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      L A T I N    A M E R I C A    D A T A    B A S E
    
              NotiSur - Latin American Affairs
    
ISSN 1060-4189      Volume 7, Number 7    February 21, 1997
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    Copyright 1996, Latin America Data Base (LADB), Latin
        American Institute, University of New Mexico
    
           Director:          Rebecca Reynolds Bannister
           Managing editor:               Kevin Robinson
                         Staff writers:
          Patricia Hynds, Carlos Navarro, Robert Sandels
 
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e-mail info@ladb.unm.edu or call 1-800-472-0888.
   
                       In This Issue:
   
BOLIVIA: NEW LAWS WILL GOVERN JUNE GENERAL ELECTIONS
   * Six parties have named presidential candidates
   
BOLIVIA: ECONOMIC NEWS IN BRIEF
   * Spanish businesses to administer private retirement funds
   * Visit from international lending organizations
   * Teachers threaten new protests
   
CHILE: ENVIRONMENTALISTS CONCERNED ABOUT NATIVE FORESTS
   * New logging contracts draw criticism
   
PERU: RECORD-BREAKING HOSTAGE CRISIS DRAGS ON
   * Preliminary talks produce little
   * Criticism of government negotiator
   
____________________________________________________________
   

*********************
       BOLIVIA
*********************
  

BOLIVIA: NEW LAWS WILL GOVERN JUNE GENERAL ELECTIONS
  
     Approximately three million of Bolivia's seven million
citizens are eligible to vote on June 1 to elect a new
president and other national officials.  Parties are already
campaigning, and the emergence of a former dictator as front
runner has prompted calls for legislation to prevent him from
participating.
     New electoral laws enfranchise, for the first time, all
Bolivians over 18.  In addition, the president elected in June
will serve for five years, rather than the present four,
according to the president of the electoral tribunal (Corte 
Nacional Electoral, CNE), Alfredo Bocangel.
     In another change, if no candidate wins an absolute
majority, Congress will choose the president from between the
two top candidates, rather than from among the three top
candidates as before.
     In 1989, Congress chose Jaime Paz Zamora of the
Movimiento de Izquierda Revolucionaria (MIR)--who had come in
third in the election.  The move followed an agreement with
the second-place candidate, retired Gen. Hugo Banzer Suarez of
the Accion Democratica Nacionalista (ADN), in effect setting
up a co-government for the next four years.  The pact shut out
Gonzalo Sanchez de Lozada of the Movimiento Nacionalista
Revolucionario (MNR), who was the top vote-getter in the
election.  Sanchez de Lozada ran again, this time
successfully, in 1993.
     
Six parties have named presidential candidates
     Bocangel said 17 parties are eligible to participate in
the June elections.  So far, six parties have chosen their
presidential candidates.
     The MNR named former Senate president Juan Carlos Duran
to head its ticket, after its first choice, Justice Minister
Rene Blattmann, pulled out of the race.  Former president
Jaime Paz Zamora is once again running on the MIR ticket.
     The ADN will again run former dictator Banzer Suarez, de
facto head of state from 1971-1978, who has failed in five
previous tries to win the presidency in a democratic election
(see NotiSur, 12/11/91).
     The Conciencia de Patria (Condepa) ticket will be headed
by Carlos Palenque Aviles; the Unidad Civica Solidaridad (UCS)
candidate will be Ivo Kuljis; and finally, the Movimiento
Bolivia Libre (MBL) will run Miguel Urioste.
     There is also speculation that a coalition of leftist
parties could run Evo Morales, the controversial leader of the
organized coca growers (see NotiSur, 08/26/96).
     Four months before elections, most polls place Banzer in
the lead, with between 19% and 25% of respondents saying they
will vote for the former dictator.  Banzer is followed in the
polls by Paz Zamora and former candidate Blattmann.
     Some analysts attribute Banzer's lead to his transition
from dictator to participant in a civilian government and to
his efforts to encourage international investment in Bolivia.
     Nevertheless, Banzer's place as front runner has prompted
MBL Deputy Juan del Granado to introduce a bill in Congress
that would prevent former dictators from running for
president, saying it is unthinkable that Bolivians can have
forgotten the painful past.  (Sources: Reuter, 02/04/97; Inter
Press Service, Notimex, 02/14/97)
  

