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Spring 2000 HS Background Document C
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: Australia, Austria,
Brazil, Canada,
China (PRC), France,
Germany, India,
Indonesia, Japan,
Jordan, Kenya,
Mexico, North
Korea, Pakistan, Palestinians,
Poland, Russia,
South Korea, 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.
Recent events in Indonesia
have made for economic and political turmoil. In late
1997, the value of the rupiah, the Indonesia currency,
began plunging dramatically. Indonesia was one of the
first countries to feel the effects of the global economic
crisis. The shockwaves from Indonesia's economic fallout
were felt across the entire Asian continent as countries'
currencies and markets plunged as a result. The International
Monetary Fund quickly launched an emergency aid package
totaling $43 billion to try and pull Indonesia from the
brink of economic disaster. (By late 1998, more than
$118 billion had been loaned from several agencies.)
Indonesia's economic problems quickly led
to civil unrest and riots as workers watched their incomes
drop by more than half. Demonstrations, begun by university
students, called for the ouster of then President Suharto
who had been president for more than 30 years. Suharto,
who appeared to be doing little to stop the rapidly plummeting
economy, was widely suspected of being a corrupt leader
who appointed family members to high ranking positions
both in government and business. Suharto finally backed
down to the pressure and resigned. Upon his resignation
in May 1998, Suharto turned power over to his handpicked
vice president, B.J. Habibie. President Habibie quickly
distanced himself from Suharto's policies, and began
making sweeping political and economic changes to pull
Indonesia from the brink of disaster. Habibie was replaced
by Abdurrahman Wahid in the election of June 1999.
Before the economic crisis took hold, economic
growth rates in Indonesia hovered between 5 and 7 percent
a year. As a result, Indonesia improved its GNP per capita
from $70 in 1967 to nearly $1,100 in 1997. The foreign
debt is currently at $100 billion, but this will grow
tremendously as foreign loans to help stabilize the economy
have added to what the government owes. The current weak
value of the rupiah has made debt payments extremely
difficult. Although these statistics still place Indonesia
among the poorer nations of the world, the change in
economic activity and the resulting improvements in the
health and life expectancy of the population are encouraging.
Recent events in East Timor have only added
to the turmoil within Indonesia. Annexed by Indonesia
immediately after it gained independence from Portugal
in 1975, the occupation and often brutal treatment of
East Timor attracted negative international attention
for Indonesia. A referendum in August 1999 resulted in
a vote for independence which was met with extreme acts
of violence by pro- Indonesian militia groups within
East Timor. International peacekeepers, under the authority
of the UN and led by Australia, continue to work to prevent
additional violence and assure an orderly transition
to independence. However, the violence continues and
a substantial refugee crisis is likely to remain for
quite some time.
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.
North Korea is one
of the last hardline communist states left in the world,
and has paid a price in terms of international isolation
because of it. Many years of poor harvests, in large
part a result of extremes of drought and flooding, have
led to a long-term famine, increasing domestic hardships
and exacerbating tensions with neighboring South Korea.
With few allies left, North Korea has had to turn to
international relief agencies for a significant amount
of aid. Continued suspicions about the manufacture of
weapons of mass destruction, and long-range missile testing,
have only served to increase tensions among other countries
in the region, including Japan and South Korea. In the
summer of 1999 North and South Korean naval vessels clashed
in disputed fishing waters. North Korean leader Kim Jong
Il has been in power since his father, Kim Il Sung, died
in 1994.
Economically, North Korea has seen a steady
decline in both production as well as their standard
of living. Before the Korean War of the early 1950s the
North was much more developed than the South, but things
have reversed since then. Inefficient production methods,
due in part to the political system as well as their
isolation from the international community, have kept
the North Korean economy at a virtual standstill. With
few viable export options, North Korea has become one
of the leading exporters of advanced weapons systems,
such as missile systems, to countries such as Iran. This
only increases the international isolation of North Korea,
as the United States and its allies continue to press
North Korea on this issue.
North Korea's future is uncertain. If it continues
to follow the same course it has been, it will likely
continue to experience economic crisis and become further
isolated from the international community. On the other
hand, moves towards liberalization of the political and
economic system pose risks for the current leadership
which they may be unwilling to face. Continuing tensions
with South Korea (the Korean War has never technically
ended, only a cease-fire is in place) will also create
pressures on the current hardline leadership.
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.
The history of the
country of South Korea dates back to 1945 when Japan
surrendered to allied forces at the end of World War
II. Japan had forcefully annexed all of Korea in 1910
and ruled it as part of its territory until its surrender.
