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Strategies & Market Trends : Stocks Crossing The 13 Week Moving Average <$10.01

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To: Bucky Katt who wrote (11425)8/9/2002 2:13:20 PM
From: James Strauss   of 13094
 
William:

Colombia has a barrel full of terrorism to go along with its barrels of oil...

Jim
******************************************
Terrorism, Latin America and the US

With the exception of Colombia, terrorism has not been a major issue in Latin America since the mid-1990s. However, the 11 September terrorist attacks in the US have led to a renewed focus on terrorism at an international level. The discovery of al-Qaida cells in the region, and an upsurge in violence in Colombia, in spite of a national peace process, have meant that Latin America has received some of this attention. This article will examine the likelihood of an upsurge in terrorist activity in Latin America in 2002, and will discuss some of the major issues that could determine whether an increase in terrorism is likely.

Terrorism in Latin America

The majority of Latin American countries had to deal with some kind of internal terrorist threat during the twentieth century. Most of these threats have been from left-wing organisations engaged in rural-based guerrilla warfare, particularly since the Cuban revolution in 1959. In the 1980s and 1990s, large parts of the continent were blighted by guerrilla activity. However, successful anti-terrorist policies, combined with a reduced presence of leftist guerrilla groups after the end of the Cold War, mean that, with the exception of Colombia, terrorism has not been a major threat to the region since the mid 1990s.

The 11 September attacks in the US have had less of an impact on Latin America than on many other parts of the world, but they have brought the issue of terrorism to the fore once again, particularly as they provoked some debate as to whether the region should be involved in US-led retaliation, with prominent countries, such as Mexico and Brazil, refusing to offer even symbolic military assistance. The discovery of cells of Osama Bin Laden's al-Qaida network in the region has also led some countries to re-examine the threat posed by terrorism from external organisations, as well as groups within national borders. However, with the exception of Colombia, terrorism is not likely to be the greatest concern for Latin American governments in 2002.

Terrorism in 2002

Terrorism Related to Recent Attacks on the US

Since 11 September, a number of al-Qaida cells have been discovered in the region. It has been alleged that Bin Laden associates have bank accounts in Colombia, and al-Qaida has been linked with a financial organisation in Panama called Tawqa ('fear of god' in Arabic), which has allegedly been used by Bin Laden's organisation for financial operations. However, the main focus for al-Qaida activity in the region seems to have been Peru and the tri-border region, on the border between Brazil, Argentina and Paraguay.

In Peru, a video has surfaced in which the former national intelligence service chief and senior presidential advisor, Vladimiro Montesinos, boasts that al-Qaida used Peru as a 'rest stop' where they planned attacks on other parts of Latin America, such as Chile, Ecuador and Argentina, on the condition that they did not carry out terrorist actions in Peru. The current Peruvian government has insisted that if such cells existed in Peru, they are no longer there, and has attempted to distance itself from the allegations. Islamic fundamentalist groups have been operating much more recently in the tri-border area between Brazil, Argentina and Paraguay. It was already known that extremist Islamic organisations, such as Hizbollah, enjoyed financial support and widespread sympathy in the region. The US authorities have recently claimed to have evidence that al-Qaida has a base of operations in the region. However, governments have been reluctant to confirm these allegations.

Therefore, although terrorist attacks by Islamic extremist groups are unlikely, the region is likely to be the focus of a great deal of attention in the US 'war against terrorism', and countries will be under intense pressure to cooperate in this campaign. This could lead to retaliatory attacks, and indeed anthrax has been found recently in both Peru and Argentina. However, the anthrax discovered in Argentina was a harmless strain, and in Peru a diplomatic bag appears to have been infected by accident.

