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Number 119, March 03, 1994

ECONOMIC NEWS

- New Economic Plan Launched.

Finance Minister Fernando Henrique Cardoso and his economic

team announced on February 28 the second phase of the

government's plan to combat inflation. The first part, a

constitutional amendment which would increase government revenues

through the creation of an Emergency Social Fund and reduced

federal spending, was approved by Congress last week. The second

part of the plan, known as "Plano FHC" was a federal decree-which

Congress must approve or amend within 30 days-instituting a new

economic index, the URV (Unidade Real de Valor). The new index

is the base of Brazil's new currency, the "real", which will

replace the "cruzeiro real" at some future date, and which will

be tied to the dollar. According to Central Bank president Pedro

Malan, one URV will equal one dollar, and will have the same

daily variation as the dollar.

The plan set the minimum salary for March 1 at 64.79 URVs

(US$64.79). Other salaries will be converted into URVs based on

the average salary of the past four months. A federal commission

was formed to elaborate a timetable to increase the monthly

minimum salary to US$97 by the end of the year.

Prices are not under controls, nor are they obligated to

automatically convert to URVs. Items in the basic food basket,

suffered a price increase of 54% in February. Cardoso said that

businesses which practice abusive price increases in the future

will be fined by the government.

According to a poll published in the "Folha de S.Paulo" on

March 2, 73% of Sao Paulo residents believe that inflation will

continue to rise in the next few months. Only 9% considered

themselves well-informed about the plan. The "Folha" ran a

special 12-page section which tried to explain how Plano FHC will

affect everything from pensions to rental contracts.

The reaction to the plan from business leaders and economists

was confusing and contradictory. Some called the URV a

dollarization in disguise. Others said it had nothing to do with

dollarization. There were also great differences of opinion as to

whether the plan is recessive.

Some said that workers' salaries will lose out in the

conversion to URVs; others said no. Some called the plan a

repetition of the ill-fated Plano Cruzado; others claimed Plano

FHC corrects the errors made by that plan.

What is fact is that workers who were paid in URVs March 1

received nearly CR$14,000 less than they would have under the

old salary policy. The March 1 URV set the minimum salary at

CR$41,956.06. The old policy calculated the salary at CR$55,537.

Metal workers connected to the Forca Sindical union in greater

Sao Paulo walked off their jobs March 2 to protest the salary

loss. The Central Union of Workers (CUT) and the General

Confederation of Workers (CGT) are planning a one-day general

strike during the second half of March.

Cardoso, responded to the strike by saying, "For the first

time workers will strike to earn less." He challenged the Forca

Sindical to explain to retired metal workers that "it's better to

earn CR$55 thousand than CR$70 thousand." That is the case for

those who will receive their pensions on the 12th working day of

March.

One union newsletter expressed its doubts that workers will

not lose out in Plano FHC. "Fernando Henrique insists that no

one will be taken advantage of. If this were the first time we

heard this kind of talk, and if we didn't know how the elites

act, it would be possible to believe it. But workers have

already lost so much in past economic plans. Besides, the

example of Argentina doesn't let anyone be fooled as to who is

going to pay the bill."

In addition, the Military Club, which consists of retired

officers, is discussing the possibility of going to court to stop

the conversion of salaries based on the average of the last four

months.

Because the plan went into effect by decree (known as a

provisory measure "MP"), it must be approved by Congress within

30 days. Members of Congress will have the opportunity to

present and vote on amendments to the measure. If no vote is

taken by March 30, the executive branch can issue a new MP,

valid for 30 more days. This, apparently, is the hope of

Cardoso, as this time period would be adequate to begin

implementing phase 3 of the plan: the introduction of the "real"

currency.

Federal Deputy Paulo Paim, of the Workers Party, said that he

will propose an amendment to restore salary losses which occurred

in the conversion to URVs. Paim, who is president of the

Congressional Labor Committee, said that "the plan is well-

intentioned and has well-founded supports." If salary losses are

restored, said Paim, "society will support the economic

measures."

