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Spring 2000 HS Background Document B
This background information is provided as a basic introduction
to the situations facing all of the countries represented
in this simulation. It is provided as a basis for your
own research. In order to prepare for the simulation,
additional information must be gathered on your country,
the other countries participating in the simulation,
and the global issues that will be discussed in daily
message exchanges and at conferences. The information
is grouped by region, and is current as of January 2000.
The nations that will be represented in this simulation
are: Argentina, Brazil,
China (PRC), Costa
Rica, France, India,
Japan, Kenya,
Pakistan, Russia,
United Kingdom (UK), United
States (USA)
AFRICA
Kenya held its first multi-party
elections in 26 years in 1992, but Daniel Arap Moi, who
has been the President of Kenya since 1978 was re-elected
in voting marked by widespread manipulation by Moi's
ruling party. Under pressure from Western donors, who
cut off $480 million in aid in 1991, Moi legalized political
opposition parties and called for elections, but violent
protests against his government have resulted in the
imprisonment of many of his opponents and international
accusations of human rights abuses. Elections were held
again in December 1997 as promised by Moi after being
re-elected in 1992. Once again, Moi was the winner of
the election, and once again accusations of fraud by
Moi's ruling party were heard throughout the election
process. After the 1997 election, Moi stated that he
will root out corruption, spark economic growth, and
be "devoid of hate, fear, and confrontation." After a
July 1999 vote of no confidence by the Kenyan Parliament,
based on evidence of corruption among senior officials,
Moi appointed a panel to investigate.
At one time, Kenya had one of the strongest
economies in sub-Saharan Africa, and was cited as an
example of productive economic development in Africa.
This can be attributed to the government privatizing
some of the industries it held, downsizing the amount
of workers employed by the government, and monetary assistance
from the IMF and World Bank. Since its independence from
the United Kingdom in 1963, Kenya's government has been
plagued with problems, though. This stems mostly from
the fact that even today, a large number of citizens
see themselves as members of their native tribes first,
and citizens of Kenya second. This tribal loyalty has
made it difficult for the government to function smoothly.
In addition to tribal loyalties, corruption within the
government is a major problem. The International Monetary
Fund (IMF) suspended a $205 million dollar loan to Kenya
in 1997 because corruption was so widespread. In addition
to its current economic and political instability, which
threatens to undermine the country, Kenya is faced with
trying to support refugees from surrounding countries
(civil wars in Sudan and Somalia have forced people to
flee to Kenya in search of safety). The bombing of the
US embassy in Nairobi in December 1998 brought additional
international attention to Kenyan security and domestic
issues.
Kenya continues to grapple with the spread
of communicable disease. The spread of the virus that
causes AIDS is a major problem. The World Health Organization
(WHO) estimates nearly 2 million Kenyans are infected
with the virus. Many people infected with the AIDS virus
In Kenya do not know that they are carrying the virus
(as is the case in much of the undeveloped world). HIV-infected
babies born to mothers infected with the virus is a growing
concern (The World Health Organization predicts that
there are 3,000 children with HIV in the city of Nairobi
alone.) Many women in Kenya who do know that they are
infected with the virus abandon their newborn babies
for fear that they will die at some point, and their
children will be left motherless. As in all of Africa,
access to effective AIDS drugs remains limited due to
high cost and patent limitations.
ASIA
While the Chinese government,
led by the Communist Party, continues to liberalize its
domestic economic policy, it still remains firmly against
any political liberalization or reforms. In recent years,
some countries have begun to view China's human rights
policies separately from its economic policies. In November
1999, China and the United States reached an agreement
that will allow foreign companies to access the Chinese
market. In return, U.S. President Clinton agreed to sponsor
China for entry into the World Trade Organization, something
China had been trying to achieve for thirteen years.
WTO membership for China will proceed if the U.S. Congress
agrees to grant China permanent normal trade relations
status. (Previously, the U.S. Congress has had to vote
to renew NTR status for China on an annual basis.) While
the Chinese government moves to open its markets to greater
foreign access and continues with other economic reforms,
it remains firmly against any political reform.
