Argentine leader links food speculators to finance crisis

Jul 1, 2008, 19:49 GMT

San Miguel de Tucuman, Argentina - Argentine President Cristina Fernandez de Kirchner Tuesday opened the 35th summit of heads of state of the South American trade bloc Mercosur with a salvo aimed at financial investors who are speculating in rising food prices.

Speaking in the Argentine city of San Miguel de Tucuman, Fernandez de Kirchner charged there was a definite connection between the rise in the prices of foodstuffs and the downswing in the financial sector triggered by the US subprime mortgage crisis.

Venezuelan President Hugo Chavez, in turn, proposed the creation of an emergency fund to produce food that would be financed through oil income.

The initiative plans to devote one dollar for every barrel of oil exported by Venezuela - the sixth-largest oil exporter in the world - with a price above 100 dollars, Chavez said.

He estimated at over 2 million dollars the number of barrels of oil that his country exports each day, although 330,000 go to destinations like Cuba, the Caribbean, Central America and Argentina at below-market prices.

'As long as the price (of oil) is above 100 dollars, we propose setting up a fund. For each barrel of oil that Venezuela exports, we propose donating 1 dollar to a fund. That is 920 million dollars a year,' Chavez said.

'We are ready to do that right now if the countries align here for an emergency plan to produce foodstuffs,' Chavez said.

Generally speaking, analysts have linked rising food prices to rising demand by more affluent developing countries and to using more corn for ethanol fuel.

But Kirchner - whose government has provoked rebellion among its farmers by increasing export tariffs on soy and other agricultural products, in order to secure an adequate supply of food in country and to benefit from rising prices on the international market - also saw the link to the financial crisis.

'When banks start to flounder, when no bank is reliable, speculative movements start in the food sector. The 'casino' economy, speculation, which was circumscribed to the financial realm, are now starting to move on to the world of foodstuffs,' the Argentine President said.

In such an international context, Fernandez de Kirchner called upon Mercosur - of which Argentina, Brazil, Paraguay and Uruguay are members, with Venezuela pending legislative approval - to deepen its integration.

'Independence and growth in our region are strongly linked to the integration process among us,' she said.

According to Fernandez de Kirchner, 'if it was once a challenge,' integration is now a strategic necessity 'to defend our natural resources.'

The summit host also criticized the European Union's new immigration rules, which she termed 'inadmissible' and 'far-removed from the history of humanity.'

Presidents Luiz Inacio Lula da Silva of Brazil and Tabare Vazquez of Uruguay also attended the Mercosur summit, as did presidents Michelle Bachelet of Chile and Evo Morales of Bolivia.