Under economic pressure, Vietnam apologizes

Mired in economic malaise, attacked by bloggers and riven by infighting within the ruling Communist Party, Vietnam took an unusual step last week -- it apologized.

In a widely broadcast speech, Communist Party chief Nguyen Phu Trong acknowledged that the government had failed to curb corruption in its top ranks. The statement was widely read as an indictment of Prime Minister Nguyen Tan Dung, who has come under fire from his party and the public in recent weeks.

The government statement spared Dung from any stiffer action. But experts say the apology is not the end of the saga but rather just the latest result of a host of greater problems that have put pressure on the Vietnamese government as competing factions fight for control.

“It’s half time and the score is still zero to zero,” said David Koh, a senior fellow at the Institute of Southeast Asian Studies in Singapore. “The ones seeking to bring [Dung] down are still in power.”

The Communist Party in Vietnam has been divided between hard-liners and those who back the opening of its market, said Michael Buehler, a Northern Illinois University professor and Southeast Asia expert with the Asia Society. Dung falls into the second camp.

The prime minister has faced corruption scandals in state-owned enterprises as the country liberalizes its markets. In August, one of his allies was arrested for conducting “illegal business.” At the same time, economic woes in once-booming Vietnam have worked against Dung.

Mexico's Senate approves bill to fight money-laundering epidemic

MEXICO CITY -- Mexico’s Senate on Thursday unanimously approved an anti-money laundering bill in  hope of stemming a multibillion-dollar tide of illicit cash that flows from the nation’s powerful drug cartels and has seeped into nearly every corner of the Mexican economy.

The bill, which was approved this year  by the lower chamber, has been under consideration for more than two years in the Mexican Congress and could help the struggling nation in its fight against the narco gangs. Although  the outgoing administration of Felipe Calderon has managed to kill or capture more than two-thirds of the country’s most-wanted drug capos, it has struggled to hit them in their bank accounts.

Calderon, who leaves office in December, has long supported a stronger anti-laundering statute, and on Thursday -- a day when Amnesty International was criticizing him for failing to have taken more effective action to stem human-rights abuses committed in his six-year fight against the narcos -- the president sent a tweet congratulating the legislators.

“This will allow us to cut the economic resources of organized crime,” he wrote. “This is big news.”

The bill, which now heads to the president's desk for his signature, establishes a new specialized prosecution unit to go after money launderers and lays out a number of new reporting requirements for major transactions. Casinos will have to report big-money bets, and charity groups will have to inform the government of particularly generous donations. The sale of expensive boats, cars,  airplanes and jewelry also must be reported.

Among other things, the bill will prohibit the use of cash in many real-estate transactions, require banks to flag big credit card bills and force Mexican notaries, who handle most real-estate deals here, to report suspicious activity.

U.S. officials estimate that Mexican drug cartels send $19 billion to $29 billion in ill-gotten cash from the United States to their home country every year, and some Mexican officials have put the annual  of laundered money at $50 billion, representing a staggering 3% of the legitimate  Mexican economy.

As with many reform efforts in Mexico, passing a law will \help only so much. To make a real dent in the drug trade, it also must be enforced. Observers have suggested that the government has neglected to crack down hard on money laundering for fear that it would damage the rest of the economy.

Mexico approved an asset-forfeiture law in 2008 similar to ones in Italy and Colombia that made a big difference in their fights against organized crime, allowing the governments to seize and sell ill-gotten properties. But Mexican prosecutors have used the 2008 law sparingly.

-- Richard Fausset and Cecilia Sanchez

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Photo: Soldiers carry a table loaded with seized U.S. dollars at a media presentation in Mexico  City last year. The cache of $15.3 million found in a car in downtown Tijuana is believed by authorities to belong to members of the Sinaloa drug cartel. Credit: Eduardo Verdugo / Associated Press

 

German leader Merkel greeted by protesters in Greece

ATHENS -- Visiting the epicenter of Europe's debt crisis for the first time since the troubles began three years ago, German Chancellor Angela Merkel on Tuesday tried to assure recession-racked Greeks that she understood their suffering but encouraged them not to abandon the road of austerity and painful spending cuts.

“I know that the path to recovery has been difficult,” Merkel said after two hours of talks with Greek Prime Minister Antonis Samaras. “Still, the strides that have been made are worth being completed.”

Her words failed to placate many of the 30,000 people who swarmed Athens to protest a visit by the woman they blame for pushing Greece down the road to economic ruin through her relentless emphasis on austerity in exchange for emergency aid.