BOLIVIA: ECONOMIC NEWS IN BRIEF
  
Spanish businesses to administer private retirement funds
     On Jan. 24, the Bolivian government signed decrees
awarding two concessions to administer newly created private
pension funds--Administradoras de Fondos de Pensiones (AFPs). 
The concessions went to the Spanish consortium Invesco PLC-
Argentaria and to the Spanish Banco Bilbao Vizcaya.
     Bids by those businesses offered the lowest monthly
commissions for administering the funds.  They will have
exclusive rights to operate the private pension funds for five
years and will begin operating in Bolivia in May.
     "We are very pleased with this new link between our
countries through businesses that will, I am sure, fulfill
very well the obligations they have taken on," said Spain's
ambassador to Bolivia, Manuel Viturro de la Torre.
     Despite the enthusiasm of Spanish and Bolivian government
officials, pensioners and the leadership of the powerful labor
organization Central Obrero Boliviano (COB) have been adamant
in their opposition to the new Ley de Pensiones.  Signed last
Nov. 29, the law authorized the conversion to private pension
funds (see NotiSur, 03/29/96).
     Before passage, numerous protests, including a hunger
strike by 60 pensioners in mid-November, were aimed at
thwarting the administration's commitment to pension reform
(see Chronicle of Latin American Economic Affairs, 08/25/94
and 04/18/96).  Promulgation of the law did nothing to
diminish the protests.
     The worst part of the new system, according to opposition
Deputy Benjamin Miguel, is that Bolivia will export capital,
instead of investing the social security funds in the social
development of the country, which is one of the poorest in the
hemisphere, second only to Haiti.
     After the law was signed, President Gonzalo Sanchez de
Lozada's administration immediately began to liquidate the
existing state-run pension fund, as well as the complementary
funds (Fondos Complementarios) operated by unions, which
Sanchez de Lozada says have become corrupt.  The move to
liquidate the complementary funds brought a new round of
confrontations with the COB.
     According to the labor organization, the government has
reneged on its commitment to pay salaries owed to employees of
the Fondos Complementarios since December.  COB leader Edgard
Ramirez also accused the government of violating its agreement
by firing employees of the funds on Feb. 13.
     Talks between the government and the COB began on Feb.
18, but broke off a day later.  The COB said it will call a
48-hour general strike during the week of Feb. 24 to protest
the pension law and the equally unpopular government coca-
eradication programs.
     
Visit from international lending organizations
     International Monetary Fund (IMF) officials began a
three-week visit to La Paz in late January to evaluate the
government's success in implementing structural adjustment
policies.  A World Bank team was in Bolivia at the same time
to assess the nation's economic performance.  The government
hopes the visits will result in approval for Bolivia's
continued participation in a program to reduce the foreign
debt.
     Government officials are confident that Bolivia, which
many economists consider a "good student" of the IMF, will
pass its test with flying colors.  The optimism is based on
the success achieved last year in reaching macroeconomic
targets and applying the structural reforms recommended by the
lending institutions.
     During 1996, Bolivia's GDP grew by about 3%, inflation
was held to 7.55%, and the Sanchez de Lozada administration
carried out several IMF-imposed reforms, including the new
pension law and several key privatizations (see Chronicle,
04/25/96).
     For 1997, the government's commitment to the IMF includes
a GDP growth rate of approximately 5%, inflation no higher
than 7.5%, a fiscal deficit ceiling of 2.6%, and an exchange
rate that averages about 5.34 bolivianos per US$1.00 during
the year.
     In return, Bolivia is asking the IMF to approve its
participation for a third year in the "Reinforced Structural
Adjustment Program," which would grant debt relief.  IMF
approval, which is considered likely, would mean an additional
US$50 million for Bolivia.
     Bolivia is among the nations whose level of debt is
considered "potentially critical" by international lenders,
and it is also on the list of 42 "most highly indebted poor
nations."
     The foreign debt currently stands at US$4.5 billion
dollars, US$2.6 billion of which corresponds to credits given
by multilateral funding agencies.  To meet payments on this
debt, Bolivia needs to raise slightly more than US$187 million
dollars per year from 1998 onwards, said the director of the
Central Bank of Bolivia, Juan Antonio Morales.
     However, the country will have serious cash flow problems
beginning in 1998 in servicing the debt because of
discrepancies between the calendar of foreign debt payments
and the reception of international credits.
     Thus, Bolivia is "a natural candidate for this debt
relief," said Morales.  Acceptance would allow Bolivia "to
earmark more resources for investment, particularly in
infrastructure, and for more social-service spending."
     During the meetings with the visiting teams, government
officials outlined their efforts to meet IMF and World Bank
demands while reducing the level of poverty in the country. 
The lenders are expected to make their decision regarding
Bolivia in meetings in Washington in March or April.
     
