The Future of South America

THE FUTURE OF SOUTH AMERICA

SUMMARY: Revision 2005

The global population of South America attains 375 million. It would reach about 484 million by 2030. The global GNI accounts for 1,089 $Billion in 2004. According to an optimistic vision, we can expect 2,070 $Billion by 2030.

Within the period 1999-2004, South America has experienced its worst economic crisis since the Great Depression of the 1930s. Most of the growth benefits of the nineties have been destroyed. A growth recovery happened in 2003 and 2004 but did not compensate the heavy losses of the previous years.

The global situation of South America, has always been a matter of astonishment and despair. The hedonistic mood of the population is the main cause of the situation and predisposes to populist and demagogic powers. As a result, the new democratic governments have followed the same poor economic management as the populists and the military. They have failed to apply sound economic policies (Or they applied them too late). Their weakness is both responsible of the economic situation and the coming anarchy in some areas. Population and leaders should be conscious that their entire society is presently on the edge of the razor: Time is coming to be serious and to face with responsibilities.

We recommend to apply the sound economic policies that have been delayed for too long. Moreover, the ruling elite must enhance his authority in empowering the safe segments of the civil society.

On the long term, an improved image should facilitate the immigration coming from Europe or Asia. The governments have to promote the quality of life, the freedom, the open ranges, and the bright prospects of South America. On the other hand, we also recommend to maintain the continental identity and notably the old Castilian legacy based on pride, courage and sense of honor. In short, you have to forget the negative experiences of the past and to visualize the success image of South America as a real New World.

These reforms could modify the bitter prospects that we have described regarding the economy.

According to our method, the first step is to draw up a diagnosis: It means that we shall just observe the region and describe its trauma. Then, we shall evacuate the false explanations and focus on the real cause of the malaise. Finally, we shall describe the cure. A short review limited to the countries I visited (9 out of 13) follows the main survey.

Warning: Go to Standards of quality about the sources of tables and stats: Economic stats-World Bank: www.worldbank.org/data. Population stats: UN: www.un.org/esa/

1-DIAGNOSIS 2-WRONG THEORIES 3-HEDONISM 4-SOLUTIONS 5-COUNTRY REVIEW

1-DIAGNOSIS

Let's us examine the region: Geography, population, economy, and political situation: We can take notice of four bad symptoms: Firstly a lack of confidence in the region future ( Emigration instead of immigration). Secondly a deep depression with an impoverishment of the middle class. Thirdly, a chaotic political situation in some sub region and finally a coming anarchy.

11-Geography

South America includes 12 independent countries (Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Guyana, Paraguay, Peru, Suriname, Uruguay, Venezuela) and a French overseas department (French Guyana).

South America covers 17,819,000 square kilometers. It is a quite compact continent: 7,640 km from the North to Cape Horn, in the South. At its broadest point, the continent extends 5,300 km from East to West. It is washed on the North by the Caribbean Sea, on the East by the Atlantic Ocean, and on the West by the Pacific. Look at the map:

DRAWING 1

South America is composed with mountains (The Andes rise to numerous snowcapped peaks: Mt. Aconcagua 6,960 meters), highlands, the amazonian forest, pampas and deserts. It embraces different climatic zones: tropical, desert, high alpine, temperate. Vegetation varies accordingly.

The continent has petroleum and natural-gas reserves (notably in Venezuela and also in Argentina, Colombia, Chile, Peru, and Ecuador). Thanks to the great rivers (Orinoco, Amazon, and Paraguay) hydroelectric plants produce most of the continent's electricity. Iron,copper, tin, gold, manganese and bauxite are abundant. Rainforests and steep slopes, limit the amount of cultivable land in the Andean and northern regions. On the contrary, large spaces in the southern part (South Brazil and Argentine) offer opportunity to use modern agriculture and low cost extensive cattle breeding.

Obviously, South America, and notably its southern part was convenient for an European settlement. Exploration and penetration started at the beginning of the 16th. Under the Treaty of Tordesillas, Portugal claimed what is now Brazil, and Spanish claims were established throughout the rest of the continent with the exception of Guyana, Suriname, and French Guyana. Spain and Portugal maintained their colonies in South America until the first quarter of the 19th.

12-Population

The population accounts for 375 million. By 2030, it would reach 484. The growth rate (1,2%) is decreasing. Only four nations exceed 30 million (Brazil: 174, Colombia: 43, Argentina 39). People concentrate in towns: In 2000, 77.2 % lived in urban areas. Sao Paulo (17.9 million), Buenos Aires (12 million), Rio de Janeiro (10.6 million) are the main towns. Outside the cities, the population density is very low, with large spaces uninhabited. People worship mainly Roman catholicism ( Evangelical churches and jews are also present). Spanish and Portuguese are the main languages in use (Only the business elite speaks English)

At this point a first question arises. Why does this large continent remain so sparsely populated? In the past, immigration has brought Europeans, particularly to Argentina and Brazil. Today immigration decreases sharply. Ten years ago, Brazil received one million migrants per year. It receives only 500,000 in 2002. Moreover, many people try to emigrate to Europe (Spain) or to the US. This trends indicates a symptom: Obviously, there is something wrong!