Just minutes before Merkel arrived in downtown Athens, protesters dressed as Nazi officers rolled into Syntagma Square, outside the Greek Parliament building, in a military jeep festooned with swastika-stamped flags.

Then, as the German leader gave only qualified support for Greece's continued membership in the Eurozone, the club of 17 nations that use the euro currency, militant protesters fired a flurry of firecracker-like projectiles at the police outside Parliament.

Spanish theater mounts shows -- and a 'carrot rebellion'

BESCANO, Spain -- Theater buffs no longer have to buy tickets for shows staged in this small Spanish village. Instead, they must purchase a rather expensive carrot.

That's the novel admission scheme hit upon by the director of Bescano's municipal theater, Quim Marce. Dismayed by a recent government tax hike on theater-ticket sales, Marce decided to abolish normal tickets and instead sell vouchers for carrots, with "free" admission to the show thrown in.

"We sell one carrot, which costs 13 euros [about $17], which I admit is very expensive for a carrot. But then we give away admission to our shows," Marce, 43, said in an interview Thursday at his theater. "So we end up paying 4% tax on the carrot, rather than 21%, which is the government's new tax rate for theater tickets."

Critics call it tax evasion. The Spanish media call it the Carrot Rebellion, another example of the creative lengths some Spaniards are willing to go to in order to get around austerity measures -- tax hikes and budget cuts -- imposed by the central government in Madrid.

Marce just calls it a way for his little theater to survive in this pretty village of about 4,000 people, in verdant hills about two hours north of Barcelona. With one in four local residents unemployed, even a modest hike in ticket prices might leave his 300-seat theater empty.

"And in this farming region, I naturally thought of carrots," he said.

Classified as a staple, carrots are subject to a 4% tax that was left unchanged when other taxes went up across Spain on Sept. 1. The highest value-added tax (VAT) rate on items like new cars and clothing rose from 18% to 21%, despite a campaign promise by Prime Minister Mariano Rajoy not to touch the top VAT rate, and the sales tax on movie and theater tickets soared from 8% to the new 21% rate.

"It seems to me like a great idea, because culture shouldn't be taxed so much," said Pilar Bayé, 45, a civil servant in Bescano who bought two carrots for admission to a show next month. "Culture should be accessible to all the people."

The Bescano theater's new logo features a carrot with the motto "For the Health of Culture," and is printed on posters tacked up on telephone poles throughout the village and on a huge banner hung in front of cornfields at the entrance to town. Carrots cost 13 euros if you buy them online in advance and 15 euros ($19.55) at the door.

Marce said the theater has re-recorded the standard audio announcement that plays before performances begin, warning the audience to turn off mobile phones.

"Now we've added, 'No chomping loudly on your carrots during the show,' " he said.

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-- Lauren Frayer

Photo: Residents of one Spanish town can purchase culture with their carrots. Credit: Sam Hodgson / Bloomberg

Sanctions, currency chaos igniting unrest in outcast Iran

Soaring prices at Tehran's cavernous Grand Bazaar have ignited violence this week as money traders and vendors clashed with riot police over the plummeting value of the Iranian currency, which is being gutted by international sanctions and mismanagement by the Islamic regime.

What for most Iranians has been an abstract political dispute between their leaders and Western countries concerned about Tehran's nuclear ambitions has suddenly hit them in their wallets and pushed them to lash out. The rial has lost 80% of its value against the U.S. dollar in the last year, a decline accelerated by tightened U.S. and European Union sanctions now depriving the regime of half the hard currency it was earning from oil exports.

Iranian President Mahmoud Ahmadinejad blamed the deepening economic chaos on foreign enemies, contending there is "no economic justification" for the public scramble to dump rials in favor of dollars, euros and gold. Supreme leader Ayatollah Ali Khamenei also struck a defiant pose, reasserting Tehran's right to enrich uranium and vowing that Iranians "will never surrender to pressure."

But Iranian exiles and scholars see the angry outbursts in the marketplace as a sign that ordinary Iranians are finally fed up with a regime that has brought them isolation, insecurity and eroding living standards. They see a population, resentful of a crackdown on dissent three years ago, now edging toward rebellion.

The unrest also demonstrates that the U.S. policy of letting sanctions and diplomacy undermine popular support for the regime is having the desired effect, confronting Tehran with its gravest challenge since Islamic clerics came to power in a  1979 revolution, the experts say.

