Spotlight: Latin America's New Transportation Links by Ben Box By 1998 the common market concept within Latin America, as exemplified by Mercosur (Argentina, Brazil, Paraguay, and Uruguay, with Chile and Bolivia joining as associate members), several bilateral trade agreements, and the rejuvenation of the Andean Community and the Central American Common Market, was contributing to a diminution of old geopolitical rivalries in favour of interdependence. These moves toward economic integration, however, highlighted the poor state of the region's infrastructure. The World Bank and Interamerican Development Bank estimated that if Latin America was to maintain and upgrade only modestly its transport sector alone, $14 billion would have to be spent annually. For such a sum government funding would be insufficient, and efforts were being made to involve the private sector and multilateral agencies. This was being achieved through privatization, new project financing, and innovative investment funds, but in 1998 it appeared that repercussions from the economic crises in Asia and Russia might force a reduction in spending by Latin-American governments and foreign investors. Historically the main intercontinental roadway has been the 48,000-km (1 km = 0.62 mi) Pan-American Highway, which extends from Alaska to Argentina and Chile. At only one place does it remain uncompleted, the 400-km Darin Gap in Panama and Colombia. Despite the difficulty of the terrain (jungle and swamp) and, more recently, environmental considerations, schemes to traverse the gap continue to be assessed. In 1995 Peru completed the rehabilitation of the 2,600-km highway in its territory, which has greatly reduced the driving time from Ecuador to Chile. The work was carried out by private firms. Ecuador has also looked to the private sector to help with the maintenance of its part of the highway, which costs about $45 million annually. Farther north, a new Caracas-Bogot highway was under consideration, as well as a railway across the Venezuelan and Colombian plains to cope with growing cross-border trade. The increased emphasis on regional trade encouraged the paving of the Pan-American Highway north of Manaus, Braz., to join with its paved counterpart in Venezuela. A branch is planned to extend east into Guyana to form part of the planned trans-Guiana highway, envisaged as a continuous road from Georgetown, Guyana, through that nation and Suriname into French Guiana and from there via the Saint-Georges-Oiapoque border crossing into the Brazilian state of Amap. The resulting network will join Caracas and the Orinoco River in Venezuela with two Amazonian cities (Macap and Manaus) and the three Guianas. Two major projects are under way to meet the transport demand in the Mercosur region. The first is the expressway from So Paulo, Braz., to Buenos Aires, Arg., with a planned extension to Santiago, Chile. Estimated at $2.5 billion at its announcement in 1992, the 2,500-km superhighway was designed to improve and widen existing roads. It will also utilize a new 42-km toll bridge, to be built over the Ro de la Plata from Colonia de Sacramento, Uruguay, to Buenos Aires at a cost of $1 billion. The Super Highway is to be developed in conjunction with the Hidrova (waterway), an ambitious project in which the Paran-Paraguay river system will open a trade corridor from the interior of the continent to the Atlantic Ocean. The rivers flow through Brazil, Bolivia, Paraguay, Uruguay, and Argentina, and since 1992 the five countries have been studying the transport potential that would result from widening and dredging those parts that have been difficult to navigate. At its fullest extent, the Hidrova was envisioned as a 3,400-km artery from Cceres, Mato Grosso, Braz., to Nueva Palmira on the Uruguayan bank of the Ro de la Plata. One major difficulty is the necessity to take barges around the Itaip hydroelectric dam on the Paran. In March 1998 Brazil withdrew from the Hidrova but continued with other plans to make better use of its rivers for transportation; one example is the Tiet-Paran river system. The Tiet River flows from So Paulo state to join the Paran River at the state border with Mato Grosso do Sul. Argentina is also developing its river transport system. In May 1995 the Ro de la Plata-Paran corridor was transferred to the private sector, which then provided 24-hour navigation that will greatly reduce transport costs on the route. A major challenge that remains for Mercosur is that the rail networks of the two largest markets, Brazil and Argentina, use different gauges. Unless that can be resolved, trains will be unable to replace trucks in the expansion of traditional and nontraditional exports. Planners in Bolivia regard the country as an ideal hub for commerce in South America, even though its transport infrastructure suffers from a lack of resources. Work progressed on the Cochabamba-Santa Cruz road and its extension to the Brazilian border to complete a paved route from west to east. The Bolivian railway network, Enfe, was