13-Economy

In 1990, the global GDP of the 12 countries accounted for 778 $Billion. It increased to 1,235 Billion in 1999 (GNI). It was quite a success story. Then, it fell and only attained 1,089 Billion in 2004! Of course erratic moves of currencies partly explain this situation but the region ( And notably Argentina) really endured a depression. The next drawing shows the evolution of the main economies over the five last years ( In yearly growth rate ):

DRAWING 2

Years----------- - 2000--- 2001--- 2002--- 2003--- 2004

Brazil ---------------4%------1%-------2%------1%-----5%
Argentina -----------1%-----4%------11%---- 9%-----9%
Venezuela ----------4%------ 3%-------9%---- -8%----1%
Colombia----------- 3%------ 1%------- 2%----- 4%-----4%
Chile--------------- 4%------ 3%------- 2%----- 3%-----6%
Peru----------------3%------ 0%-------5%----- 4%-----5%

In Argentina, according to official government statistics, about 5.2 million people belonging to the middle class sank below the poverty line between October 2001 and May 2002. A growth recovery happened in 2004 but did not compensate the heavy losses of the previous years.

In accordance with these figures, and taking in account the present political uncertainties (Chavez) , we may only forecast a yearly growth rate of 2.5% on average over 26 years. As a result, the Global GNI would reach 2,071 $Billion in 2030. (Brazil: About 1,190 in 2030).

Of course, all the economic history of South America has been characterized by successive stop and go but fatality is not a sound explanation. We shall have to seek carefully the cause of this situation.

14-Political situation

Among 12 independent countries, there are ten democracies and two partly free (Venezuela and Colombia). The progress to democracy began in 1980 and was a success story. Before, the region was a permanent theater of dictatorships, political instability, revolution and guerillas.

Today, the situation is going bad, notably in the Andean region (Colombia, Venezuela, Ecuador, and Peru). In Columbia, the civil war is rising. Ecuador, Peru and Venezuela show a quite confuse situation. The Andean region is now a threat to the political stability of South America.

In the nineties, South America was a safe area. Today, in relation with these economic and political events, corruption and violence are increasing. The region remains the source of almost 75 % of the world’s supply of cocaine and drug trafficking is becoming a dominant plague: A large part of almost 30,000 homicides registered annually in Brazil are linked to drug abuse and trafficking. The narcotic trade favors a system of corruption that involves the highest public officials. Large segments of the entire society are poisoned by this plague.

15-Conclusion

We can take notice of four bad symptoms: Firstly a lack of confidence in the region future ( emigration instead of immigration), secondly a deep depression with an impoverishment of the middle class, thirdly a chaotic political situation in some sub region and finally a coming anarchy based on drugs, corruption and street violence's. What are the explanations of these symptoms?

Compared to the Middle East and Africa, we cannot invoke a lack of democracy: Since 1980, most of these countries are free. Moreover, the population is well educated with a good literacy rate. The resources are abundant. There are large open spaces with magnificent landscapes. The climate is good in many areas. When we compare with the USA that enjoy a quite similar geographical situation, we may be stunned by the bad results of South America.

1-DIAGNOSIS 2-WRONG THEORIES 3-HEDONISM 4-SOLUTIONS 5-COUNTRY REVIEW

2-WRONG THEORIES

The global situation of South America, has always been a matter of astonishment and despair. Many doctors have rushed to examine the sickness and most of them have used a marxist grid in order to find an explanation.

According to these scholars, South America suffers of colonialists and feudal structures based on races, social and land inequalities. As a result, a landlords minority often calls the military to maintain its privileges. By the end, the economy depends on the rent coming from latifundia and raw materials: The globalization enhances these negatives features and explains the present catastrophic situation.

We recognize easily the conceptual framing of the marxist and anti globalization speeches. If fact, this presentation distorts the reality and just corresponds to out dated facts. It means that our first task is to get rid of these wrong theories.

21-Social structures

Firstly, the social structures are not based on races and social inequalities.

211-Racial inequalities

According to this marxist speech, many people in Europe believe that South America is inhabited by a large majority of poor indians and black dominated by some white landlords. In fact, Indians and blacks only form a small minority compared to the white and mestizo. Look at the next drawing:

DRAWING 3

Categories--------------------- Million------------- %

Europeans descent (White)---------195------------- 55%
Mestizo--------------------------- 125------------- 35%
Native indians---------------------- 21---------------6%
Blacks------------------------------15---------------4%

Total----------------------------- 353------------- 100%

All the southern cone of South America (Argentina, Chile, Uruguay, Southern Brazil) has primarily European populations (95%). Most of the mestizo live notably in Brazil and Colombia. Native indians only represent a majority in two countries (Bolivia and Peru). Blacks are scattered in the North of the continent (Mainly North Brazil: About ten million). In countries with ethnic diversity such as Brazil, it is quite difficult to distinguish a mestizo from a white (Same habits and dressing, same religion, same behaviors). A common identity relies on religion and language. It means that there is no ground for race inequalities.