The street value of the rial has dropped by half in the last two months and plunged 18% on Monday alone. The unofficial exchange rate for the dollar -- more than 35,000 before back-alley trading halted -- is almost three times the official rate of 12,260. But that subsidized exchange rate is available only from state banks to a limited and shrinking number of key importers.

Money traders stopped selling dollars Tuesday, confused over how to price the swiftly deteriorating rial. Some vendors closed their shops in protest of the government's failure to intervene and prop up the currency; others boosted prices beyond what many shoppers can or will pay.  

Before harsher sanctions kicked in three months ago, Iran's government had been using a sizable share of its $100-billion annual oil earnings to subsidize dollar-denominated food and consumer goods, to keep prices stable and placate the population, said Abbas Milani, a Tehran-born academic who directs Iranian studies at Stanford University.

Milani said he suspects the government was initially using the economic downturn brought on by the sanctions to put an end to the costly dollar subsidies. But he now concludes that the regime has been forced to let the rial tumble because it has run out of the hard currency needed to stop the slide.

"We're not talking about a billion dollars or 2 billion to stabilize a currency that has gone down so far. The government would have to find enormous sums of money to pour in, and if they had it they would have done it by now," Milani said.

"I don't think the regime can survive this one," he said, unless Khamenei does the unthinkable and meets Western demands that Iran cease enriching uranium beyond levels needed for civilian nuclear programs.

Tehran officials recently told the International Monetary Fund that they had $50 billion on hand, enough to see Iran through the sanctions bite for at least four or five months, Milani said. He calculates that the regime should have saved about $300 billion in a rainy-day fund over the last eight years. That no intervention in the currency crisis has been forthcoming tells him that much of the oil windfall has been squandered or siphoned off into private accounts of the Revolutionary Guards and government leaders.

"Social and political cohesion in Iran will be deeply disturbed by this economic crisis," predicted Alireza Nader, senior policy analyst on Iran for Rand Corp. "And it's not just the economic crisis -- you saw Iranians take to the streets in 2009 for a number of reasons, and those tensions have been simmering below the surface. We see them coming up now."

Nader pointed out that protesters at the bazaar this week have shouted denunciation of the regime's politics as well as soaring inflation. Shouts of "Leave Syria alone and think about us!" could be heard in clandestinely shot video footage of the angry crowds, he said.

 The Iranian government has been the sole regional supporter of Syrian President Bashar Assad and his brutal suppression of a rebellion now in its 19th month.

"Eventually this is going to put enormous pressure on the Iranian government to concede on a number of issues, not just the nuclear programs but domestic political issues as well," Nader said. "It's already gotten to the point where people's livelihoods are at stake and they're not going to tolerate that situation. We can definitely expect to see more unrest in the coming months."

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Photo: An Iranian shopper on Wednesday pays a fruit seller at the Grand Bazaar in Tehran with 50,000-rial banknotes. The sanctions-battered Iranian currency has lost 80% of its value in the last year, spurring inflation and social unrest. Credit: Abedin Taherkenareh / European Pressphoto Agency

Insert: Riot police block an approach to the Grand Bazaar on Wednesday after arresting money traders and dousing fires lighted in protest of the falling rial currency. Credit: European Pressphoto Agency

Iranian police patrol tense Tehran bazaar in wake of protests

TEHRAN -- In the wake of demonstrations in Tehran over surging prices and the plunging value of Iran's  currency, police patrolled the city's central bazaar Thursday as many shops remained shuttered in silent protest.

Tehran's massive traditional marketplace in effect was shut down Wednesday as shops closed their doors and merchants joined in angry demonstrations over their economic woes. Carpet sellers reopened their shops Thursday and tried to woo customers, but more than a third of shops still appeared to be closed, though shoppers continued to stream by.

Gold and cloth markets were closed. Some jewelry shops were open, but had failed to set up their  window displays, leaving gold wares inside their safes instead of arraying them to lure customers. The deeper that shoppers strolled into the labyrinth of the bazaar, the fewer shops were open.

“We wholesalers don’t know what to do. The cost of the raw material increases. Retailers can’t buy from us as before, because we have to increase our prices too,” said Ebrahim, a clothing wholesaler who didn't want to give his last name to foreign media. His store was shuttered most of the day.

The unusual outburst of protests Wednesday came after the latest drop in the value of the rial, which has tumbled as much as 80% in the last year as Iran has been squeezed by international economic sanctions. As Iranians have bought up foreign currency, anxious about the fate of the rial, its value has only fallen further.