The government's unwillingness to allow for
political reform adds to the negative view many take
regarding China's record on human rights. In the past,
Chinese citizens caught publically speaking out against
the government are arrested and accused of "counterrevolutionary
activities" and sentenced to long jail terms. In the
same vein, President Jiang Zemin and the Chinese government
continue to crack down on the millions of followers of
the officially banned Falun Gong religious sect. Despite
being banned, many Falun Gong members continue to non-violently
protest harassment of the sect by the government, and
are detained and jailed. Reiterating China's view of
human rights in October 1999 as China celebrated fifty
years of communism, President Jiang stated that basic
human rights are defined as the rights to food and shelter.
China has been a major arms exporter since
the 1980s, selling conventional weapons to nations around
the globe. China also legally possesses nuclear arms,
as it is allowed to do under the terms of the Nuclear
Non-Proliferation Treaty (NPT). In 1997, the Chinese
government promised to stop the sales of nuclear technology
to Iran and Pakistan. However, in 1998, the U.S. confirmed
that Chinese companies were still secretly selling nuclear
technology to these countries, apparently with the knowledge
and consent of the Chinese government.
Tensions between China and the Island of Taiwan
became heated again in 1999, when Taiwanese president
Lee Ten-hui suggested publically that there is not one
China, but two. (Despite Lee's comment, nearly all countries
continue to officially recognize mainland China and Taiwan
as one country.) The Chinese government reacted swiftly
to Lee's suggestion saying it would destroy the island
of Taiwan should it attempt to separate from China. China
has also warned the U.S. (which holds close ties to Taiwan)
that it should not come to Taiwan's aid should the dispute
escalate further.
China's success with its one-child policy
has slowed its birth rate to American and Western European
levels. The Chinese fertility rate is now lower than
the rate required for replacement of its population.
Since the Chinese population makes up about 21 percent
of the world total, this has a big impact on world population
growth. However, many see the Chinese program as a violation
of human rights. Although the Chinese government claims
that the program is voluntary, families that have more
than one child are fined (usually by taxing them heavily)
and there have been reports of widespread coercion in
enforcing the policy. The traditional preference for
male babies, coupled with the one-child policy, has led
to the growth of the ratio of male to female children
in society. This rise in the ratio is attributed to unreported
births of baby girls, female infanticide in rural areas,
and abortions of unwanted girls.
India is the world's most
populous democracy; only China's population is larger.
(It is estimated that India's population will be larger
than China's by 2020.) However, nearly one-third of India's
huge population lives in poverty. India is also severely
divided along lines of caste, religion (Hindu, Muslim,
Sikh), and demands for regional autonomy. In May 1991,
the assassination of Prime Minister Rajiv Gandhi thrust
the country into prolonged political turmoil. This turmoil
continues today as the lines of power in the Indian Parliament,
particularly over the course of the last three years,
have changed frequently. The Hindu-nationalist party
BJP (Bharatiya Janata Party) took over as the ruling
party in March 1998, only to lose its hold on power in
an April 1999 vote of no-confidence in parliament. In
October 1999 elections that resulted from the no-confidence
vote, the BJP surprisingly won reelection to lead India.
The leader of the BJP, Atal Behari Vajpayee, resumed
his duties as prime minister.
In May 1998, India, detonated a total of five
nuclear devices in tests over a two day period, and removed
any doubts about its capabilities to build and detonate
nuclear weapons. Prior to the 1998 tests, India stated
that its efforts to create a nuclear program was for
defensive purposes only. The 1998 tests left the international
community to wonder about India's motives regarding its
nuclear weapons program. The tests brought condemnation
from a number of countries including the United States,
Germany and Pakistan. Two weeks after India tested its
nuclear devices, Pakistan, India's neighbor and enemy,
successfully tested its own nuclear devices. (Since India
and Pakistan gained independence from Britain in 1947,
there have been three wars fought between the two.) Before
this time, Pakistan had never detonated a nuclear device
although it was assumed that it had nuclear capabilities.