On the other hand, natives indians keep a strong identity. It is currently said that they endure some discriminations. This fact calls for a balanced judgment. In French Guyana ( a French department just like Normandy) there are yet some tribes living in the rain forest. For their preservation, it is absolutely forbidden to travel in a region as large as one third of the department. Why? Because through contact with Europeans, these indians could catch some virus harmless for us but lethal for them since they have not developed immune protections.

As you can see, the problem is more complicated than the scholars say. For indians, to live apart can be a vital issue. It’s not only a matter of discrimination and inequalities. For example, the fast disappearing of indians in Brazil (Only 700,000 on a population of 174 million) mainly results of diseases due to their contacts with the seringueros.

212-Social inequalities

Poverty and inequalities are a common motto in any description of the economy of South America. It is commonly said that a third of its population is living in shanty towns and that inequalities are the most extreme in the world. These asserts call for a balanced judgment.

Firstly, in visiting "favallas" (shanty towns) I observed that people have often TV set, radio appliances, refrigerators and so on. Moreover, people live constantly outside and their housing is adapted to the climate condition. Secondly, a large part of their poor budgets is devoted to dressing, sports articles, disks music's and so on. Thirdly, these people are constantly smiling and singing. They enjoy a high degree of conviviality that does not exist any more in Europe. They look more happy than our middle class. In short, I mean that you cannot judge poverty by comparison with our conditions (climate, habits, tastes) in Europe.

As for the inequalities, they usually rise with the economic development: Let's us suppose two persons: A earning 100 and B 1000: Their difference is 900. Now apply a growth rate of 10%: A earns 110 and B 1100. As a result the difference is now 990! Moreover, inequalities allow savings and investments. So all these speeches about poverty and inequalities must be relativized.

213-Land inequalities

Thousands scholars have written tons of surveys and books about this topic in Europe and America. It is well known that there are huge inequalities in the distribution of land. For example in Argentina, 2.5 % of the total ranches ("Estancias") cover two thirds of the cultivable land. Marxists repeat at large these figures opposing the land lords to the poor peasants.

In fact, with the economic progress the value of the land sharply diminishes and the decline of the agricultural economy is constant: Today, only 20% of the population is rural, and 10% of the national product comes from agriculture. It means that most of the former poor farmers have already moved to get jobs in towns. Of course, it is a progress since it's better to get a good salary in industry rather than to exploit a small agricultural plot in the pampas!

However, an agrarian issue only exists in the Andean countries. In this region the weight of the rural sector is above the South American average (Bolivia:44%, Ecuador: 29% and Peru: 33%). This situation is connected to the presence of native indians who cannot move towards the towns for the reasons exposed above. In fact, these countries have already abolished the large estates and distributed the land among the peasants. Of course, as in other countries where land reforms have been established, this policy did not improve the output because this small peasant agriculture cannot be profitable.

It means that all these speeches about land inequalities are just out dated stories. Presently, the South American agriculture relies on large agri business replacing former latifundia and exploiting the potential of these big spaces: biogenetic diversity ( pharmaceutical industries), as well as livestock, oil, and mining resources.

22-The political structures

According to their marxist grid, our scholars posit that the landlords minority relies on the military to maintain its privileges and to avoid a revolution. Once again, this explanation does not correspond to the reality.

Firstly, the risk of a revolution has never been obvious. The communist threat is mainly a Central America history with Castro in Cuba and the Sandinista in Nicaragua. The attempt to export the Cuban revolution in South America during the cold war has been a failure: Che Guevara complained that he could not rally the poor bolivians peasants. The Tupameros in Uruguay and the Shining Path in Peru were also rejected by the population. The only exception is Chile: In fact, Allende was elected as a democratic socialist and then placed himself under the control of Castro. The population perceived that like a treachery and Allende was overthrow by the military with the consent of the larger part of the citizens. Globally speaking, we may posit that the marxism failed because the rich and poor South Americans are not inclined to a Stalinist rule.

Secondly, the "land lords" were not the main instigators of the military takeover. A real analysis shows that the military were mostly a legacy of the failed populist powers in South America. The populist leaders (as Juan Perón in Argentina) rallied the poor's and the riches and emphasized social justice and national control of natural resources. They also believed that industrialization, modernization and export development could be achieved with a minimal amount of work and efforts. They made promises with a money they had not. So they lent abroad and generated a huge foreign debt. Of course, these policies usually ended with hyper inflation, unbearable foreign debt, and finally bankrupt and depression.

Thirdly, when the populism failed, the military took the power but they followed quite the same policy as the populists in economic matter (One exception is Pinochet who implemented real basic reforms in Chile). As a result, they benefited of the same popular support (both riches and poor's) as the populists. What is more, these dictatorships have never been really dreadful. We cannot compare them with the African or Middle East dictatorships (or with the European dictatorships in the past). Of course, we do not intend to make accounting with victims but the 3000 missing persons in Chile do not weight with the 30,000 victims of the marxist Shining Path in Peru or the 70,000 dead's due to the marxist rebellion in Colombia. Moreover, while Castro is yet exercising his dictatorship over Cuba, most of the military returned by themselves the power to the civilians (It was notably the case for Pinochet)

In short, the social structures and the "landlords" are not the real cause of the chaotic political evolution. On the other hand, this history shows that the South Americans are inclined to favor populist and demagogic policies rather than sound economic reforms.

