By The Economist Group
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Extra info for The Economist - 28 July 2001
5% of GDP this year—now exceeds its spending on health and education combined. Talk of debt renegotiation would increase greatly if Argentina defaulted. The mere thought of a potential defaulter winning Brazil’s election would alarm investors, adding to the weakness of the currency. What can the government do? A new IMF deal should help Brazil weather any coming market storm. But it may not be enough. Hitherto, tax increases have been the government’s main weapon in trying to stabilise the debt.
Her main advantage is her potential for restoring morale. The police force, especially, needs a boost if it is to rein in vigilantism and ethnic violence. Unfortunately, however, Miss Megawati is unlikely to press hard for badly needed reforms. Nor does she seem inclined to look hard at the armed forces' ugly past. That attitude could continue to complicate relations with America's Congress, despite the Bush administration's readiness to work with her. Most worrying of all, Miss Megawati is likely to take a harder line towards separatists in Aceh and Irian Jaya, making any lasting solution even harder to achieve.
One large one comes in the shape of missile defences. In Chinese eyes, plans to deploy a system that could knock out a limited number of incoming warheads are aimed at China just as much as at North Korea, and Mr Powell is certain to be lectured on the subject. China's large trade surplus with America is another perennial problem, as are human rights, especially this year, the 50th anniversary of Tibet's annexation. China attempted to smooth matters over by releasing three academics with American ties, all accused of espionage, just ahead of Mr Powell's arrival.
The Economist - 28 July 2001 by The Economist Group