With both countries testing nuclear devices so close
together, it appeared as though both countries were poised
to engage in an arms race. However, with its tests complete,
India declared a moratorium on further tests, and one
month later in June 1998, the Pakistani government also
declared a moratorium on nuclear testing. Both countries
have indicated that they are prepared to back off from
a nuclear confrontation, if their demands can be met
by the international community. India wants to be officially
recognized as one of the world's nuclear powers, while
Pakistan wants international security guarantees. India
has also refused to sign the CTBT or NPT because it does
not require the five recognized nuclear weapons- holding
nations to destroy their nuclear arsenals.
The competition between India and Pakistan
over both conventional and nuclear weapons constitutes
one of the most destabilizing threats to both regional
and international peace. The continuing conflict between
India and Pakistan over control of the Indian state of
Kashmir increases the danger that either side may resort
to use of its nuclear weapons. In the spring of 1999,
India discovered that Pakistani rebel forces had crossed
into Indian territory in Kashmir. The government of Pakistan
stated that these were not Pakistani military forces,
but Islamic rebels acting independently fighting for
the separation of Kashmir from Indian control. (Pakistani
military forces were later discovered in the area, however.)
A nearly two month long "mini war" resulted between the
two sides until India was able to drive the rebels back
into Pakistani territory.
Economic problems faced by India have forced
the government to reevaluate its economic philosophies.
India must now confront rising concerns that its foreign
debt is becoming too large ($100 billion). The debt problems
are complicated by a rising internal budget deficit and
a widening trade deficit. However, it has a large amount
of cash on hand to use for development and infrastructure
and the economy shows few signs of slowing down. In the
1990s, India's economic growth rate was remarkable, especially
in light of its burdensome population boom. Unfortunately,
the high levels of external borrowing could trigger an
economic crisis.
The Japanese economy still
suffers from a recession growing at less than 2 percent
per year since 1991. Ryutaro Hashimoto became prime minister
in 1996 with promises of lifting Japan out of recession,
but was unsuccessful and subsequently his Liberal Democratic
Party lost several seats in the Diet in 1998 elections.
Hashimoto resigned in disgrace that year making way for
Keizo Obuchi to become prime minister. Obuchi also promised
to lift Japan out of recession, but has had little success.
Several countries, including the U.S., have begun requesting
that the Japanese government invest more in its industries
as well as open its markets to greater foreign investment
with the hope of igniting an economic recovery.
Trade continues to be a major issue for Japan,
particularly in light of its economic recession, however,
its trade relationships are not without controversy.
Continuing trade tensions, while improving, still exist
between the U.S. and Japan over Japan's restrictions
on the importation of U.S. products. Japan reasons that
U.S. industries produce inferior goods and employ inefficient
management techniques. As the Japanese trade surplus
with the U.S. continues, some members of the U.S. Congress
are calling for higher tariffs and restrictions on Japanese
imports.
Increasingly, Japan has been singled out for
its environmental practices, particularly concerning
deforestation. Over the years, Japan used its increasing
wealth to improve its environment. Japan's government
set environmental regulations, and strictly enforced
conservation laws. In addition, Japan started to replant
its forests that it destroyed in its quest for wood.
As a result of the conservation and reforestation efforts,
though, Japan is again one of the world's most heavily
forested countries. Consequently, Japan has begun to
acquire a significant amount of its wood and wood products
from the countries of Southeast Asia. As a result of
the demand for wood put on these countries, Japan has
been signaled out as one of the world's largest destroyers
of the world's rainforests.
In October 1999, Pakistan's
army overthrew the government of Prime Minister Nawaz
Sharif in a bloodless coup d'etat. The catalyst for the
army's ouster of Sharif was his attempt to dismiss General
Pervez Musharraf , the top military official in Pakistan.
As events unfolded after the army's takeover, General
Musharraf inserted himself as Pakistan's leader effectively
ending the rule of Pakistan's democratically elected
government. Since its independence, Pakistan has been
ruled by a military government for 25 of its 52 years.