23-Is globalization the cause?

By the end, the marxist scholars posit that the globalization enhances these negatives features and drives to the present catastrophic situation. We may oppose that the globalization cannot be responsible simply because most of the free market reforms have never been applied.

Firstly, it is fruitless to invoke the Asian financial crisis or the fall in the commodities prices. As we see it in another study, the South East Asia has quickly recovered. Moreover, except some countries such as Peru, Ecuador and Venezuela which remain dependent on commodities prices, the main economies such as Argentina or Brazil are well diversified with a strong industrial support and do not depend any more of the raw materials like in 1930!

Secondly, it is also fruitless to invoke the free market reforms because they have not yet been applied! As we shall see below, the new democratic powers have followed the same poor economic management as the populists and the military.

All the marxist and leftist explanations are just out dated theories. They could apply to the situation in 1930 and may be in some undeveloped countries such as Bolivia but are not pertinent regarding the real world. Unfortunately, they form the main bulk of the information's dispatched by the media's. Time is coming to present our own diagnosis.

1-DIAGNOSIS 2-WRONG THEORIES 3-HEDONISM 4-SOLUTIONS 5-COUNTRY REVIEW

3-HEDONISM

According to our idealistic vision, the real causes of the phenomenon must be found in the people minds. Our diagnosis do not care too much about past history, geographical potentialities, ethnicity or traditions. We mainly examine the mental events. What is really in the people mind? How do they perceive the external reality? What is their global vision? Thanks for this method, we focus on the magical background in Africa, the global schizophrenia in the Middle East, the mental depression in Europe and the moral values in South East Asia. Regarding South America, we diagnose an excess of hedonism.

31-Have fun

When you read the scholars books, you only find a gloomy description: Poverty, inequalities, slums and so on. In fact, such a picture only corresponds to the depressed mood of their European authors. The reality is quite different. Except, the Andean countries with their inward-looking indian communities, the most visible feature of the mainstream of South American population can be described in two words: Have fun. In fact South Americans are mainly hedonistic. And we could say too much hedonistic!

The most popular people are not politicians but sportsmen and show biz persons. The critical issues are not political or economical. The soccer cup, the car races are the main issues. Consumption mainly focus on material goods such as fashionable dressing, cosmetic surgery, festivals, carnivals and so on. There is a strong preference for leisure, music, dancing, and sex tolerance.

Have fun notably in Brazil is the main goal. Even outside the carnival period, it is current to see people dancing in the cafe or in the streets. Poor people that scholars described so oppressed rush to the sunny beaches and enjoy bathing and sea pleasures. In a more nostalgic way, the same observation applies in Argentina (Tango) Chile and Colombia. Despite economic hurdles, people are constantly looking for party, dancing, horse trip in the pampas and do not care about depressed facts. As a result, people are always smiling or laughing. They are very friendly and the large majority is composed with kind people, always enjoying to help you. Violence only exists in relation with politics and drug traffic.

This too much hedonistic way of life has some wrong consequences: Savings are spent in useless expenses rather than for business purposes. The need for quick money tends to favor corruption. Moreover, this way of life impedes responsibilities. Globally, we can say that the ruling elite is too much disturbed by hedonistic short term issues. This situation is the real cause of the chaotic political and economical situation of South America.

32-Economic consequences

An hedonistic way of life does not predispose to democracy ( because democracy requires responsible and serious citizens). On the other hand, it predisposes to populist powers. As a result, the new democratic powers are following the same poor economic management as the populists and the military. Of course, the leaders are conscious of the need of reforms but they face with political opposition and street demonstrations.

Firstly, the democratic governments have maintained overvalued currencies that reduced the exports and increased the imports at the detriment of local producers. It was more and more difficult to pay back the foreign debt. Finally the Brazilian government adopted a floating currency (the pesos lost 40% of its value against the $US) but it was to late for preventing the depression. For the same reasons, Argentine registered a default payment of its external debt and it resulted in a run to the banking system and a general collapse. Ecuador also defaulted on its external debt and the banking system collapsed. Of course these situations induce a fall of confidence among foreign investors. Today, the foreign debt is not matched any more by the foreign investments.

Secondly, any attempt to care the economic sickness met everywhere a strong popular opposition. In 2001 the former brazilian president Cardoso attempted to apply some free market reforms and privatizations. As a result he lost the elections and was replaced in 2002 by a former leftist Lula da Silva who campaigned against the globalization. In Argentina, Menem implemented an economic liberalization and soon lost the elections in 1997. The next president tried to cut spending's and to apply some unpopular labor reforms. He faced massive demonstrations and finally resigned. In others countries (Ecuador, Peru, Bolivia) the same attempts to liberalize also resulted in riots, demonstrations and chaotic political evolution.

Today, many social democrat have taken the power and they are expected to delay the privatizations and the economic reforms. So the economy will going on with a chaotic process and it is yet impossible to forecast a steady growth like in Asia. The real cause of this situation seems quite simple: Clearly, huge segments of the population want to go on in living beyond their means. They cannot accept that their governments are bankrupt.