At that time, the U.S. and Russia agreed that Japanese
troops below the 38thparallel would surrender to U.S.
troops, and those above the 38th parallel would surrender
to Soviet troops. In 1948, the Soviets and Korean authorities
in the North ignored a UN General Assembly resolution
that called for free elections. These elections were
carried out in the South, however, and as a result, in
September of that year the Republic of Korea (South Korea)
was born, thus beginning a period of hostilities between
the Republic of Korea in the South, and the Democratic
People's Republic of Korea in the North. These hostilities
boiled over in 1950 when the North invaded the South
in what became the Korean War. Interestingly, a formal
peace treaty has never been signed since the end of the
Korean war.
Economically, when South Korea emerged in
1948, it was one of the poorest countries in the world,
and was far worse off than North Korea. In 1961, Maj.
Gen. Park Chung Hee led an army coup against the government
and inserted himself as president of South Korea. Park
began instituting sweeping economic reforms in South
Korea that essentially transformed it into a modern industrial
power by 1980. Growth in the South Korean economy remained
astoundingly high through 1997 making it the eleventh
largest economy in the world. In 1997, however, South
Korea could not escape the global economic crisis, which
began in Thailand and Indonesia, earlier in that year.
Confidence in the South Korean economy plummeted, and
the won (the South Korean currency) lost more than 50
percent of its value. Attempting to rescue its economy,
South Korea agreed to a $58 billion loan from the IMF
in late 1997. In return for the loan, South Korea agreed
to open its markets to greater foreign investment. By
late 1999, the economy began showing signs of improvement
growing roughly 5 percent.
Kim Dae-jung was elected South Korean president
in 1997. His political opponents accuse him of being
sympathetic to the North as he has created an engagement
policy with the North that allows for some tourists from
the South to visit certain locations in the North on
special tours. In return for the North's agreement to
permit these special tours, the Hyundai Corporation (whose
ferries the tourists are transported on) agreed to pay
the North more than $1 billion over a five year period.
Additionally, trade that was begun with the North in
1988 has continued under Kim's presidency. Kim has made
it clear, though, that political and economic issues
remain separate between the South and North, as well
as a zero-tolerance policy towards any provocative behavior
from the North. This zero-tolerance policy led to a highly
publicized skirmish between naval forces from both countries
in the Yellow Sea in July 1999. Several North Korean
ships were badly damaged or sunk as a result of the confrontation.
AUSTRALIA
The country of Australia
enjoys the benefits of close relationships with Europe,
as a member of the British Commonwealth, and also its
location near growing Asian markets. These close ties
with two continents have allowed Australia to participate
in the economic growth of both regions, while still remaining
relatively isolated from some of the recent turmoil that
has affected them. The unique position of Australia as
a country and a continent has allowed it to remain largely
insulated from regional threats while still participating
in the political, economic, and military affairs of the
world.
Australia continues to grow in stature as
a regional power in Southeast Asia, both economically
as well as militarily. The Australian military is currently
leading the peacekeeping force in East Timor in the post-independence
era from Indonesia, while UN peacekeeping participation
continues to be a high priority for Australia. Prime
Minister John Howard's government has worked to continue
this shift away from their traditional relationships
with Europe and towards a stronger role in Asia through
participation in the Asia Pacific Economic Cooperation
(APEC) group and other regional pacts.
Australia's economy is growing at a quick
pace, due to privatization efforts and increasing international
trade relationships. Natural resources, manufacturing,
and a growing high tech sector have driven this growth.
Economic reform and deregulation have spurred economic
development in Australia, which has occurred simultaneously
with low inflation and interest rates. Australia is a
member of the World Trade Organization, and has been
active in lowering tariffs and other barriers to foreign
trade and investment. Australia is also experiencing
a record low rate of unemployment.
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.
Located in the heart
of central Europe, Austria is a wealthy country that
joined the European Union in 1995. In the 1950s, as Austria
emerged from its post World War II occupation and once
again declared itself an independent state. At the same
time, it also declared permanently neutrality in regards
to any military, strategic or security operations. As
its role in the EU grows, many observers are left to
wonder what role Austria will ultimately play in the
organization as long as it continues to exclude itself
from EU security matters. In recent years, though, Austria
has begun to reassess its neutral status. In the mid-1990s,
Austria agreed to participate in the peacekeeping mission
in Bosnia. Aside from this, disputes within the Austrian
government remain as to whether the country should continue
to maintain its neutral status on security matters.
Economically, Austria maintains a well-developed
market and a high standard of living. A member of the
European Monetary Union, Austria remains tightly integrated
with its European neighbors, especially Germany. Austria's
internal deficit remains high, though, due to the generous
social programs it provides for its citizens. Like other
European economies, like Germany's and France's, Austria
has had to confront the large amount of money it devotes
to maintaining the social benefits provided to citizens.