Finally, the plan is not without political implications. If

successful, it would make Cardoso ( a member of the PSDB-

Brazilian Social Democratic Party) a leading contender for the

presidency. Many on the left are beginning to remember the

after-effects of the 1986 Plano Cruzado, which carried into

political office many members of the PMDB party. However,

according to current law, Cardoso would have to leave the Finance

Ministry by April 1 if he wants to run for president, which may

not be enough time to see if his plan will really bring down

inflation. At this moment, everything indicates that prices will

continue increasing this month. If Cardoso does resign, it is

unclear whether his successor could have the same political

influence over President Itamar Franco and Congress to carry out

the plan.

ECOLOGY

The following is a summary of the news items carried by the principal Brazilian newspapers during recent days dealing with ecology. The date is given for each summary and the newspapers are identified as follows:

FSP = Folha de Sao Paulo.

GL = O Globo.

GM = Gazeta Mercantil.

JB = Jornal do Brasil.

OESP = O Estado de Sao Paulo.

February 10, 1994.

- Of the four principal points of divergence between Brazil and the US in the area of industrial patents - parallel importation, local use of the patents, "pipeline" and biotechnology - it is the last which presents the greatest difficulties for the signing of the agreement between the two countries which should take place by February 28. On this date if the agreement is not signed, the US government will decide whether or not it will start a process of commercial retaliation against Brazil. (FSP).

- The Brazilian senate approved the international agreement dealing with the use of nuclear power for pacific ends. (FSP).

- Rains put out the fires which raged in the Taim reserve since February 03. Fire-fighters calculate that 2 thousand hectares were destroyed. (GM).

February 11.

- Tests carried out by the Adolfo Lutz Institute confirm that 74 families in the city of Cubatao, State of Sao Paulo have been contaminated by chemicals dumped there during the 1970s. The companies responsible for the dumping are from the local petro-chemical complex. (FSP).

February 21.

- The government of the State of Parana is expected to authorize the construction of the hydro-electric station of Tijuco Alto on the river Ribeira de Iguape near the Sao Paulo border. The project belongs to the Votorantim group of companies. It is strongly opposed by environmentalists and rural trade unions. A large area of agricultural land as well as part of the Atlantic Rainforest will be flooded if the project goes ahead. (GL).

- The 76 Yanomamis who survived the massacre in the village of Haximu returned to their village after having fled into the forest with the return of gold prospectors. FUNAI now believes that the number of gold prospectors within the Yanomami reserve has increased significantly since the end of last year. At that time there were approximately 200; at the moment the number is almost 1000. (JB).

February 22.

- The number of people with cholera in the State of Rio de Janeiro this year reached 42. In the State of Ceara, where the epidemic affects an average of 300 people per day, the state government has declared a state of emergency in Forteleza. (JB).

February 23.

- The federal government does not have the necessary infra-structure to control the invasion of the national park on the Ilha do Cardoso, Sao Paulo. The government of the State of Sao Paulo has now taken over this responsibility and plans to demolish clandestine buildings on the island. (GM).

February 24.

- The life of Chico Mendes will be launched as a film in March. The producer is David Puttman, the director is John Frankenheimer and Raul Julia will play the role of Chico Mendes. Warner Brothers and HBO have invested U.S. $10 million in the project. (OESP).

- The government of the State of Mato Grosso has requested the use of the military forces to prevent the invasion of predatory Paraguayan fishing boats in the Pantanal. A number of Paraguayans have already been arrested. Many formerly were engaged in hunting crocodiles. (JB).

- A study carried out by CETESB shows the existence of inflammable products underneath the slum dwellings built over the swamp in Cubatao, State of Sao Paulo. Many died here in a slum known as Vila Soco ten years ago when similar conditions were responsible for a major fire. (FSP).

February 25.

- After the arrest of Paraguayan fishermen by the Brazilian authorities, a heavily armed Paraguayan patrol boat arrived in the Pantanal area. The Paraguayan authorities accuse Brazil of arresting the fishermen in Paraguay and not in Brazil. (OESP).

- The National Conference of Catholic Bishops of Brazil (CNBB) is preoccupied about the proposals presented for the constitutional amendment concerning the indigenous peoples. The CNBB feels that in the amendment process many of the rights which the indigenous peoples gained in the 1988 Constitution could be lost. The Bishops' Conference also feels that sufficient debate has not taken place to decide which are the most important topics to be dealt with during the amendment process. (JB).

February 26.

- Three days prior to the date given by the U.S. authorities for the start of commercial sanctions against Brazil, the American authorities decided to suspend the threats. They stated that the progress made in this area by the Brazilian authorities will now allow an understanding between both countries on the question of patents. (FSP).