33-Political consequences

This hedonistic mood and the weaknesses of the governments also explain the coming anarchy. The new democracies are unable to contain street violence's and a revival of terrorism. Moreover, an atmosphere of permissiveness imported from Europe is spreading over. It is forbidden to forbid is becoming a motto in some ruling circles.

In 1998, the colombian government surrendered its national sovereignty (no police, no army, no administrative government presence) over an area the size of Switzerland to the 17,000 marxist insurgents (the FARC). As a result, FARC's "demilitarized zone" is actually a "state within a state" that the guerrillas used as a sanctuary for criminal activities such as drug trafficking and hostage warehousing.

In Peru, the Antiterrorist legislation, which played an essential role in eliminating the Shining Path, is being dismantled in the name of “human rights.” As a result, in 2002, the Shining Path made a small comeback, killing 10 people in a car bomb attack. In Bolivia, the new President only won by two points the 2002 election against a radical Indian leader of the country's coca growers: This victory only dispels for the present moment, the emergence of narco-marxist State in this poor Andean country. Finally, in Venezuela, the leftist President Hugo Chavez supports Fidel Castro (With oil subsidies to the bankrupt Havana regime).

One of the reasons of this general permissiveness is the influence exercised by nongovernmental organizations (NGO's), mostly those specialized in human rights. These groups often penetrated by Marxist sympathizers play a major role in the dismantle of all the anti crime and anti terrorist network. For example, in Columbia they have made not the FARC but the paramilitaries their main enemy!

In short, these democracies are unable to deal with the coming anarchy. This chaotic situation could impede the democratic process. Both marxist and the military can expect new opportunities.

1-DIAGNOSIS 2-WRONG THEORIES 3-HEDONISM 4-SOLUTIONS 5-COUNTRY REVIEW

4-SOLUTIONS

We have diagnosed an hedonistic mood and a lack of willingness and authority. As a result, population and leaders should be conscious that their entire society is presently on the edge of the razor: Time is coming to be serious and to face with responsibilities. According to our diagnosis we may set up the following recommendations:

41-A sound economic policy

Whatever the political inclination (socialist, liberal or conservative) there is only one possible economic policy. All the governments must apply the free market reforms delayed for too long. It includes a floating currency, the privatization of all the state enterprises (Telecom, energy, mining, railways and so on), the abolishment of a lot of regulations that impede the labor market, and finally the signature of as much free trade agreements as possible. It implies also a tax reform in order to channel the wealth toward more profitable activities than the existing latifundia and luxurious housing. On the other hand, the South American countries have to maintain their pressure to dismantle European barriers on agricultural products.

This economic policy can bring fast results: For example, thanks to the conservative policy of Vicente Fox, Mexico has completely outpaced the Brazil of Lula da Silva. It means that the old leftist should have better to listen the recommendations of the World Bank and the IMF rather than the cranky advices of his anti globalization friends!

In fact, most of the leaders agree with these reforms ( Including Lula da Silva ). All the difficulties rely on the application because of the strong opposition among both the riches and the poor’s who want to preserve their hedonistic way of life. The only way is to communicate and to explain that there is no choice. Moreover, thanks for some political improvements, a strong republic should be able to overcome all the street demonstrations that have impeded any progress toward the reforms in the past.

41-A strong republic

The new democracies have to struggle against the coming anarchy: violence's, drugs, corruption, criminal and radical organizations. The recent experience shows that only a strong power can achieve this goal.

It must be recall that a free republic does not mean the reign of the poor’s and the indigents. A free republic is not any more a soft marxism, a lunatic asylum, or a leisure center. Since many South Americans often refer to the French revolution, they may take notice that the former French republics were not weak or permissive. They were based on a determined elite supported by an active middle class. The republican leaders fought with an equal determination either the right wing (Nobility and church) either the left wing (early communists). Saint Just used to say that the Republic ought to be formidable to its enemies! He also said that the enemies of freedom cannot enjoy the republican liberty.

A strong power means a good institutional framework and motivated leaders able to impose respect and loyalty. Generally speaking, the institutional framework is good. Indeed, in most countries, it is founded on an elected president with large executive powers and a bicameral chamber. This framework is an asset against political instability as long as the leaders can resist street demonstrations. As we have seen, it was not the case. Consequently, we propose some improvements regarding the practical organization of the Power:

Firstly, we suggest that each government includes (as in Mexico) a military in charge of the internal security and defense. The South American countries are not at war with other countries. Today, the military are in their barracks and get paid for doing nothing. We recommend to use them to maintaining law and order in the streets.

Secondly, in the current situation, the free governments must not dismantle the existing anti terrorist network as it is suggested by irresponsible NGO and notably the so called human rights activists. The free governments must be very careful with all these new grass roots organizations only good to propagate unrest and demagogic claims.

Thirdly, we recommend to empower the safe segments of the civil society. Considering the corruption of the police and the judiciary, many citizens have already taken law and order into their own hands: For example, there are some 1.3 million private security guards in Brazil. In Colombia the paramilitaries composed with free citizens (Freedom fighters) are the main force against the marxist rebellion. In order to avoid abuses, the governments must recognize and organize these spontaneous movements of free citizens. For example, they should erect a national guard on a benevolent basis on the model of Switzerland. This national guard should be more effective that the corrupt police framework.