A large portion of Pakistan's people welcomed the ouster
of Sharif's government and the return to a military controlled
government. Many citizens viewed democracy in Pakistan
as only beneficial to those holding positions in government,
and not the common Pakistani citizen. Graft and corruption
in Pakistan are widespread, and many citizens saw the
return to military control as a way to clean up many
of Pakistan's underlying problems. Many experts predict
the military government will eventually have to allow
civilians back into the government in order to rekindle
its relationship with the international community--as
well revive economic assistance that is so vital. (After
the coup, many countries and organizations, including
the IMF, halted the aid they provide to Pakistan).
The new military-led government has caused
some concern since Pakistan has made it known to the
world that it possesses nuclear weapons. Pakistan officially
tested its nuclear weapons in June 1998. Pakistan's nuclear
tests were in response to neighboring India's tests that
took place two weeks earlier. In late 1998, now deposed
prime minister Nawaz Sharif indicated that Pakistan would
be willing to sign the Comprehensive Test Ban Treaty
(CTBT) if India would adhere to its promise not to conduct
further nuclear tests. Sharif also indicated that he
would expect all sanctions to be lifted in return for
Pakistan`s signing of the CTBT. Negotiations between
the two countries on the signing of the CTBT in late
1998 and again in early 1999 were unproductive. No indication
has been given by the new government, led by General
Sharraf, as to whether it intends to negotiate on these
terms.
Pakistan's history has been turbulent since
its creation in 1947 when the Hindu-majority nation of
India was partitioned, and the separate and sovereign
Muslim nation of Pakistan was born. Pakistan has fought
three wars since that time with India. Tensions with
India remain as both countries continue to fight what
amounts to a low-level war in the state of Kashmir over
who has the right to govern this area. These tensions
boiled over in May 1999, when India discovered that alleged
Pakistan-supported Islamic rebels had taken up positions
in the India-controlled portion Kashmir. India began
attacks against the rebels to drive them back into Pakistan.
Both sides agreed to peace talks to prevent an all-out
war, although fighting continued until India claimed
it had successfully swept the rebels out of its territory.
Political instability, natural disasters,
and low demand for local products have all contributed
to the near collapse of Pakistan's already weak economy.
Pakistan supports the eighth largest military in the
world with military equipment from the U.S., China, France,
and the United Kingdom. Consequently, military spending
and debt servicing have consumed up to two-thirds of
Pakistan's revenues. This spending has become a target
of reform for lending institutions like the IMF. Furthermore,
Pakistan has drawn criticism for its acquisition of weapon
supplies from China that could be used to accelerate
its weapons programs. The Ghuari missile, capable of
carrying nuclear warheads, was displayed in public for
the first time in March 1999.
Western nations have become concerned that
Pakistan has become one of the world's premier staging
area for terrorists, drug-runners and Islamic radicals.
The Pakistani government has been unsuccessful in its
attempts to curtail these activities. Moreover, Pakistan
has been criticized by several nations for aiding the
rule of the Taliban in neighboring Afghanistan. A hijacking
of an Indian Airlines jetliner in December 1999, led
some officials in the Indian government to accuse Pakistan
of sponsoring the hijacking. In order to end the hijacking,
which ultimately took the airplane to Afghanistan, the
Indian government agreed to release a few Islamic radicals
it had imprisoned. Unfortunately, the hijackers were
able to avoid being captured.
EUROPE
The process of European economic unification,
expanding NATO membership, and ethnic wars in Eastern
Europe are the consuming issues for the governments of
the European Union (EU). The EU members are Austria,
Belgium, Denmark, Finland, France, Germany, Greece, Ireland,
Italy, Luxembourg, the Netherlands, Portugal, Spain,
Sweden and the UK. The official economic unification
of Europe was celebrated on December 31, 1992.
The European Union is
a major concern of French foreign policy. France has
been one of Europe's most outspoken proponents of a strong
EU, but the government has had some concerns about the
costs of admitting the formerly communist states, as
well as the effect that enlarging the Union will have
on France's power and influence. French President Jacques
Chirac and Prime Minister Lionel Jospin have both voiced
reservations to other EU members over admitting more
countries into the union too rapidly.