taken over in 1996 by Chile's Cruz Blanca, which hopes to create a railway through Bolivia connecting So Paulo with Antofagasta, Chile, and thus link the Atlantic and Pacific coasts. Chile and Argentina are also facing the challenge of constructing a comprehensive road network between the Atlantic and Pacific coasts. Under preliminary study is a low-altitude tunnel across the Andes from Mendoza to Santiago. In Central America the Panama Canal, which is to come under Panamanian jurisdiction on Jan. 1, 2000, is being upgraded in a $1 billion program due for completion in 2002. Any further expansion would involve new locks and perhaps even a parallel sea-level canal. The railway that runs beside the canal is in desperate need of rebuilding, which has been undertaken in a $60 million joint venture between Kansas City Southern Industries and Mi-Jack Products. Panama is facing competition, however: a shallow-draft canal for barges through Nicaragua; a new canal through Colombia; "dry canals" (railways carrying container traffic from port to port) through Nicaragua, Costa Rica (with an associated new port north of Puerto Limn), or the isthmus of Tehuantepec in Mexico; and a rail/road "dry canal" through Honduras and El Salvador. Ben Box has written extensively on Latin American subjects and is editor of Footprint Handbooks. Stock Exchanges By the end of 1998, world stock markets had formed two camps: the strong markets of Western Europe and North America and the weak markets of the rest of the world, particularly Asia. Lack of financial probity in Asia lay at the heart of this polarization. Following the collapse of Southeast Asian markets and currencies in summer 1997, investors largely abandoned debt-ridden emerging markets for the greater security of developed markets. By spring 1998 braver investors had been attracted back by the prospect of buying sound assets cheaply. Over the year to end November, the MSCI Emerging Markets Free Index fell 27.5% in U.S. dollar terms, but by year's end the stock market of one of the worst-affected Asian countries, South Korea, had risen by more than 49%. (For Selected Major World Stock Market Indexes, see Table.) The full implications of Asia's collapse were realized by midyear, when the gravity of Japan's financial plight and growing signs of economic stress in the hitherto strong markets of Latin America became plain. Until then investors' "flight to quality" had sent the markets of Europe and North America soaring, but by September successive economic shocks had undermined confidence. Fears surfaced that moves by banks to impose tougher lending criteria threatened a credit crunch that would stall investment and consumption in the U.S. and precipitate a global recession. Fear of inflation was overtaken by fear of a downturn. In the U.S. short-term interest rates were reduced to ease liquidity concerns, but although American markets were volatile, the overall trend was upward. In the rest of the world, investors' heightened fear of risk had driven down equity prices. The Financial Times/Standard & Poor's (FT/S&P) World Index had fallen nearly 12% from its July peak, and the Financial Times Stock Exchange 100 (FT-SE 100) had fallen by 20%. (For annual averages of the Financial Times Industrial Ordinary Share Index, see Graph.) The slump in equity prices had lowered consumer-spending growth and lowered investment growth as firms reacted to the higher cost of capital. In the U.K. interest rates were cut in three successive months, by a quarter-percentage point in October and November and a half point in December, to stand at 6.25%. Michel Camdessus, managing director of the International Monetary Fund, outlined plans for building a strong global financial system through the adoption of international standards of good practice. Even in the U.S., where financial systems were among the most robust, authorities were confronted in August by the $2 billion collapse of Long Term Capital Management, a hedge fund that had extensive exposure to the international financial markets. The event was seen to have profound implications. Like the failed fund, nearly all major American banks and investment houses were trying to beat the market by using highly complex computer-aided trading strategies. These models failed to predict the sudden drying up of cash availability across markets. As Russia defaulted on its debts in August, Asia's crisis deepened and investors worldwide switched their money into safe securities such as U.S. Treasury bonds.IEIS Technology's New Spin on Music Throughout the 20th century the music industry has been revolutionized by technology. This process, which accelerated in the 1980s and '90s, can be traced back to the invention of sound recording by Thomas A. Edison in 1877. Technological developments of this century have created a music culture unimagined even a few years ago. By 1998 the challenges and opportunities brought about by technological change had become the most critical ever for musicians and music lovers. Crucial elements of