- Rancher Darli Alves da Silva who escaped from prison while serving a 19 year sentence for the assassination of trade unionist Chico Mendes may be living near Xapuri. The rancher was seen by a number of people, including the superintendent of IBAMA. (GL).

- Brazil and Germany agreed on terms for the conclusion of work on the Angra 2 nuclear station. According to Brazilian Minister Celso Amorim the terms include as well financing for the construction of Angra 3. (FSP).

- 15 thousand cases of cholera have been already confirmed in all of Brazil during 1994. (FSP).

February 27.

- The "empate" used by Chico Mendes as a form of defense for the forest is likely to be recognized by municipal law in many of the Amazonian municipalities. (JB).

February 28.

- The Juma tribe which has been reduced to four adults and three adolescent girls may escape extinction if an adolescent of the Uru-Eu-Auau group is accepted as a husband for one of the girls of the Juma group. (JB).

- Conservationalists and ecologists do not agree on the future of the Reserva da Praia on Ilha Grande, State of Rio de Janeiro. The former group defends a rigorous preservation of the area while the latter group defends an integrated occupation and environmental protection. (JB).

February 28.

- The Association of Municipalities of the Alto Vale region of Itajai plan to replant 140 thousand hectares of forest. This corresponds to 20% of the total area of the region. (FSP).

- The Enron Development Corporation which is responsible for 20% of the natural gas sold in the U.S. wants to participate in the construction of the gas-line between Brazil and Bolivia.

- A survey carried out amongst tourists during carnival showed that squalor and misery caused a bigger impression on them than violence during their visit to the city of Rio de Janeiro. (JB).

March 02.

- Representatives of a number of indigenous groups, the majority of them from the south of Brazil where few indigenous reserves have been demarcated, have requested that the text of the 1988 Constitution which defends the demarcation of indigenous territories in all of the country be maintained in the current constitutional revision. (JB).

- Going against their own customs, guarani indians requested help from the police to resolve a series of crimes which have taken place at the Morro da Saudade village in Barragem, Sao Paulo. Five people were assassinated there within the last few days. This includes chief Eleno Venite who was killed early last Saturday morning by blows of an iron bar to the head. (JB).

- A group of representatives of the federal and state governments on an inspection visit to the national park on the Ilha de Cardoso discovered a number of new construction in this area where such activity is prohibited. A number of owners of such constructions were fined including the vice president of General Motors in Brazil, Andre Beer. (GM).

- Starting this month, the municipalities in the State of Sao Paulo which contain an area of conservation or a dam will receive a royalty of 0.5% of the state sales tax. With this royalty the income to the mayor's office in some municipalities will increase by 500%. In the State of Parana similar royalties have been paid for a number of years. (GM).

- Approximately 4500 cases of poisoning by inadequate handling of agro-chemicals happen each year in the State of Parana alone. (FSP).

INDIGENOUS QUESTIONS

- Construction of Roads Continues in Indigenous Territories.

In Brazil, one of the most common aggressions against the indigenous peoples is the invasion of their territories for the construction of roads. Entire areas are cut generally without the authorization of those who live there. This helps the later entry of invaders into such areas. The roads are always constructed with "development" given as the motive. One of the most recent cases affects the Xerente indians in the State of Tocantins. Their territory was cut by two roads which are being constructed at the moment; this project is being carried out against the wishes of the indians.

Not even the Federal High Court managed to force the government of Tocantins to interrupt the project. Last December the court ordered that the construction of one of the roads be discontinued in the stretch which intersects the indigenous area of Funil. It also ordered that the construction of a bridge over the River Sono in the Xerente territory be interrupted. Work on these projects was only interrupted in late February after a meeting took place between the Xerente, representatives of the Tocantins Government, of the local municipalities and of the Attorney General.

Last August, over 50 indians occupied the building site at the Sono River and seized machinery used in the construction of the bridge. However, construction started again immediately after the indians left.

The Government of Tocantins look on the indians as an impediment in the so called development of the state and they have turned the local population against them. However, the Constitution and the Indian Statute forbid that public works be carried out in indigenous territories except when they are of national importance. This is not so in the case of the roads in question which could easily be built along other routes. If roads were built along other routes, private lands would be used and the ranchers in general oppose this.