Throughout most of the 1990s to the present,
France's economy has been growing very slowly. Like other
Western European countries, France has a capitalistic
market system, yet the government owns a large number
of industries including electricity generating facilities,
airlines, railways, telecommunications and the defense
industry. In addition, the French government employs
a large segment of the population and provides generous
social welfare services to all French citizens. All of
this requires the French government to devote more than
half of its Gross Domestic Product (GDP) to maintaining
these industries and providing these services. In conjunction
with this, the unemployment rate remains high. In January
2000 the government reduced the number of hours in the
official work week from 39 to 35 in an attempt to create
more jobs.
When the Nuclear Non-Proliferation Treaty
(NPT) was put to a vote in the United Nations General
Assembly in 1968, France abstained from voting on the
treaty stating that while it would not sign the treaty,
it "would behave in the future in this field exactly
as the States adhering to the Treaty." The NPT did recognize
France as one of the five countries permitted to possess
nuclear weapons, however. In 1991, France agreed to formally
sign the NPT, but continued its program of nuclear weapons
tests on islands in the South Pacific until the end of
1995. In 1996, President Chirac reversed his support
of the tests, and declared an end to all nuclear testing.
France then proceeded to sign the Comprehensive Test-Ban
Treaty (CTBT) in September 1996.
France has been a strong proponent of creating
and enforcing strict environmental policies on a worldwide
level. At the Kyoto conference on climate change in December
1997, France and other EU countries were lobbying for
an agreement that would have required industrialized
nations to cut their greenhouse gas emissions by 15 percent
by the year 2010. The U.S. argued against such a high
percentage of reduction citing economic concerns. The
final agreement called for a roughly 6 percent reduction
by 2012.
In Russia, President
Boris Yeltsin unexpectedly resigned from office in December
1999. Criticism from within the Russian parliament about
Yeltsin's competence as president as well as the condition
of his health had been increasing. Recently appointed
prime minister Vladimir Putin became acting president
until official voting to elect Yeltsin's successor takes
place in late March 2000. Putin is widely expected to
win that election and officially become Russia's next
president.
The transition to a market economy continues
in Russia although there has been little progress since
1998. Severe economic problems in 1998 caused the Russian
stock market to plunge more than 40 percent and the ruble
to be devalued so far that it was worth almost nothing.
Up to that point, Russia had increased foreign investment
and trade, and instituted economic reforms that paved
the way for its membership in the International Monetary
Fund (IMF) and World Bank. However, Russian foreign debt
(approximately $150 billion owed to foreign governments
and banks and growing), the need for increased aid, and
unregulated domestic economic policies undermined Russia's
economic strength. Despite this, many foreign governments
continue to cautiously support Russia by granting limited
loans, even though there appears to be little stability
in the economic system. The aid from the West has been
far from unconditional, however. The price for such large
aid packages has required further economic reform, which
continues to make for difficult conditions for Russian
citizens who have seen their social safety net disappear.
Privatization of industries is considered
crucial to the success of Russia's economic reforms.
Currently, about 75 percent of Russian economic activity
is accounted for by private companies, which is encouraging,
but benefits have been slow in coming. One of the most
trying difficulties for the Russian government to overcome
is the conversion of defense industries into the manufacture
of consumer goods. (The Soviet Union built a massive
defense industry which Russia cannot afford to maintain.)
If this conversion fails, it may further exacerbate mass
unemployment and social instability. However, not all
of Russia's defense industries are targeted for conversion,
increasing concerns about arms becoming a major export
product.
In addition to meeting the military requirements
for its own armed forces, the Russian arms industry is
one of its best sources of foreign trade and hard currency.
Russia is courting nations such as Israel, South Africa,
Taiwan, Pakistan, and Iran as clients. Iran has already
purchased large quantities of advanced conventional weaponry,
including aircraft and tanks, worth approximately $600
million. This Russian-Iranian transfer of arms has brought
harsh condemnation from the U.S. In 1999, it was discovered
that the Russian government allowed three Russian institutes
to sell missile and nuclear technology to Iran bringing
threats of limited trade sanctions from the U.S. While
weapons sales are beneficial to the Russian economy,
many nations worry about the spread of Russia's military
technology to other nations, particularly to countries
such as Iran and Iraq. Reduced to the bottom line, Russia's
economic realities will force a continued reliance on
arms exports for hard currency earnings. However, many
observers feel that it may not be the best time for Russia
to ignore the wishes of the international community as
it is currently so dependent on their aid, as well as
continued loans from the IMF.