Regarding the policies, we may repeat some recommendations.

Firstly, do not negotiate with terrorist and criminal organizations ( Do not follow the bad colombian example). In the same way, do not allow the peasants to cultivate poppy.

Secondly, dismantle as much regulations as possible. South Americans dislike the regulations that are constantly fueling corruption.

Thirdly, apply tolerance zero to street violence and in case of emergency, do not hesitate to order the martial law in some bad districts. Of course these global recommendations must be applied in accordance with each specific country features.

43-Road map to the future.

Due to the biased scholars descriptions, South America has not a good image in the developed world. For example, when you speak about a new world, you usually target North America rather than South America. Indeed, this continent is also a new world with huge potentialities. It means that the governments must improve their image with sound and coherent policies in economic and security. It would be a first step but it is not enough and we shall provide with some global advices.

Firstly, South America has too much followed the European example. Santiago or Buenos Aires look like Paris or Madrid fifty years ago! It means that people are constantly looking backward with a vague nostalgia (notably in Argentina). In fact, some feudal habits and the Marxism imported from Europe impede any progress: For example, too many universities or foggy Andean institutes, established on the European model, are just good to produce marxist theorists such as Guevara or Guzman. They should be replaced by business and engineers schools.

Secondly, the South Americans have always been reluctant toward the “gringos”. They should have better to adopt the pioneer and the entrepreneurship spirit of their North Americans neighbors (just like Mexico is doing). For example, I observe that our entrepreneurship program gets very few visitors from South America (Most of our visitors come from North America, Eastern Europe and Asia). In short, we recommend a greater openness to the future.

Thirdly, the South Americans must keep their own continental identity: The hedonistic behavior is a better asset than the depressed European mood. Nevertheless, this hedonism should be channeled toward business activities rather than car races, soccer's, festivals and so on. The old Castilian legacy based on pride, courage and sense of honor is also a precious value in the present world (Do not compare with the European Spanish who have capitulated facing with terrorism!)

An improved image should facilitate the immigration coming from Europe or Asia. Just like Canada and Australia, the governments should develop a network of agencies promoting the quality of life, the freedom, the open ranges, and the bright prospects of South America. In short, you have to forget the negative experiences of the past and to visualize the success image of South America as a real New World.

These reforms could modify the bitter prospects that we have described regarding the economy.

Hot comments!

Do you agree? Do you not agree? Send your comments. Click Here

From: Manuel.Campos , Argentinian citizen, Buenos Aires.
Sent: Monday, February 13, 2006 9:02 PM

Somehow I agree with the study's conclusion about the mentality of the
Southamerican citizens. From our european inheritance (poor southern
Spaniards, Italians and Portuguese) we have a culture of escapism and
negation. What surprises me, is that the lack of will or national pride of
our governing elites has been grosely dismissed.

Since the early 1900's the architects of the southamerican new born
republics fostered a spirit of predestination, a fate of grandeur, not a
goal to be achieved with hard work. Quoting Argeninian ex-president Eduardo
Duhalde "Argentina is condemned to success". This policy of national pride
based on god-given natural resources was artificially indroduced to bolster
a national identity in countries with foreign population way over 60%, but
proved awefully destructive to the middle classes entrepeneur spirit.

Notice that the UBA, the biggest Argeninian state-owned university (much
like the Universidad Central in Venezuela) main's aim is to provide free
social movility to anyone willing to sit on a chair enough time. Beyond a
reality in which social movility has long been gone, the idea of exploiting
other people's business and ideas remains. Our middle class doesn't focus on
creating new business oportunities or markets, the common wish is to be a
professional and to earn enough to enjoy life at the expense of somebody
else's effort. That's why laws, psichology, and some other non productive
careers remain so popular. The problem is neither the political elite nor
the upper clases are interested on changing this because they follow the
same model, just replace a good administrative job for foreign capital or
state purchases providing a rent without having to move a finger.

The hedonistic spirit of the southamericans is not spontaneous, it's the
result of a historical experience and a socioeconomical model. Any
freemarket reform would only pour more gas to the fire if they are not
applied with some kind of a mentality change, a change that only a major
historical event could provoke (much like the 30's US depression).

During 2002, the worst year after the 2001 economical collapse, the mood on
the streets was pretty gloomy and the middle classes were forced to work
their way through in new and creative ways, but Argentina started to recover
around 2003 and all these changes were thrown into oblivion.

That quick recovery was due to one of the proposed measures: floating currency (kept artificially low to favor exports) which led to an impressive soybean exports boom. China's appetite for soybean has turned Argentina into a country-sized soybean plantation providing farmers an incredibly high rent without the need to reinvest or diversify. Many farmers are now leasing the lands because they find it easier than working the fields themselves. Needless to say, those profits are not saved or reinvested.

But here's the dark side of the story: in 10 years the soil will be depleted, in 20 years there's gonna be a widespread shortage of fertilizers because of the oil prices, and we'll spend another 10 years crying for those assets now vanished in the air and spent on populism just like we did in the 1940's with the extreme profits of the WWII food sales.