Internal Terrorist Threats in Latin America

A greater threat is posed by activity by terrorist organisations within Latin America. The country that should be watched most closely in 2002 is Colombia. There has been an upsurge in violence in Colombia, in spite of a national peace process between the government and the country's two main leftist guerrilla organisations, the Revolutionary Armed Forces of Colombia (FARC) and the National Liberation Army (ELN). Peace talks with the ELN were suspended in August and negotiations with FARC have been intermittent and half hearted. While government and FARC peace negotiators appeared to make progress in September and reached an agreement that allowed the demilitarised zone to be extended, FARC has since refused to participate in negotiations, accusing the armed forces of carrying out flights over the zone. Violence has, if anything, increased and there have been a number of high-profile murders, including that of former culture minister, Consuelo Araujonoguera.

Guerrilla and paramilitary activity is likely to increase in Colombia in 2002 as a result of presidential elections, which are scheduled to take place in May. Candidates in this election are likely to compete as to who takes the hardest line on terrorism. The opposition Liberal Party candidate and presidential favourite, Horacio Serpa, has already described the peace process as dead, and has been highly critical of the demilitarised zone and of President Pastrana's engagement with the guerrillas. Unless peace talks make miraculous progress they are unlikely to survive the elections, meaning that the armed forces will probably attempt to regain control of the demilitarised zone. This is likely to lead to an upsurge in violence and lawlessness, both in this region and throughout Colombia as a whole. It remains to be seen how the authorities would attempt to contain this and to what extent they would enjoy funding and logistical support from the US and other external sources.


The other potential hotspot for terrorism in Latin America is Peru. During the 1980s and early 1990s, the country was shaken by campaigns by the Maoist Shining Path organisation and the Marxist Tupac Amaru Revolutionary Movement (MRTA). Both these groups were effectively neutralised by anti-terrorist operations in the early 1990s. However, a small number of Shining Path cadres have always been active, particularly in the jungle region in the Huallaga Valley - which is also Peru's principal coca-growing area - where they provide safe passage and logistical support to drug traffickers in return for large sums of money. The Shining Path may be able to exploit the fall in popularity of recently elected President Alejandro Toledo. Toledo's popularity ratings have been in constant decline since he took office in July 2001, and there have recently been a spate of demonstrations and protests on issues ranging from road building to job creation. The Shining Path may be able to tap into a fairly large pool of support, particularly among young Peruvians, who have little memory of terrorist activity in the 1980s. Indeed, in a move clearly suggesting concern at a resurgence of Shining Path activity, the new government of President Alejandro Toledo recently ordered the re-opening of military and police bases in vulnerable rural areas, which had been closed in the mid-1990s.

Conclusion: What Chance a Resurgence of Terrorism in the Region?

There is unlikely to be a large-scale escalation of terrorist activity in Latin America in 2002. However, there are specific areas in the region where terrorism will be a major issue. While terrorist activity in the tri-border area is unlikely, the area will be a focus for investigations, both by the authorities of Brazil, Paraguay and Argentina, and US law enforcement agencies investigating terrorism. If a number of major arrests were made, there would be the possibility, albeit fairly remote, of some kind of revenge attack, probably away from the tri-border region. In Peru, while nobody is really sure about the capabilities of the Shining Path, it is likely that the organisation would have the ability to relaunch operations on a fairly small scale. If they were to do so it is not known whether they would embark on a rural or urban campaign or a mixture of the two. It is also not clear to what extent the Toledo government would be able to launch a successful anti-terrorist campaign, given the popular perception in Peru that terrorism was defeated in the early 1990s.

The key hotspot for terrorism in Latin America in 2002 is likely to be Colombia. President Andrés Pastrana will be under intense pressure to make progress with peace negotiations or abandon them, while simultaneously ensuring that disruption of May's presidential elections is kept to a minimum. Even if guerrillas do not attempt to sabotage the elections, attempts by the victorious candidate to crack down on terrorism are likely to invoke a bloody response. It remains to be seen whether these issues can be dealt with sensitively by all sides in the run-up to the elections, in order to avert potential chaos during and after.
worldmarketsanalysis.com

This article was written by Dr Neil Pyper (neil.pyper@wmrc.com).
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