Contributing further to its tenuous relationship
with some of its allies, Russia again sent its armed
forces to invade the southern Russian region of Chechnya
after several terrorist bombings in Moscow were reportedly
linked to Islamic separatists from that region. This
was the second time since the fall of the Soviet Union
that Russian forces and Chechen rebels have quarreled
in the region. Chechnya, populated by a Muslim majority,
wants to separate from Russian control. The Russian invasion
of Chechnya this time was particularly brutal bringing
some criticism from many in the international community.
In the United
Kingdom, Tony Blair became Prime Minister of Britain
in 1997 in a landslide election. Prior to the election
of Blair, the government faced repeated crises, which
led to strong discontent among Britons with their former
government. Despite Blair's left-leaning government,
the UK remains one of the more conservative European
Union members on issues of common security and political
unification. The UK was the only member of the EU that
opted out of some of the clauses of the Maastricht Treaty
when it was drafted in December 1991. In addition, the
UK has also declined to phase out the pound as its currency
and implement the euro, the new European single currency.
(Three other EU members, Denmark, Sweden and Greece also
did not assume the euro as their currency.)
The United Kingdom continues its close ties
with the U.S. aligning itself with the U.S. on many international
issues. In 1998, the UK fully supported and participated
with a military airstrike against Iraq for its refusal
to abide by terms for weapons inspections made after
the Gulf War. The UK also voiced its full support for
military strikes taken by the U.S. on terrorist facilities
in Sudan and Afghanistan in retaliation for the bombings
of the U.S. embassies in Kenya and Tanzania. Similarly,
the UK was the strongest supporter of US airstrikes against
Serbia in 1999, and helped to unify NATO behind these
actions.
LATIN AMERICA
Costa Rica is one
of Central America's most stable democracies, despite
its close proximity to regional conflicts in Panama,
Nicaragua and El Salvador. This has allowed Costa Rica
to develop a strong tourism industry, based on the variety
of species and climates within the country. The vast
bio-diversity that exists in Costa Rica attracts tourists
from around the world. Agricultural exports are the core
of the economy, although manufacturing is also growing
quickly due to preferential tariff structures designed
to attract foreign investment. Conservation measures
are becoming a priority for the government, however,
as development begins to endanger the environment which
tourism depends upon.
While Costa Rica was spared the worst effects
from Hurricane Mitch in October/November of 1998, substantial
flooding and infrastructure damage did occur. As a region,
Central America's development is estimated to have been
set back 20 years by the Hurricane, which has created
additional pressure for Costa Rica to seek international
sources of trade. Attempting to balance manufacturing,
agriculture, and tourism is a challenge to Costa Rica
for the future. In terms of the domestic economy, President
Miguel Angel Rodriguez-Echeverria has had limited success
in curbing inflation, which was near 10 percent in 1999.
A substantial trade imbalance is also a concern, with
imports outweighing exports by 600 million US dollars
in 1997.
NORTH AMERICA
In the United States,
trade has been a central focus of the Clinton Administration's
foreign policy. The passage of the North American Free
Trade Agreement (NAFTA) and Uruguay round GATT agreement
by the U.S. Congress were major successes for the President
in his first term. In addition, Clinton has met with
Asian and Latin American leaders about free trade (a
proposed free trade zone encompassing the entire western
hemisphere may be in place as early as 2005.). American-Japanese
trade relations have also been improving, with the Japanese
government agreeing to grant American automotive and
telecommunications industries greater access to the Japanese
markets. At the same time, trade frictions with China
have apparently been diffused as China agreed to allow
greater foreign access to its markets in November 1999.
In return, the U.S. agreed to sponsor China for membership
in the World Trade Organization (WTO). China will be
allowed to become a WTO member if the U.S. Congress agrees
to grant China permanent normal trade relations status.
