Brazil’s Cardoso denies currency devaluation reports
RIO DE JANEIRO
Jan 12
(AFP)
Brazil’s president Tuesday denied reports that the government was preparing a huge
devaluation amid a spat with a
mining state that has shaken this nation’s gigantic economy.
President Fernando Henrique Cardoso also denied rumors that Finance Minister Pedro Malan
and Central Bank
President Gustavo Franco would be sacked.
«Minister Malan is vital for Brazil,» Cardoso said at a hastily arranged press
conference here. «All this is false. The
market can calm down because the government knows what it will do, what it is doing.»
Rumors that Malan would soon be out began circulating on Friday when he traveled here from
Brasilia for a dentist
appointment and to attend his son’s graduation.
Cardoso also sought to calm investor fears prompted by an announcement by Itamar Franco,
governor of Minas Gerais
state, that there would be a 90-day moratorium on debt payments because the state was
broke. Minas Gerais has the
second biggest economy in Brazil after Sao Paulo and owes 15.4 billion dollars.
«We pay our debts. We honor our debts,» said Cardoso, adding that Brazil had no
intention of repeating a 1987 decision
to stop payment on all debts. «The attitudes of the past caused stagnation in Brazil.»
Cardoso spoke shortly before Maranhao Governor Roseana Sarney roundly condemned the
moratorium in a meeting
Tuesday of the governors of 18 of Brazil’s 27 states at Sao Luiz do Maranhao in northern
Brazil.
Sarney called Franco’s decision something that could «tear apart the federation via an
individual desertion.»
«We can and we must debate formulas for renegotiating the financial relationship (between
the Brazilian states and the
federal government) but in an appropriate forum,» said Sarney.
The 18 governors, all of whom are Cardoso’s political allies, said in their statement
that «these are inadequate attitudes
that could destabilize the country and compromise our international credibility, with
serious international repercussions.»
In another pressure tactic, the Banco do Brasil, a commercial bank which disburses federal
funds to state governments,
froze 50 percent of the funds that it had been scheduled to give Minas Gerais on Monday.
Financial markets had been shaken by the moratorium, which came at a time when Cardoso was
attempting to cut the
budget to qualify for 41.5 billion dollars in International Monetary Fund (IMF)
assistance.
But Franco’s plan is popular with the Workers Party, the Democratic Labor Party, the
Socialist Brazilian Party and the
Communist Party, which released a joint statement on Tuesday calling for «support for the
Minas Gerais moratorium and
for a reduction in interest rates to create more jobs and increase production.»
Because of the spat, the Sao Paulo stock market slid 7.61 percent on Tuesday at 5,915
points. The currency, the real,
was also down against the dollar.
North Korea tops concerns in US-Japan security talks
TOKYO, Jan 13
(AFP)
US Defense Secretary William Cohen opens security talks with Japanese leaders Wednesday
amid a dangerous
impasse in the 1994 agreement that froze North Korea’s nuclear program.
Missile defenses and a proposed network of Japanese surveillance satellites to counter a
more menacing North Korean
threat are at the heart of Cohen’s talks with top Japanese officials, US officials say.
Cohen also is expected to nudge the Japanese to move quickly in implementing new defense
guidelines that would allow
the Japanese military to play a broader supporting role in a regional crisis.
On another issue, Cohen is expected to raise US concerns that US navy personnel and their
families are being exposed
to hazardous pollutants from an incinerator located next to the US Naval Facility in
Atsugi, Japan, officials said.
US military officials say the privately owned incinerator, located 200 meters (yards) from
a navy apartment complex and
school, is spewing pollution containing 27 times the level of dioxin considered safe by
Japanese government standards.
The Japanese government has pledged to replace the incinerator with one that meets safety
standards by 2000.
Although money has been allocated for the project, no building permits have been issued,
the officials said.
Cohen was scheduled to meet with Cabinet Secretary Hiromu Nonaka, Japanese Defense Agency
Director Hosei Norota
and Foreign Minister Masahiko Komura.
Adding urgency to Cohen’s talks here is the sharpening dispute with North Korea over
compliance with the Agreed
Framework, the 1994 accord that has served as the basis for a US strategy of engagement
with Pyongyang.
Collapse of the agreement would confront Washington and its allies in the region with
tough choices about how to deal
with a heavily armed North Korea that may already have built nuclear devices.
Dramatically raising the stakes, North Korea launched a three stage rocket over Japan
August 31 that showed it now has
the technological means to strike over much longer distances.
Washington is seeking Japanese support for its multi-billion dollar efforts to develop
theater missile defenses capable of
protecting the estimated 83,000-strong US forces in South Korea and Japan.
Japan has budgeted eight million dollars for theater missile defense research and
development, and expressed greater
interest since the North Korean launch.
Washington also is prepared to share technology and see if there are other ways it can
help Japan with its plans to put
up four surveillance satellites by 2003, Cohen has said.
Tokyo annnounced the 1.8 billion dollar satellite plans after being taken by surprise by
North Korean rocket launch.
Cohen’s meetings come just ahead of crucial US-North Korean talks in Geneva on US
demands for access to a site in
Kumchangri, North Korea that Washington suspects is for a secret nuclear facility.
The defense secretary warned Tuesday that the agreement will be undermined if Pyongyang
continues to refuse to allow
inspections of the underground site.
«If we are not successful in having access to satisfy ourselves that they are not
circumventing the agreement that will
call into question the viability of the Agreed Framework,» he said.
Calling it «a mere piece of paper which is of no use,» North Korea threatened Tuesday to
abandon the framework
agreement if the United States continued to delay promised deliveries of fuel oil.
Under the agreement, North Korea mothballed its nuclear program in return for two light
water nuclear reactors financed
mostly by Japan and South Korea.
US officials say Washington remains committed to engagement with North Korea, but Cohen
acknowledged that
continued food and fuel to Pyongyan will be a tough sell unless US suspicions about the
Kumchangri site are assuaged.