Teachers threaten new protests
     On Feb. 2, 30,000 teachers from the Confederacion de
Maestros Urbanos de Bolivia refused to begin their duties as
the new school year commenced, and they vowed to stage
demonstrations protesting new educational reforms and the
government's refusal to meet their salary demands.
     Victor Prado, a leader of the teachers' union, said the
teachers' walkout came in the face of the government's refusal
to increase wages beyond its current offer of 11%.
     At the same time, the Federacion de Maestros Rurales de
Bolivia agreed to return to their classrooms while they
continue pressing their demands for an increase in their
monthly salary from the current US$42 to US$640.
     The powerful Central Obrera Boliviano (COB) is also
threatening to convoke a general strike if the government
sticks to its overall 7.5% salary increase offer.
     Last year, the teachers led a 50-day strike, accompanied
by sometimes violent demonstrations.  The 1996 protests were
almost as large as the strikes and demonstrations that took
place in 1995, when the government imposed a six-month state
of siege (see NotiSur, 06/16/95 and 03/29/96).  [Sources:
United Press International, 11/30/96; Inter Press Service,
01/21/97; Spanish news service EFE, 12/29/96, 01/23/97,
01/24/97, 01/26/97; Notimex, 01/26/97, 01/27/97, 02/02/97;
Nueva Economia (Bolivia), 02/04/97; Boliviapress (Bolivia),
02/07/97, 02/14/97; El Deber (Bolivia), 02/18/97; Los Tiempos
(Bolivia), 02/18-20/97]
  

*********************
        CHILE
*********************
  

CHILE: ENVIRONMENTALISTS CONCERNED ABOUT NATIVE FORESTS
  
     In mid-January, 240 scientists from 17 countries, who
were attending a meeting on biodiversity in Valdivia in
southern Chile, called on the Chilean government to regulate
the exploitation of the country's native forests to protect
them from indiscriminate logging and prevent desertification. 
While the impact of the lumber industry and the manufacture of
wood products on the overall Chilean economy is still
relatively small, environmentalists fear that growth in the
export of such products will have a lasting detrimental effect
on the country's biodiversity.
     According to figures from the Chilean Ministry of
Agriculture, Chile has 11 million hectares of native forests,
principally located in southern Chile from Valdivia, 835 km
south of Santiago, to Tierra del Fuego, 2240 km south of
Santiago.
     Exports of forestry products earn about US$2.4 billion a
year, principally from lumber, cellulose, and wood chips. 
However, production of wood chips from native forests "makes
a negligible contribution to the Chilean economy," said
economist Marcel Claude, adding that it adds almost no jobs.
     "In value-added income, the contribution to the GDP is
only .05%," said Claude.  "Therefore, this activity could be
dropped and not a single macroeconomic indicator in the
country would move."
     Nevertheless, according to a study by Claude on the
production and export of wood chips for the nongovernmental
group Defensores del Bosque Chileno (DBCh), between 1989 and
1995, wood-chip exports grew at an average annual rate of
155%, far superior to the 13.3% growth rate of exports in
general.
     While earnings for the exporting companies have increased
significantly, critics say that the growth came at the cost of
soil erosion, deforestation that contributed to the loss of
biodiversity, and loss of water resources.
     Growing concern about negative environmental impact on
Chile's native forests prompted the 240 international
scientists to write Chilean President Eduardo Frei asking that
the government play a more active role in forest preservation.
     "Extensive areas of native Chilean forests are being
depleted or substituted for pine or eucalyptus, putting at
risk the richness of native species, the soil, aquatic
ecosystems, and water resources associated with the forest,"
said the letter to Frei.
     "What's happening in Chile is that people have no sense
of culture, they only see the present," said Marta Kahlin,
professor at the University of Chile.  "Chile has good
scientific resources, but they are not being used."
     Experts at the meeting said exploitation of native
forests is "the worst business that Chile could engage in,"
since it "does not even bring in enough money to cover the
cost of reforestation."
     
