/IPS DEVELOPMENT BULLETIN/ ARGENTINA: Corruption Issue Blurrs U.S.- Argentinian Summit

By Marcela Valente Reprint | | Print |

Marcela Valente

BUENOS AIRES, Dec 7 1996 (IPS) - Charges of official corruption in Argentina, fed by the allegations of former Economy Minister Domingo Cavallo, are casting a shadow over the visit of President Carlos Menem to the United States this week for talks with President Bill Clinton.

Officials, diplomats and analysts believe Washington is sufficiently concerned about this delicate issue to raise it during the meeting between Manem and Clinton — along with discussions on more routine subjects at the heart of relations between Argentina and the United States.

These issues include patenting laws, progress made in the Mercosur (Southern Cone Common Market) and the Latin American nation’s integration into the Free Trade Area of the Americas.

U.S. Ambassador in Buenos Aires, James Cheek, and the Argentine representative in Washington, Raul Granillo Ocampo, have both said corruption would be discussed at the summit.

“Argentina and the United States are allies in this battle as in so many other things,” said Cheek.

Officials say Washington regards corruption as an impediment to free trade. It has passed legislation penalising companies which pay bribes abroad while in the European Union illegal payments are tax deductable in a dozen countries.

U.S trade representative, Mickey Kantor, said that in just one year his country had lost contracts worth billions of dollars due to the advantages gained by countries that routinely pay bribes.

The United States is the leading foreign investor in Argentina.

According to the Investment Foundation, 38 percent of the 18 billion dollars invested in Argentina from 1994 to 1995 came from the United States.

The U.S company IBM has allegedly paid million-dollar bribes to obtain a contract to provide the public sector with computer services. Some 14 people have already been tried in the case, including Argentine officials and IBM personnel.

As a result, the United States is putting pressure on the World Bank, the International Monetary Fund, the World Trade Organisation and the Asia-Pacific Economic Cooperation forum (APEC) to adopt anti-corruption measures.

At the 1994 America’s Summit in Miami in 1994, the nations of the hemisphere committed themselves to working against corruption. The Organisation of American States (OAS) drew up an Inter- American Convention against Corruption ratified by Argentina’s Chamber of Deputies last week.

In Argentina, the U.S embassy has organised workshops on “Ethics in politics and business” which will be held this week in the capital to discuss impunity, lack of respect for the law and exposure of officials and businesspeople to bribes.

In this country, in recent years, allegations of the payment of bribes, the illegal earnings of officials, smuggling and wholesale tax evasion have been a permanent concern both domestic and foreign. However, no one has been punished on related charges.

For Argentines, corruption is the second most worrying issue after unemployment, which is running at 17 percent — as has been shown in public opinion surveys.

According to the Gallup poll agency, more than 90 percent of Argentines believe corruption taints their politicians.

The IMF and the World Bank both called on Latin America to fight against the “cancer” of corruption this year, and the Ibero American presidents meeting in Chile in November concentrated on “democratic governability” as a key issue.

Former economy minister Cavallo made his assertion about corruption after spending five years in office.

“The greatest danger for Latin America are the hidden powers which are formed on the basis of illicit business arrangements, be it from drug trafficking, smuggling, tax evasion or corruption,” he said.

Cavallo met with Clinton adviser Mack McLarty in Buenos Aires two weeks ago. McLarty visited Brazil and then Argentina, where he met with Menem and later Cavallo, much to the concern of many government officials.

Menem will also be discussing the issue of pharmaceutical patents which are already recognised under Argentine law, although the United States has suggested some modifications. And lastly, they will run over the Mercosur and the outlook for the futre hemisphere bloc.