LETTERS.

AES no miracle

I just read your cover story (February 1999) regarding the AES miracle in Argentina and Brazil, and would like to say your timing could not have been more off. One of the things you failed to mention is that AES in Brazil grew so quickly by using its purchased assets as collateral to accumulate a mountain of U.S. dollar-dominated debt. With the devaluation of Brazil's currency, the real, AES does not have the cash to pay back these debts. In short, the house of cards they built in Brazil is falling apart. Their share in Light, the electric company in Rio de Janeiro, is up for sale and so is AES Sul, their distribution company in the south of Brazil. A downturn in the economy has negative effects on every business, but your business should not implode as a result of it. This empowerment you wrote about allowed some executives to use AES's assets in Brazil to run up big debts, cash in six-figure bonuses, and, put off worrying about the long-term effects of their moves. Well, the effects are becoming evident soo ner than later. I'm not suggesting that empowering employees is a bad thing, it's just that everything should be done in moderation. AES's meltdown in Brazil has proven that sometimes you can push decisions too far down the line. I would suggest a follow-up story, so people can see that LATIN TRADE has their finger on the pulse of what is going on in Latin America. As it stands, this cover story on AES is laughable considering the reality of their current situation.

Tania V. Manley

Rio de Janeiro, Brazil

Editor's Note: Good suggestion. We're working on it.

Chalk your SOURCES

In the article "Manufacturing Change" (March 1999), the data is not accurate. I'm positive that companies like CocaCola, Carrefour, PepsiCo, IBM and Cargill Inc. do, in fact, have companies and operations in Venezuela. I advise you to do more thorough research before publishing such data, even if the information comes from the U.N. Economic Commission for Latin America and the Caribbean.

Alejandro Sune

Waco, Texas, USA

Editor's Note: The data is accurate. The multinational corporations obviously have operations in many more countries than those listed in the table, but the U.N. study calculated "total sales in Latin America" for each company, summing subsidiaries' revenue in only the listed countries.

Latin dollars

In reference to the Editor's Note (April 1999) regarding the dollarization of Latin America's economies. While I recognize the pitfalls of replacing national currencies with the U.S. dollar, it is important to recognize that the health and stability of economic systems in historically unstable economies are very dependent by and large on the confidence people have in their government's fiscal and monetary policies. That trust and confidence can only be gained through consistent and sustainable fiscal and monetary discipline. I am of the opinion that the U.S. dollar is backed by the most consistently disciplined system in the world, What Latin American country can make a similar claim? Let's face it, capital flight is not a threat in the United States, but it is certainly an everlasting shadow for countries in Latin America. The key question then becomes: How deep is the confidence of the Latin American people in their economic systems?

Christian P. Vandendriessche

Boca Raton, Florida, USA