In addition, in recent years, Austria has also had to
sell some of its publicly owned industries to reduce
its large deficit. Furthermore, Austria has had to deal
with a high unemployment rate between 7 and 8 percent
for much of the last decade.
In early 2000, controversy struck the Austrian
parliament as the nationalist Freedom Party was negotiating
to become part of a ruling coalition government. The
Freedom Party received the second highest amount of votes
in October 1999 elections. The move was controversial
as the Party's leader is the son of a former Nazi official,
and he has publicly expressed some sympathy with aspects
of Adolf Hitler's Nazi government. In addition, the Freedom
Party has called for a halt to all immigration and for
the EU not to allow any former Eastern European countries
into the organization. In response, the EU said that
it would break off all political contacts with the Austrian
government if the Freedom Party is allowed to become
part of the ruling coalition.
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.
Gerhard Schroeder was
elected German Chancellor in September 1998. Schroeder
defeated Helmut Kohl who had been in office for sixteen
years. Like citizens in other European countries, Germans
had become frustrated with a stagnant economy and a high
unemployment rate. After his election, Chancellor Schroeder
said that his first priority in office would be to confront
the unemployment problem, however today, the unemployment
rate remains relatively unchanged.
Economically, Germany remains the dominant
economic power on the continent with a GDP of $2.5 trillion.
However, the cost of reunification of East and West Germany
remains a huge drain on the economy. Furthermore, Germany
still faces slow economic growth and significant fiscal
challenges, which have forced Germany to reduce international
aid commitments. Before former Chancellor Kohl was voted
out of office in 1998, he made historic changes to generous
the German social-welfare programs by reducing some of
the benefits citizens were entitled to in an attempt
to revive the economy. The social benefits provided to
German citizens requires the government to dedicate a
large portion of its GDP to pay for these benefits. Germany
is still struggling with its economy, nevertheless, the
economic potential of the unified Germany strengthens
the European Union, while raising concern about equality
and control of the Union. Chancellor Schroeder has stated
that further cuts in domestic spending are needed in
order to strengthen the economy, but many Germans have
not reacted well to the notion of further cuts in their
state sponsored benefits.
In its other international policies, Germany
has amended its constitution to allow it to supply troops
to UN peace-keeping forces, although they will still
not be allowed to participate in combat missions. The
German parliament authorized deployment outside of Germany
on a case-by-case basis. Additionally, Germany, as well
as other Western European nations have been strong advocates
of reducing global warming emissions levels. At the Kyoto
conference on global warming Germany was in favor of
tougher standards than were eventually agreed upon. Also,
Prime Minister Schroeder has taken a more cautious approach
than his predecessor in matters of foreign affairs, including
slowing the process of admitting Eastern European nations
into the EU.
Poland, along with Hungary
and the Czech Republic, was granted acceptance into NATO
in 1998. The admittance into the military alliance has
been viewed by observers as a critical step in Poland's
transition from an Eastern Bloc communist country to
a modern European nation. The Polish government now turns
its attention to gaining membership in the European Union.
EU membership would strengthen Poland's economy, but
EU members are reluctant to include Poland, or other
Eastern European countries because of their weak or fluctuating
economies. Wages for workers in Poland are still lower
than in Greece, an EU member whose wages are the lowest
of the 15 union members. Observers have speculated that
it will be at least 2005 before Poland's economy is strong
enough so that it can be accepted into the EU.
In November 1995, Alexander Kwasniewski, a
former member of the communist government was elected
as President of Poland. Kwasniewski describes himself
as a western-style social democrat, and pledges to continue
economic reform and to hold the former communist leadership
accountable for their actions in office. Recent economic
accomplishments include the privatization of the Polish
telecom company, decreasing unemployment, and an economic
growth rate of five percent. Poland is considered by
many economists to have the strongest economic status
of any nation from the former Soviet bloc which is why
the government believes it is now well-suited for membership
in the EU. Plans for restructuring and privatization
of such sectors as the railroad industry are continuing,
as well as attracting foreign investment and boosting
the confidence of international lenders.
Poland's environmental problems continue to
plague the government. The industrial policies of the
communist-era relied on heavy industry with little concern
for environmental impact. The estimated costs of environmental
clean-up in Poland are staggering, and Poland has little,
if any, resources to contribute to environmental protection.
Balancing environmental concerns with the need for continued
growth will continue to create difficult choices for
Poland in the foreseeable future.
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.
MIDDLE EAST
King Hussein, who ruled
Jordan since 1952, died in early 1999. It was learned
that the king was suffering from cancer in July 1998.