As 'Chavismo' sputters, a charismatic challenger woos Venezuelans

Venezuelan President Hugo Chavez has loomed larger than life over his oil-rich country for nearly 14 years, doling out healthcare and houses and university admissions to supporters of his “Bolivarian Revolution” aimed at creating history’s first affluent socialist state.

A barrel-chested former paratrooper who has tapped Venezuela's oil revenues to court a loyal following among the country’s poor, Chavez has handily outpolled disorganized opponents in past elections and harnessed people power to defeat a 2001 coup d’etat and win a recall vote three years later.

But much of the revolutionary fire that stirred the masses into a political phenomenon known as Chavismo has gone out of the cancer-stricken president. For the first time since his 1998 election victory, he faces a viable competitor with a message of unity and a track record of efficient management as governor of the state that surrounds Caracas.

Few neutral observers are yet convinced that Chavez will fall to Miranda state governor Henrique Capriles in Sunday’s presidential election. They are as dubious of polls showing the 40-year-old challenger with a slight edge as they are of the Chavez-commissioned surveys depicting the incumbent at least 10 percentage points ahead. 

Still, there is a solidifying impression among political analysts that Chavez's "missions" to eradicate illiteracy, improve healthcare, provide government jobs and build housing for the homeless have benefited too few for the vast sums squandered on the programs. A Reuters news agency report this week on its investigation into the opaque ledgers of a massive slush fund under Chavez's control identified more than $100 billion in off-budget spending over the last seven years.

While the social programs are popular and have made dents in poverty and illiteracy, Venezuelans are tiring of unfulfilled promises after 14 years, said Michael Shifter, president of the Inter-American Dialogue think tank in Washington. He believes that Chavez "has run his course."

Violent crime has skyrocketed -- including at least two fatal shootings of Capriles supporters at campaign events this week. Infrastructure is crumbling, as seen in deadly refinery explosions this summer. Power shortages afflict much of the country, and "there is a sense that Chavez's rhetoric has lost its magic," Shifter said.

A cult of personality enveloped Chavez through most of his presidency, with his visage ubiquitous on posters and billboards. Broadcast media have been obliged to carry every one of his 2,300 speeches. If aired end to end 24/7, they would run for 72 days, according to the calculations of two prominent Latin American statesmen in a report for the Woodrow Wilson International Center for Scholars.

The report, by career Chilean diplomat Genaro Arriagada and former Mexican Federal Electoral Institute chief Jose Woldenberg, also noted that Venezuela’s high-tech balloting machines that identify voters by fingerprint are suspected by a third of the population -– and a majority of Chavez supporters -- of creating a record of how they voted, despite official demonstrations to the contrary.

Voters in line for new housing or other government perqs fear they'll be bumped from the waiting lists if they are found to have voted for the opposition, said Charles Shapiro, a former U.S. ambassador to Venezuela and now president of the Institute of the Americas in La Jolla.

"What is true is not as important as what people think is true," Shapiro said of voters' enduring  suspicions that their votes won't be secret.

Opinion polls in Venezuela are a poor gauge of voter intentions, said Shapiro, who wouldn't hazard a guess as to whether an end to the Chavez era might be on the horizon.

"What I do know is that Capriles has run a terrific campaign. Chavez has been president for 14 years, and in any country a certain weariness sets in," Shapiro said. "While Chavez is a very good campaigner, he clearly is not as vigorous as in past campaigns."

Chavez, 58, has had three cancer operations in Cuba in 15 months and often has been absent, uncharacteristically, from the public spotlight.

The 40-year-old Capriles, by contrast, has projected a dynamic image, plunging headlong into Chavista territory to assure the poor that as president he would maintain popular social programs but run them better.

"Capriles has been extremely smart in his campaign, in a way that would suggest there's not going to be a period of vengeance against Chavez supporters in the government," Shifter said. "The mistake the opposition has made in the past is saying that everything Chavez has done is bad."

It remains to be seen whether the young governor's message is strong enough to overcome the considerable powers of incumbency, with Chavez in control of the airwaves and the oil treasure chest, Shifter said. There are also concerns about whether a Capriles victory would be respected by Chavez loyalists on the electoral council, in the courts and among the armed forces.

"Capriles is the new generation," whether he wins this time or not, Shifter said. "People are obviously responding to his message and giving him a serious look."

