trafficking in Lebanon have reportedly
>created strong links between the Colombian rebels and groups like the
>Hezbollah, who appear to be operating in Latin America.
>
>It is in this context that the United States is clearly unable to formulate
>a policy. U.S. Special Forces are already deployed there. If the talks
>break down, it seems inevitable that U.S. forces will be drawn in. That
>would be unfortunate. More unfortunate would be a peace treaty that would
>either bring the rebels into the government or create a rebel state in
>parts of Colombia. What U.S. policy would be in that case truly boggles
>the mind. Once again the U.S. has endorsed a peace process in which
>neither success nor failure would be in the U.S. interest.
>
>Thus, U.S. policy is in trouble, Latin American prosperity is in trouble,
>and Latin American stabililty is in trouble. The evolution of the
>situation in Colombia is no longer a matter primarily of interest to
>Colombians, but is becoming a globally significant affair. We nominate
>Colombia to join Asia, Russia and the Middle East on our watch list.
>
>_______________________________________________
>
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