In December 1998, the king surprised observers by appointing
his oldest son Prince Abdullah heir to the throne, a
post which the king's brother, Prince Hassan, had held
for thirty-four years. The death of King Hussein represents
a matter of concern for those involved in the Israeli-Palestinian
peace process. The king had increasingly worked over
the last decade to bring both sides in peace process
together. Most notable were his efforts in 1997, getting
both sides to agree to the Hebron-West Bank Accord, and
in 1998, when he participated in the Wye River meetings,
helping to broker the deal between Israel and the Palestinians.
King Abdullah has stated that he will continue to encourage
peace in the region just as his father did.
Although Jordan has been pro-Western in its
foreign policy, a rift developed in the early 1990s as
Jordan aligned with Iraq during the Persian Gulf war.
This cost Jordan much of its Western economic aid, and
Jordan absorbed 600,000 Jordanian and Palestinian refugees
from Kuwait and Saudi Arabia. The war was also costly
for Jordan because it lost its biggest trading partner,
Iraq, because of the post-war economic sanctions. Eventually,
King Hussein joined the West in calling for Saddam Hussein
to be replaced, and reconciled with Saudi Arabia's King
Fahd after a six year rift. More controversy came about
in 1994, when Jordan signed a peace agreement with Israel.
This agreement has created tensions between Jordan and
the Palestinians. While the Palestinians are not opposed
to peace between Israel and Jordan, they believe that
Jordan should have waited until some issues between Israel
and the Palestinians were more fully settled. (Jordan
has a large Palestinian population, some of whom are
native born citizens and others who are refugees from
Israeli-occupied territory. The refugees have put a serious
strain on the Jordanian economy.)
Jordan began an austerity program under the
guidance of the International Monetary Fund (IMF) in
1989. However, the economic problems caused by the loss
of aid and the other economic problems brought about
by the Persian Gulf war have forced Jordan to abandon
the economic reform program and suspend debt payments.
The past few years have seen an increase in privatization
and foreign investment, which is beginning to lower debt
levels and stabilize the economy. Jordan recently signed
an agreement with the European Union which aims for a
pan-Mediterranean free trade zone by the year 2010.
The declaration
of principles between Israel and the Palestinians under
the Oslo agreement in 1993 marked a new era for the leadership
of the Palestinian people. Yassir Arafat had been criticized
in the past for endorsing terrorism and his commitment
to the dissolution of the state of Israel. However, by
committing himself to peaceful transition beginning with
the Oslo meeting in 1993, Arafat has renounced terrorist
tactics and has recognized Israel's right to exist. Despite
this progress, however, the Palestinian people still
face serious problems. The territories that have been
designated for Palestinians are impoverished and isolated.
Furthermore, throughout the Middle East, nearly a half-million
Palestinian refugees remain. The Palestinian Authority
continues to push the Israel government to fully adhere
to the terms of all of the agreements reached since Oslo.
The opening of the Gaza International Airport
in November 1998 was hailed as a important step in establishing
a Palestinian state, though, difficulties still surround
the issue of Palestinian statehood. Agreements reached
between both sides called for a Palestinian state to
be achieved by May 4, 1999. As that date grew nearer,
it appeared that the Israeli government was unwilling
to proceed with the possibility of a Palestinian state
as former Prime Minister Netanyahu felt that the Palestinians
still had not fully honored their commitments to previous
agreements. Arafat appeared to be intent on declaring
statehood, though, which increased tensions further.
As the date grew nearer, many in the international community,
including the United States, urged Arafat agreed to delay
his declaration until sometime after the Israeli elections.
Ultimately, Arafat agreed to delay his declaration of
a Palestinian state. The move towards full realization
of this state continues to face difficulties in the development
of its economy, achieving internal security, and building
relationships with its neighbors. The international community
has committed itself to easing this transition, in the
form of economic aid and security assistance.
In October 1999, Israel and the Palestinians
agreed on a route for safe passage between the West Bank
and Gaza further increasing hope for the Palestinians
to be formally recognized. Also, November 1999, both
sides met to formally discuss a long-term peace accord.
The intent is to have a framework for peace between Israel
and the Palestinians in place in February 2000, and an
agreement signed by October, however, progress towards
this effort has slowed recently. In December 1999, these
talks were threatened when the Palestinians walked out
of the talks because Israeli settlements were still being
constructed in the West Bank. Prime Minister Barak agreed
to a moratorium--though not a complete halt--on the construction
of new settlements in the West Bank which appeased the
Palestinian negotiators. Also, in January 2000, Barak
and Arafat agreed that Israel would turn over another
6 percent of the West Bank to the Palestinians. The specific
area of the West Bank that was to be returned was not
clear, however.