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Photo: Venezuelan presidential candidate Henrique Capriles, at a campaign rally on Monday, has united the country's scattered opposition forces to confront President Hugo Chavez with the first serious challenge of his 14-year tenure in Miraflores Palace. Credit: Leo Ramirez / AFP/GettyImages

Insert: President Hugo Chavez, at a campaign rally in Yaracui state on Tuesday, still draws enthusiastic crowds but has been less in the public spotlight this election year because of long absences for cancer treatment in Cuba. Credit: Juan Barreto / AFP/GettyImages

Iran president blames 'psychological war' for dropping rial

As the Iranian rial tumbled to new lows on Tuesday, Iranian President Mahmoud Ahmadinejad blamed the plummeting value of the currency on a “psychological war” waged against his government by the United States and his domestic critics.

The Tuesday news conference marked an unusually open admission by Ahmadinejad of the pain inflicted by Western sanctions, imposed to press Iran to curb its nuclear program.

The economic restrictions are “a hidden and heavy war on a global scale,” Ahmadinejad said, arguing that the West had targeted Iran's people, not its government.

The president also complained that critics such as parliamentary speaker Ali Larijani had wrongly laid the blame for the sinking rial with government mismanagement instead of “the economic war of the enemy.” He singled out Fars News Agency, which is close to the Revolutionary Guards and interviewed Larijani, arguing it had attacked his government for the past six months.

When “the enemy has thrown a rock on our path,” he said, “everybody needs to help throw the rock back to the enemy."

While Ahmadinejad fired back at his critics, street traders said the rial was trading Tuesday at a new low of 37,000 to the dollar, a stunning drop from just five days ago, when 26,900 rials bought a dollar. The street value is far lower than the official trading rate of 12,260 rials per dollar used by its central bank for essential goods, which most Iranians cannot access.

Iranian currency plunges to record low against the dollar

TEHRAN -- The Iranian currency plunged to a record low Monday, plummeting to a street value of 32,500 rial to the dollar, according to exchange tracking websites.

The dramatic numbers were censored and disappeared from websites minutes after they were posted Monday. Yet the news was also relayed through the semi-official Mehr News Agency, which reported the rial was trading at an only slightly better rate of 32,300 to the dollar.

The newest numbers revealed a stunning drop in just a few days: The rial had been selling for 26,900 per dollar on the Tehran black market as of Thursday. But the trend is nothing new. Over the past nine months, the rial has tumbled more than 70% in value, driving up inflation and making food more costly.

The plunge is another sign of the economic unease in Iran as it grapples with economic sanctions that have tightened in the past year. Western powers, unconvinced by Iranian insistence that its nuclear program is solely for peaceful purposes, have ratcheted up pressure to try to curb its uranium enrichment efforts.

The unease has apparently spurred Iranians to buy up dollars and other foreign currency. Though the Iranian central bank sets an official trading rate of 12,260 rials to the dollar, the street value of the rial is far lower.

As Iranians continued to be pinched financially, the economic strain could have political repercussions. A recent Israeli Foreign Ministry report, reported by Haaretz, found Iranians blamed their government for the surging cost of bread, meat and electricity caused by Western sanctions.

“As long as there is no reconciliation with the U.S. administration and sanctions prevail, the devaluation of the rial will continue,”  said Asghar, a 40-year-old who owns a currency exchange shop south of the British Embassy in Tehran.  

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-- Ramin Mostaghim in Tehran and Emily Alpert in Los Angeles

Photo: An Iranian woman displays a new 50,000 rial banknote released by the Central Bank of Iran in Tehran on March 12, 2007. Credit: Hasan Sarbakhshian / Associated Press

Hourly wage in Mexico? Union members express fears of legislation

MEXICO CITY -- Mexico's lower house of Congress has passed a major labor-reform law -- the first changes in employment regulations in Mexico since 1970 -- that would alter the way bosses and employees interact before, during and after a job.

For organized workers like Antonieta Torres, a primly dressed 44-year-old government office assistant wearing eyeglasses, the law spells uncertainty.

"It's possible that there could be more jobs, but at miserable wages, with exploitation of workers," Torres said during a large union rally. "It would hurt all of us."

The outgoing administration of President Felipe Calderon, which succeeded in passing the bill with help from the party of incoming President-elect Enrique Peña Nieto, said the law would boost job rolls and competition in the labor market. 

For union members, the measure -- which is now on its way to Mexico's Senate -- would strip workers of what they called few relative benefits they enjoy under existing regulations, which they argue favor employers and large companies anyway.