The Xerente now hope to lobby the World Bank so that it will not give a loan to the State of Tocantins for the construction of such roads. The State's request for a loan is presently being studied by the Secretariat for Planning of the Presidency of the Republic.

RURAL QUESTIONS

- Priests Receive Death-Threats in State of Para.

On February 17 and 18 two identical death-threats by phone were made to Fathers Mike Ferris and Ricardo Rezende. In the latter case there exists a doubt if the death threat was directed towards Father Rezende or towards Father Henri des Rosiers who lives in the same house; the author of the threat did not specify which priest was being threatened.

All of the priests in question have been active in the defense of small farmers in the region. Father des Rosiers also is the lawyer for the families of trade union members who have been assassinated in the region. Shortly before the first threat which was directed at Father Ferris, the mayor of Conceicao do Araguaia, Carlos Cavalcante, used the space given to the municipality on the local TV station to attack the Pastoral Land Commission (CPT) and Father Ferris.

SOCIAL ISSUES

- UN Report Names Brazil as Cocaine Producer.

A report released February 28 by the UN's Commission on

Narcotics Control in Vienna states that Brazil, besides being

part of one of the most important international routes for drug

trafficking (along with Argentina and Chile), is now one of the

principal manufacturers of cocaine chlordate, one of the most

common forms of cocaine.

The increase in cocaine production can be measured by the

number of drug apprehensions made in Brazil in recent years. In

1991, police seized 8.5 tons of marijuana, the most consumed

narcotic in Brazil. A year later, the amount apprehended

increased to 19.6 tons.

One of the UN Commission's main concerns is the growing

internationalization and cooperation among drug cartels,

political groups, and arms traffickers, an explosive mix "which

is increasing the economic power and political influence of

criminal organizations." The report cites the increasing number

of Africans, mostly from Nigeria, imprisoned in Brazil for being

drug transporters, as an example of this internationalization.

The drug wars occurring in Rio de Janeiro (most recently in

Mangueira, where 14 people were killed days after Carnaval),are

an example of what is happening elsewhere in South America, says

the report. Production, trafficking, and consumption of drugs

are consequences and causes of fundamental economic and social

problems, the UN says.

POLITICAL NEWS

- Congress Passes Constitutional Amendment Creating Emergency

Social Fund; Agenda Defined for Next Stage of Revision;

Continuity of Revision Process is in Doubt.

On February 24, Congress approved by a vote of 409 to 95 the

creation of the Emergency Social Fund (FSE). This fund will

consist of the equivalent of US$15.5 billion, $300 million of

which is earmarked for investments in housing and another $300

million destined for education. The money comes from federal tax

increases and cuts in federal spending on localities.

The voting session was the most-attended one of the entire

Constitution revision process. At the same time, Congress voted

to extend the revision until May 31. It also established an

agenda for the next items to be considered. They are:

1. Reduction of the presidential term from five to four years.

2. Re-election of the president, governors, and mayors,

without their having to resign during the campaign.

3. Abolish the April 2 deadline for the resignation of elected

officials who wish to run for other political offices this year.

4. Abolish the positions of vice-president, vice-governor, and

vice-mayor.

5. Greater fidelity to one's political party. The offical who

changes parties loses his/her mandate and is ineligble to run for

another office for three years.

6. Creation of the non-obligatory vote.

7. Adoption of an electoral system with a mixed district vote

(similar to the German system).

A week after this agenda was announced, the "Folha de S.Paulo"

reported that the revision process is in the midst of its worst

crisis. "The left has systematically obstructed the process,

while the majority who want constituional reforms run up against

their own incompetence and their electoral and corporate

interests."

The president of the lower house of Congress, Federal Deputy

Inocencio Oliveira, called a meeting for later this week with

congressional leaders and presidents of political parties to

determine whether or not the revision will continue.

The "Folha" reported on March 2 a possible agreement between

the national directorate of the Workers Party (PT) and PT

congressional members on PT participation in the revision. The

agreement would continue to give priority to obstructing the

revsion, but would allow PT parliamentarians to choose for

themselves whether or not to vote on determined issues.

Meanwhile, non-governmental organizations continue to monitor

the revision process, paying special attention to constitutional

amendments which would affect indigenous peoples and the

environment.

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