(Previously, Congress has had to vote to renew NTR status
for China on an annual basis.) Trade tensions between
the U.S. and the European Union over the EU's refusal
to end its ban on the importation of American beef raised
with special growth hormones, (The EU countries were
concerned that the hormones could present a health risk,
while the U.S. argued that they do not.). The EU's refusal
to open its markets continued after a WTO deadline to
halt the ban passed. As a last resort, the U.S. received
WTO permission to retaliate in July 1999 by imposing
100 percent tariffs on a range of luxury goods imported
from Europe.
In its statements, the U.S. places a great
deal of emphasis on human rights. The U.S. continues
to define human rights largely in political terms, however,
the U.S's differences on domestic and international policies
that protect human rights remain problematic and controversial.
The Clinton administration continues to face criticism
by human rights organizations for its negotiations with
China allowing it to enter the WTO , and for the refusal
to sign the 1997 treaty banning the use and production
of anti-personnel land mines (The U.S. did agree to most
parts of the land mine treaty, however, it wanted an
exemption in the treaty to keep its land mines along
the border between North and South Korea citing protection
of U.S. troops in that region.) The changing of immigration
policies that drastically scaled back the numbers of
refugees allowed to enter the U.S., has also brought
sharp criticism from human rights organizations.
The United States' relations with Cuba has
caused some tension between the U.S. and its allies.
After the Cuban government shot down two unarmed, U.S.
civilian aircraft in February 1996, the U.S. adopted
the Helms-Burton law, which allows the U.S. government
to place restrictions on foreign companies in the U.S.
that also do business in Cuba, and allows U.S. citizens
to sue foreign companies for profiting from property
confiscated by the Cuban government after 1959. Canada
and the EU complained to the World Trade Organization
(WTO) that this is a violation of their sovereignty because
it represented legitimate restrictions on their right
to do business. The U.S. reached an understanding with
the EU in 1997 under which the EU agreed to suspend its
WTO case and step up its efforts to promote democracy
in Cuba. In 1998, President Clinton eased some restrictions
on the U.S.'s embargo against Cuba which allowed for
greater freedom to send money, charter flights, start
a direct mail service, and sell food to non-governmental
bodies.
The U.S. has promised to pay more attention
to Africa, traditionally a low priority region. In 1993
the U.S. announced that it would forgive half of the
debts owed to the U.S. by the 18 poorest countries in
Africa; however, this only amounted to $228 million out
of $50 billion in outstanding debt. (Nigeria was considered
a middle-income country, and was therefore not eligible.)
In 1997, in an attempt to jump-start the African economy,
the U.S. agreed to grant the poorest countries the right
to import up to 1,800 products duty-free into the U.S.
As part of the same plan, an investment of $500 million
was made to improve telecommunications and the infrastructure
of those countries south of the Sahara. Additionally,
in 1999, the U.S., a G8 member, agreed to a plan to forgive
a portion of debt owed to the G8 countries by 30 of the
world's poorest countries--many of which are located
in Africa. Later in the year, the U.S., along with Canada
and the United Kingdom agreed to forgive all debts owed
to them by these countries.
In terms of the environment, in December 1997,
the Clinton administration committed the U.S. to accept
specific international limits on greenhouse gas emissions
by agreeing to the terms of the Kyoto Protocol. This
commits the U.S. to lower greenhouse gas emissions to
a level roughly 6 percent lower than 1990 levels by the
year 2012. However, the U.S. Congress has hinted that
it will not ratify the treaty when the Clinton administration
sends it to the Senate for approval. Some members of
Congress feel that the treaty is unfair because it exempts
many developing countries from the terms of the treaty,
and that it is economically damaging.
SOUTH AMERICA
October 1999 saw the
end of Argentina's president Carlos Menem's term in office.