Looks good in paper but if the base problem is not tackled, things only get worst.

I agree on the diagnosis, but I don't see any possible solution and I don't
think the proposed scheme would do anything to make things better.

1-DIAGNOSIS 2-WRONG THEORIES 3-HEDONISM 4-SOLUTIONS 5-COUNTRY REVIEW

5-COUNTRY REVIEW

This review only includes the countries we have visited (9 on 13). It provides with some specific information's notably in business matters. Our short tourist advices are dedicated to businessmen, traveling in the main capitals and who have not too much time.

51-Brazil

Introduction: Brazil is the giant of South America (8,547,000 Km) with nearly half of the continent's area. It is composed with three main regions: The Southeast region contains more than 40 % of the country's population. The second region is the poor Northeast. North, dominated by the Amazon, is the largest region with the fewest people.

Population: 174 Million. White (includes Portuguese, German, Italian, Spanish, Polish) 95 million, Mestizo: 69 million, black: 10 million. two-thirds of Brazil's population live near the coast. Rio and São Paulo are two of the world's great metropolises, and nine other cities have over a million inhabitants. Capital: Brasilia.

Politics: Free country

Economy: Brazil is today South America's leading economic power and a regional leader. In latin america, Brazil is outpaced by Mexico (see above). The GNI reaches 552 $Billion in 2004 (GNI per capita $3,090: Rank: 96 out of 208 countries). Taking in account the purchasing power parity method, the GNI per Capita reaches $8,020 (Rank: 86 out of 208). Brazil was the best location in South America. Friendly people and government, dynamism and the kindness of the population, first class infrastructures in the south part, big internal market, huge prospects, few State regulations. Unfortunately, the depression and recent change in political power bring a lot of uncertainties. Our small investor rating is **+ .

However, I would recommend to our scholars addicted to the raw materials theory, to visit the southern part of brazil, its heavy and light industry, its manufactures of aircraft, motor vehicles, machinery and fine chemical: Today, the real landlords are the big businessmen in towns!

Tourism : Brazil has no mountains like Argentina or the Andean countries but offers the best quality of life. In residing only fifteen days you feel yourself Brazilian! Very friendly people. Just avoid the wrong side of the town (For example, Copacabana poisoned by prostitution).

52-The southern cone

521-Argentina

Introduction: Argentina, is second largest in South America (2,780,000 Km). Its heartland is a broad plain known as the Pampas. The Andes form the boundary with Chile. The highest peak in the Western Hemisphere, Aconcagua, dominates the Andes at 6,960 meters.

Population: 39 millions (95% europeans) mostly from spanish, italian and german descent. Capital: Buenos Aires.

Politics: Free country

Economy: The GNI reaches 142 $Billion in 2004 ( GNI per capita $3,720: Rank: 91 out of 208 countries). Taking in account the purchasing power parity method, the GNI per Capita reaches $12,460 (Rank: 66 out of 208). Considering the potentialities, these results are pitiful: Argentina benefits of rich natural resources (lead, zinc, tin, copper, iron , manganese, petroleum, uranium), a highly literate population, an export-oriented agricultural sector (livestock, soybeans, grapes, corn) and a diversified industrial base (food processing, motor vehicles, consumer durables, textiles, chemicals and petrochemicals, printing, metallurgy, steel). Our small investor rating is *+.

Tourism. Due to the great distances, visiting Buenos Aires is the only issue for a business travel.

522-Chile

Introduction: Chile covers 757,000km. It extends like a ribbon down the west coast of South America for over 4,000 kilometers but averages only 150 kilometers wide. Mountains cover 80 % of Chile.

Population: 16 Million ( European 95%). Chile is highly urbanized, with 40 % of the population living in the Santiago area.

Politics. Free country.

Economy: The GNI reaches 78 $Billion in 2003 ( GNI per capita $4,910: Rank: 76 out of 208 countries). Taking in account the purchasing power parity method, the GNI per Capita reaches $10,500 (Rank: 75 out of 208). Chile has a market-oriented economy characterized by a high level of foreign trade. Copper mines rank as the world's largest. Iron, nitrates, precious metals, molybdenum are present. The agricultural sector is well developed: Vineyards, apples, pears, onions, wheat, corn, oats, peaches, garlic, asparagus, beans, beef, poultry, wool; fish; grapes. Industry includes foodstuffs, fish processing, iron and steel, and wood products. Our small investor rating is **+

Tourism: The country is safe and you feel at home. From Santiago, you may easily visit Valparaiso (one day trip by car)

53-Andean countries

531-Peru

Introduction: Peru extends on 1,285,000 Km. It is composed with a pacific coastal region, the highlands that occupy a third of the country, the Andes and finally a jungle bordering Colombia and Brazil.

Population: 26 million. Native Indian: 12 million, Mestizo: 10 million, White: 4 million. Capital: Lima.

