TECHNOLOGY-LATAM: Y2K Threat Looms Over Region

By IPS Correspondents Reprint | | Print |

Zoraida Portillo

LIMA, Nov 10 1999 (IPS) - The scenario is not as chaotic as it was just a few months ago, but threats persist that could affect day-to-day life in Latin America beginning on the first day of the new century, due to what is known as the Millennium Bug or Y2K.

Airline flights behind schedule or cancelled, traffic lights gone mad, automatic teller machines out of order, and breakdowns in electrical, water or communications systems are just some of the problems that could occur.

Most South American countries have passed tests in the five focus areas (energy, tele-communications, transportation, health and finance) advised by experts at the International Y2K Co-operation Centre, financed by the World Bank and the United Nations Development Programme (UNDP).

The Y2K problem originated in the development of computer systems. Programmers, in order to conserve digital space, used two- digit numbers to represent years, not thinking ahead to the year 2000, when computers could confuse “00” to mean 1900 instead of 2000.

The problem extends beyond computer systems because technology has incorporated date-limited computer chips into other systems, “such as medical equipment, telephone switches, cash registers, satellites, automobiles, electronic equipment and elevators,” according to the UNDP.

South American countries in general are in the “moderate risk” category, but the nations of Central America face serious risks in key areas.

There are still South American cases that worry the experts. In Brazil, for example, a driver received a traffic ticket in late October that comes due in January next year, with late fees calculated since 1900.

This seems to indicate there are still latent risks in Brazil, though Planning minister Solman Lemos Pinto cited private international studies that indicate the nation’s preparations are among the best in the world.

Y2K expert Russ Kelly predicts people will encounter problems with technological systems they use every day, such as card-access security systems, digital gasoline pumps or automatic cash machines.

Kelly, who is leading Y2K seminars in Lima at the request of a private Peruvian company, explained that these problems will not necessarily occur at the same time, but could occur throughout the first three months of the year 2000.

He recommends, as a fundamental part of any contingency plan, that all businesses create back-up files of all data.

“The companies that are unable to recover their data will not be able to survive – they will likely go out of business,” he warned.

The financial sector continues to be a vulnerable area. In Peru – one of the best-prepared countries in the region, says the World Bank – the private banking industry performed a test run by changing the date of its computer systems. The test resulted in a zero percent margin of error, calming the nerves of financial experts.

“There is a greater chance for a systems failure on any day of the year than there is for January 1, 2000,” commented Ignacio Soto, optimistic after the test. Soto is a member of the Peruvian Y2K commission, made up of financial and computer systems experts.

This enormous success is the result of two years of work, complete overhauls of computer systems and equipment, test runs, modifications – an investment of almost 150 million dollars by the banking industry.

But sectors that cannot afford such preparations face serious risks in Peru, warned Kelly. Failed computer systems will directly result in five percent of the nation’s small and medium-sized businesses going bankrupt, Kelly predicted. That part of the business sector will be hardest hit worldwide.

In the United States, for example, an estimated 750,000 small businesses – out of a total five million – will be financially sunk by the Y2K problem, said the expert.

“Most small businesses work within tight margins, leaving them wide open to technological problems, adding to the likelihood they will have to close up shop,” Kelly pointed out.

The health sector also continues to face Y2K problems. In several Latin American countries, experts have found defects in bio- medical equipment. A problem worsened by the fact that most hospitals lack the resources to repair or replace the systems.

Félix Murillo, head of Peru’s National Institute of Statistics and Computer Science (INEI), which is co-ordinating the nation’s Y2K policies, confirmed that the health sector is one of the weakest areas, but he assured that the problem will not endanger patient health.

Authorities from the Peruvian Corporation of Airports and Commercial Aviation, another of the affected areas, reported that they have a contingency plan and are working with neighbouring countries to stave off potential Y2K problems.

The safety of the country’s five largest airports at year end is vital because of the the huge number of tourists planning to greet the new millennium in Peruvian cities like Lima, Cuzco, Iquitos and Arequipa.

According to the World Bank’s most recent survey, just 35 percent of 139 developing countries have an effective national plan for the date change. Peru and Mexico are at the second level of “Y2K compliance,” though both are listed in the “moderate risk” category.

Countries at the first level of Y2K compliance include the United States, Canada, Great Britain, Australia and Ireland.

International consultants estimate that 650 billion dollars have been spent worldwide on making computer systems Y2K compliant. The total could reach three trillion dollars when the non-compliant systems begin to collapse.