Menem was first elected in 1989, and served two five
year terms after persuading the Argentine Congress to
alter its constitution to allow him to run for a second
term in 1995. Much of Argentina's economic growth in
the 1990s was attributed to the policies enacted by president
Menem. At the time of his election in 1989, the rate
of inflation had reached 200 percent, the nation was
deeply in debt, and the consequences of years of government
mismanagement had left the country in disarray. By 1992,
though, the rate of inflation had fallen to 2.2 percent
due to Menem's efforts to drastically reduce government
spending on social programs, government services, and
even pensions. Privatization of government industries
and services also helped to generate revenues and cut
government losses. Additionally, Argentina was accepted
into the Brady Plan in 1992, which involved some debt
forgiveness and significant debt restructuring. Fernando
de la Rua was elected to succeed Menem as Argentina's
new president. De la Rua has promised to crack down on
corruption and implement strict fiscal measures to balance
Argentina's budget.
As the second largest country in South America,
Argentina has natural resources, a highly literate population,
strong agricultural sector, and a diversified industrial
base. A key development in Argentina's recent economic
success, has been its dramatic increase in foreign trade.
Earnings from its growing export sector have helped Argentina
meet its scheduled debt payments. Further development
of its foreign trade plays an increasingly important
role in Argentina's overall economic development.
Argentina has been working to solidify its
relationship with the U.S., and trying to bolster its
relationship with other countries both industrialized
and underdeveloped. In recent years, Argentina has been
supportive of the U.S. and its allies sending troops
to the Gulf war in 1991, and to peacekeeping missions
such as Haiti and Bosnia. It has also been an outspoken
supporter of international disarmament efforts, the fight
against international terrorism, and of strong environmental
policies.
A shaky economy has been
of great concern in Brazil in recent years. Brazil has
been faced with a massive budget deficit, rising inflation
rates, slow economic growth and investors pulling their
money out of the Brazilian system. In January 1999, in
an effort to halt the economic slide, President Fernando
Henrique Cardoso devalued the Brazilian currency(something
that he promised not to do when he was reelected in 1998).
Cardoso, who rose to popularity by bringing Brazil's
astronomical inflation rate under control as his country's
finance minister in the early 1990s, has been facing
extremely low approval ratings lately as Brazilian citizens
are unhappy with the reforms and what appears to be an
unchanging economic situation. Cardoso has been concerned
with implementing tough austerity programs and free market
reforms in an attempt to reintroduce some stability into
the economy. The devaluation of the real was also an
attempt by Cardoso to get the Brazilian Congress to take
action and accept some of the reforms he had been proposing.
The Brazilian Congress has been reluctant to make cuts
in many areas, particularly in social programs. The reforms
that Cardoso has been trying to implement are required
as part of a deal negotiated with the IMF in 1998 that
provides Brazil with $41.5 billion in debt relief.
Fallout from the global economic crisis of
1997-98, sent Brazil's economy spiraling downward just
as it looked as if things had taken a turn for the better.
The market reforms and debt restructuring programs adopted
by President Cardoso reduced inflation to single digit
figures. (In mid-1994, monthly inflation ran at 40 to
50 percent.) Brazil also agreed to a debt restructuring
plan in 1994. This plan resembled the Brady Plan with
its emphasis on privatization of government-owned companies
and the use of austerity measures to reduce government
expenditures. The austerity measures instituted under
the debt restructuring plan have prevented an expansion
of Brazil's welfare policies, which could be a problem
given the huge disparity in income distribution. About
20 percent of Brazil's population shares only two percent
of the country's wealth. In many cases, Brazil has been
unwilling or unable to help its poorer citizens. An estimated
one-fifth of the Brazilian population, about 33 million
people, lives at the so-called "misery level". In addition,
Brazil's economic woes, and a recession affecting several
countries in the region, has led to a 30 percent drop
in trade between the Mecousur group in which Brazil plays
a large role.
To increase industrial output, improve agricultural
production, and relieve the pressures of world record
population growth in Rio de Janeiro and São Paulo, the
government is actively encouraging the settlement of
the rainforest for industrial development, agricultural
expansion, and grazing land. There is currently intense
pressure from industrialized countries and environmental
groups to curb the development of the rainforest. Brazil
blames the current environmental crisis on the industrialized
countries, and is reluctant to halt rainforest development
because it is considered one of the keys to Brazilian
economic development.
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