Politics: Free country

Economy The GNI reaches 65 $Billion in 2004 (GNI per capita $2,360: Rank: 108 out of 208 countries). Taking in account the purchasing power parity method, the GNI per Capita reaches $5,370 ( Rank: 119 out of 208). Peru is among the world's top producers of silver, copper, lead, and zinc. Petroleum industry and fisheries are promising. Agriculture is diversified ( coffee, cotton, sugarcane, rice, corn). Industry includes clothing, food processing, cement, auto assembly, steel, shipbuilding, metal fabrication. Our small investor rating is*-

Tourism: Cusco and the Machu Picchu are a must but you need at least four days from Lima. There is some remnant insecurity. Do not camp ( notably around the Machu Picchu!). You have better to travel in group with a guide (Native indian in the Cusco region do not speak spanish or english).

532-Bolivia

Introduction: Bolivia (1,099,000 Km) is a poor, mountainous, and landlocked country.

Population: 9 millions. Native indian: 5 million, White and mestizo: 4 million. La Paz, is the world's highest capital city (La Paz airport: 4,100m above sea level!).

Politics: Free country

Economy: The GNI reaches 8 $Billion in 2003. (GNI per capita $890: Rank: 143 out of 208 countries). Taking in account the purchasing power parity method, the GNI per Capita reaches $2450 (Rank: 150 out of 208). Despite some large natural gas deposits, Bolivia is an under developed country. It remains a large cultivator of coca. Our small investor rating is*- .

Tourism: Coming from the US or Europe, you will need few days to be accustomed to the La Paz altitude: You can be really sick. Lake Titicaca (a day trip by car from La Paz is the main site to visit). You will need a guide outside La Paz.

533-Ecuador

Introduction: Ecuador (284,000 km) has four distinct regions: The coastal plain, The Sierra, the Andes and the jungles east of the Andes.,

Population: 13 million. Mestizo:10 million, Native indian: 2million, White: 1million. Capital: Quito. Europeans are engaged in land ownership in the Andean uplands where most of the native indians are living on small subsistence farms. They cultivate on the slopes by 4,000 meters high! As a result, land reform is always a source of unrest in this region.

Politics: Free country

Economy: The GNI reaches 23 $Billion in 2003 ( GNI per capita $1790: Rank: 118 out of 208 countries). Taking in account the purchasing power parity method, the GNI per Capita reaches $3440 (Rank: 136 out of 208). Ecuador has petroleum resources, which have accounted for 40% of the country's export earnings in recent years. It is also the world's largest exporter of bananas. Coffee and fisheries (shrimp) are two important modern agricultural sectors. Indians cultivate potatoes, manioc (tapioca), plantains, sugarcane and breed sheep's, pigs, pork's, and lama. The US dollar is the legal currency. Our small investor rating is*+:.

Tourism. From the capital Quito, and through one day trip, you can easily drive to the Cotopaxi: A magnificent snowy peak (6,000 meter high).

534-Colombia

Introduction: Colombia (1,139,000 Km) is the only South American country with coastlines on both the Pacific Ocean and Caribbean Sea. The Andes separate the western coastal lowlands from the eastern jungles.

Population: 43 million. Mestizo and mulatto: 32 Million, White: 9 million, Black: 1.5 million, Native indian: 0.5 Million. Capital: Bogota.

Politics: Due to the civil war, large parts of Colombia are beyond government control.

Economy: The GNI reaches 90 $Billion in 2004 ( GNI per capita $2,000: Rank: 122 out of 208 countries). Taking in account the purchasing power parity method, the GNI per Capita reaches $6,820 (Rank: 101 out of 208). Colombia is a producer of emeralds, gold, silver, and platinum. It also exports oil and renowned coffee. The main industries are related to textiles, food processing, beverages, chemicals, cement. Colombia is the world's leading coca cultivator and supplier of cocaine. Of course, our small investor rating is very bad:***

Tourism: Colombia is a violent country. More than 3,000 people are kidnapped each year. Of course, I cannot recommend this destination!

54-Other countries

To conclude, Just a few words about these two small countries:

541-Suriname

Suriname (163,000 km and 0.4 million inhabitants) was a dutch colonies and gained independence in 1975. Most people are descendants of African slaves and Indian or Indonesian servants brought over by the Dutch. Most Surinamese live in the coastal plain. It is a free country with a GNI of 0.8 $Billion. In 2003, the bauxite industry, accounts for more than 15% of GDP and 70% of export earnings. Rice is also well renowned. The capital Paramaribo shows many old dutch building (It’s quite astonishing in this mostly iberian continent). Due to the small market, our small investor rating is *

542-French Guyana

The European Space Agency launches its communication satellites from French Guyana ( a French department). The Space Center, fishing (shrimp), forestry and gold mining are important. Beside the fiscal paradises in the Caribbean, Guyana is a "social paradise". As a result all the poor's and indigents from the neighboring countries are rushing in this holy place!

Our small investor rating is *+:. There are a lot of business to do in connection with the launching of satellites. From Cayenne you can easily see the Forest ( It covers 90% of the country ). You can also visit the Devil Islands used as a penal settlement in the past.

1-DIAGNOSIS 2-WRONG THEORIES 3-HEDONISM 4-SOLUTIONS 5-COUNTRY REVIEW

Best links-Click below

ww.cia.gov Go to the "Worldfactbook"

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