NORTH AMERICA
Canada along with the United States
instituted a free trade agreement that was expanded to
include Mexico in 1994. The North American Free Trade
Agreement (NAFTA) as it's called, has become the example
for other trade agreements in Latin America and Asia.
U.S. president Bill Clinton has proposed expanding NAFTA
to include most of Latin America by 2005. However, many
critics feel that free trade agreements make economic
conditions worse in some countries, and as a result,
the expansion of NAFTA could face some opposition.
The relationship that Canada has with the U.S., is perhaps
the strongest between any two nations in the world. In
trade alone, both countries exchange over $1 billion
dollars in goods per day. Both countries share strong
ties on defense policy, as well. There are differences
on some issues, however--most notably in the way both
countries view their relationship with Cuba. Canada has
kept its diplomatic ties to Cuba over the last forty
years, while the U.S. has not. In 1996, Canada, and other
allies of the U.S., voiced their opposition to the U.S.'s
Helms-Burton law. The Helms-Burton law aims to block
foreign companies from investing in Cuba. One provision
of the law denies entry into the U.S. to executives of
companies that conduct business on property seized by
the Castro government. Canada has been improving economic
relations with Cuba as an attempt to encourage political
change through economic reform. Canada and Cuba signed
a fourteen-point agreement that works to advance human
rights in Cuba and to combat narcotics trafficking. In
contrast, the U.S. continues to support its economic
embargo and other sanctions to force political change
in Cuba.
Jean Chrétien continues to lead Canada as prime minister.
Throughout his term in office, Chrétien has had to deal
with on-again, off-again talk of Quebec's secession from
Canada, and he remains unpopular in that province. Although
the October 1995 vote on secession failed in Quebec,
secessionist sentiments still linger. In December 1999,
the government published a bill making Quebec's secession
more difficult by defining specific procedures that any
future vote on secession would have to follow in order
to be officially and legally recognized.
After almost a decade
of recognition as an example of an economic success story,
Mexico entered a severe financial crisis in December
1994. The government of President Ernest Zedillo was
forced to devalue the peso (the Mexican currency) which
resulted in a stock market and bond market crisis that
had ripple effects throughout Latin America and the entire
developing world. In response, the U.S. government increased
Mexico's credit line in an attempt to avoid the kind
of debt crisis that threatened the stability of U.S.
banks in the mid 1980s. Today though, analysts are still
concerned about the stability of the Mexican economy.
President Zedillo continues to push economic liberalization
policies with good results, and in 1997 Mexico earned
$11 billion from foreign investment in the country. President
Zedillo hopes that economic growth as a result of NAFTA,
and Mexico's participation in the Asia-Pacific Economic
Cooperation (APEC) forum, will help the country to continue
to emerge from the financial crisis of 1994-95. U.S.
efforts to stabilize Mexico's economy appear to be successful,
although it remains to be seen if this is a long-term
change.
Although Mexico claims to be a democracy because
it holds regular elections, one party has been in power
since 1929. Mexico has been accused of being an autocracy
and violating the political rights of the opposition
by maintaining one-party rule. The ruling PRI (Revolutionary
Institutional Party) has been accused of wide spread
election fraud to maintain control of the country. However,
events in 1997 may have weakened, to a degree, the PRI's
hold on power. In July of that year, the PRI lost a majority
of seats in the lower house of the Mexican Congress.
Additionally, recent strides have been made to uphold
true democracy, by reducing election fraud and promoting
cooperation between parties. In response to these challenges,
the PRI announced plans for an open presidential primary
that took place in November 1999, breaking with the tradition
of presidents naming their own successors. The two main
opposition parties are moving closer to an alliance as
well, which could lead to the first change in presidential
power in over 70 years when the election is held in July
2000.
Human rights are an issue in the Chiapas region
of Mexico, where in 1994 peasants formed a violent underground
political movement known as the Zapatistas. This movement
was designed to gain political representation and economic
opportunities. The government's response to the emerging
Zapatista movement was violent and repressive, resulting
in accusations of human rights abuses. In 1997 violence
in the Chiapas region flared again as 45 indigenous Indians
were killed. It was later learned that the Indians were
killed by another group of indigenous Indians whose desires
were different from the Indians of the Chiapas, and who
were associated with the PRI, the ruling party in government
in Mexico. Although negotiations officially continue
between the PRI government and the rebel leaders in Chiapas,
they have slowed for the time being. Peace talks between
Zapatista rebels and the government broke down again
in November 1998, and the stalemate appears to have no
end in sight.
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
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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