New logging contracts draw criticism
     Business leaders associated with the Corporacion de la
Madera insist, however, that complaints by environmentalists
such as the DBCh and Greenpeace are an "obstructionist" effort
aimed at paralyzing investment and development in economic
sectors such as forestry.
     Despite the complaints from environmentalists, the
government continues to grant major logging permits.  Last
August, the government's Comision Nacional de Medioambiente
(CONAMA) authorized the US-based company Trillium to cut
250,000 ha of Magellan oak in Tierra del Fuego.  Although
opponents waged legal battles to block Trillium's "Rio Condor
Project," arguing that it "implies the extermination of oak
forests in 30 or 35 years," the company's operations are
continuing.
     In addition, the state Corporacion Nacional Forestal
(CONAF) recently authorized another operation in the Corral
area near Valdivia, which is now under investigation by the
Comision de Medioambiente of the Chamber of Deputies,
following accusations of irregularities in the process.
     Meanwhile, nongovernmental organizations preparing for
the meeting in Rio de Janeiro in March to evaluate the results
of the 1992 Earth Summit said Chile has sacrificed its
environment in the name of economic growth.
     "Decisionmakers, both in the public and private sectors,
see environmental concerns as an impediment to economic
growth," said consultant Sara Larrain of the Red de Accion
Ecologica.  The Chilean government is "obsessed with an
increase in economic growth indicators and with the insertion
of the country in foreign markets."
     Juan Carlos Cardenas, Greenpeace representative in Chile,
said that 85% of Chile's exports are based on the extraction
of natural resources, "which show increasing levels of
depletion and evidence of damage to the ecosystem."
     Neither environmental sustainability nor social equality
are taken into account in setting Chilean economic policies,"
said Cardenas, "and this could profoundly affect governability
and the future image of the country as a model for the
region."  (Sources: Spanish news service EFE, 01/23/97; Inter
Press Service, 01/29/97, 02/06/97, 02/14/97)
  

*********************
         PERU
*********************
  

PERU: RECORD-BREAKING HOSTAGE CRISIS DRAGS ON
  
     The hostage takeover at the home of the Japanese
ambassador to Peru, which has become the longest lasting
crisis of its kind in Latin American history, shows no signs
of nearing a resolution.  Little was accomplished in three
sessions of "preliminary talks," which began Feb. 11 and ended
Feb. 15.  Talks finally resumed on Feb. 20, renewing some
optimism.  The next move is for the Guarantor Commission
(Comision de Garantes) to draft an agenda agreeable to both
sides for formal negotiations aimed at ending the deadlock.
     The crisis, now in its third month, began on Dec. 17 when
about 20 rebels from the Movimiento Revolucionario Tupac Amaru
(MRTA) captured more than 500 guests at the home of Japan's
ambassador, Morihisa Aoiki.  The rebels are still holding 72
persons, including Pedro Fujimori, brother of Peruvian
President Alberto Fujimori (see NotiSur, 01/10/97).
     All remaining hostages are Peruvian or Japanese, with the
exception of Bolivian Ambassador Jorge Gamucio.  Peruvian
Foreign Minister Francisco Tudela and Agriculture Minister
Rodolfo Munante are among the hostages, along with six Supreme
Court justices, five congressmen, several military and police
officers, and 19 Japanese diplomatic officials and
businessmen.
     Following a meeting between Fujimori and Japan's Prime
Minister Ryutaro Hashimoto in Toronto on Feb. 1, hopes rose
for a break in the stalemate (see NotiSur, 01/31/97).  The
visit led to the preliminary talks, which began on Feb. 11, to
prepare for formal negotiations.  They were the first direct
contact between the two sides since Dec. 28.
     Peru's negotiator, Education Minister Domingo Palermo,
met with the MRTA's second in command, Roli Rojas, in a house
across the street from the ambassador's residence.  Also
present were the members of Guarantor Commission, which has
been mediating the preliminary talks.  The commission includes
Canadian Ambassador Anthony Vincent; Juan Luis Cipriani,
archbishop of Ayacucho; International Red Cross representative
Michel Minnig; and a Japanese government observer, Terusuke
Terada.
     
Preliminary talks produce little
     The hopes for a breakthrough were dashed, however, when
the meetings produced no discernable results and broke off on
Feb. 15.
     "I believe that unrealistically high expectations were
raised, because the two sides have maintained their initial
irreconcilable positions," said former deputy Carlos Tapia, an
expert in counterinsurgency.  "What is positive is that they
have agreed to keep talking."
     The Lima press described the dialogue as "a conversation
between deaf people," with neither side willing to give
ground.
     "The MRTA stubbornly insists on demanding the liberation
of its imprisoned members, a point that the government refuses
to discuss," said sociologist Imelda Vega Centeno.  "Thus, if
neither side changes its position, nothing can come of the
talks."
     The MRTA has dug in its heels and insisted that
negotiations include the release of more than 400 members of
the organization now in Peruvian prisons.  The rebels also
demand improvements in prison conditions.
     Speaking on Colombian radio, the MRTA's spokesperson in
Europe, Isaac Velazco, said the only solution to the conflict
is "exchanging prisoners of war," and he added that "if the
Peruvian government wants a quick solution, they have to
negotiate seriously, and if not, then the MRTA has all the
time in the world to wait for a real solution."
     Velazco said the MRTA's position is that the hostages
include high-ranking military officers linked to charges of
torture.  They also include judges who were or are members of
military courts "who sentenced thousands of innocent people
with no proof whatsoever of their guilt and without providing
them the right to defend themselves."
     After no apparent progress for several days, meetings
resumed on Feb. 20.  For the first time, Nestor Cerpa
Cartolini, leader of the MRTA commando group, attended, along
with Rojas.  In addition to Palermo, Rafael Merino of the
Peruvian intelligence service (Servicio de Inteligencia
Nacional, SIN) represented the government.  Cipriani described
the talks as taking place in "a constructive atmosphere," and
said both sides agreed to meet again on Feb. 24.
     "The fact that Cerpa is directly participating is a sign
the proposals are much more concrete," said Fernando
Rospigliosi, a Peruvian political analyst.  "I think the
chances of a peaceful resolution are slightly better now."
     
Criticism of government negotiator
     Meanwhile, government officials who requested anonymity
expressed their "resigned skepticism" regarding the
effectiveness of Palermo, whose role has so far been
"unproductive" and at times even "harmful."  These sources say
he is too inexperienced to be in charge of the negotiations,
and they accuse him of deliberately prolonging the hostage
drama "to boost his own image."
     Other government officials expressed "indifference" to
Palermo, saying that all efforts towards striking a deal with
the rebels are bound to fail, be it through Palermo or any
other official, since Fujimori's inflexible position allows no
room for maneuvering.
     "As long as the rebels hold fast to their demand for
prisoner release and the Peruvian government opposes it and
refuses to even discuss it, the result will be the same and
the crisis will continue regardless of who is the negotiator,"
said one government official.
     Some diplomatic sources also have told the press that
differences have increased between Tokyo and Lima regarding
the best way to respond to the crisis, with Tokyo pushing for
more concessions to the MRTA than Lima is willing to give.
     Meanwhile, on Feb. 16 the Lima newspaper La Republica
released details of a plan supposedly prepared by Peruvian
army intelligence to stage a rescue operation at the Japanese
ambassador's residence with US military support in case talks
fail with the MRTA.  According to the newspaper, the plan
projected that only a quarter of the hostages would survive
the operation, and 20 of the rescuers could be killed.
     Fujimori carefully denied the existence of the plan but
repeated his earlier statements that force would not be ruled
out if any harm came to the hostages.
     "That report saying the assault would be done with the
aid of US troops and that it would be executed in seven
minutes is totally false," Fujimori said.  "But I repeat we
are not ruling out force in the case which we have already
explained."
     Meanwhile, according to some reports, the rebels may be
closer to dropping their demand for the release of all their
comrades in exchange for a considerable sum of money, safe
passage out of the country, and some type of compromise over
the improvement of prison conditions.
     However, Fujimori's position becomes more difficult with
each passing day.  He must resolve the crisis peacefully
without appearing to give in to terrorist demands.  But
without some government concessions, a breakthrough is
unlikely, since the MRTA seems in no hurry to leave the
ambassador's house empty handed.  (Sources: Inter Press
Service, 02/12/97; United Press International, 02/13/97,
02/14/97, 02/17/97; Associated Press, 02/15/97, 02/17/97,
02/21/97; The Miami Herald, 02/17/97; Reuter, 02/15/97,
02/17/97, 02/18/97, 02/21/97; Spanish news service EFE,
02/15/97, 02/17-21/97; The New York Times, 02/21/97)