this change included the advent of digital recording and the development of the Internet. By the late 1990s both of these technologies had reached a critical level of public acceptance and use for communication and data storage in general and music in particular. Digital recordings provided a high level of clarity and wide dynamic range, and the Internet had seemingly limitless space available for data storage. The emergence of a new computer file format called MP3--which stands for MPEG-1, Layer 3--caused record companies to worry about their profits (competing schemes included Liquid Audio, a2b, and Madison Project). MP3 worked by compressing large amounts of information into small packages that could easily be sent over the Internet. The information could be anything that could be transformed into digital information, such as video clips, art, or music. Once the information reached its destination, it was decompressed and used or stored as a computer file. Suddenly there was a completely new way to store and access music. Electronic copyright quickly became important as a legal issue affecting all products on the Internet. The ease that digital recording provided in copying music from one format to another threatened the security of musicians' intellectual property rights to their compositions and performances. This risk was heightened by the development of a palm-sized MP3 player called the Rio from Diamond Multimedia that cost as little as $200 and stored up to an hour of digitally recorded sound. The Rio (as well as a number of similar devices) allowed the owner to upload a recording to the Internet or download music already available there onto a personal computer. The recording industry became alarmed by this trend, since individuals could now create their own collections of recordings without actually purchasing CDs. Whereas both the Rio and the Internet provided many advantages for musicians, if they were misused, the potential for worldwide high-tech violations of copyright was great. On a more positive note, knowledge about and appreciation of good music were much enhanced by the proliferation of World Wide Web pages devoted to music. Music organizations were no longer limited to the traditional print media to communicate their message. By the end of 1998, all the major musical organizations--symphony orchestras, chamber groups, music publishers, instrument manufacturers, and groups of aficionados with special musical interests, not to mention rock and pop music performers--had developed their own Web pages and established a solid presence on the Internet. Composers had home pages, as did national organizations such as the American Symphony Orchestra League and Opera America, reference publishers (e.g., the New Grove Dictionary of Music and Musicians), government agencies such as the National Endowment for the Arts, and magazines such as Opera News and Gramophone. One of the newest Web sites devoted to classical music was set up by Amazon.com, the third largest bookseller in the United States. The technological curve established at the beginning of the century by record companies such as Deutsche Gramophone and EMI (both recently celebrated centennial anniversaries) was climbing sharply. As the music industry moved into the 21st century, the advantages and risks that new technologies represented were only beginning to be realized. JOSEPH MCLELLAN Media and Publishing TELEVISION Organization. AT&T stunned the telecommunications world in June 1998, agreeing to purchase the largest American cable operator, Tele-Communications Inc. (TCI), for $48 billion. The deal gave the long-distance telephone company what it most needed--direct access to millions of homes. Using the same technology that allowed several operators to begin offering high-speed access to the Internet, AT&T hoped to piggyback telephone service over cable's coaxial network, Cable continued its inexorable rise. As of October 30, according to Paul Kagan Associates, cable subscribership reached 65.8 million, 66.3% of all U.S. homes with TV. As subscribership grew, however, so did cable rates--at two to three times the rate of inflation. DirecTV and United States Satellite Broadcasting, which shared broadcast satellites and reception equipment, were the market leaders in satellite TV with 4.2 million subscribers as of October 30, according to SkyTRENDS. Primestar was second with 2.2 million homes and Echostar third with 1.7 million. Pax TV debuted August 31 with a smattering of original programs and a heavy dose of family-friendly reruns such as "Dr. Quinn, Medicine Woman" and "Touched by an Angel." Along with those two shows from CBS, Pax also hired CBS's former entertainment chief, Jeff Sagansky, to head the network. Pax TV was the brainchild of Home Shopping Network cofounder Bud Paxson, whose business plan included running a "lean and mean" operation with much of the marketing, programming, and accounting handled not at the station level but from his West Palm Beach, Fla., headquarters. In that way, Paxson said, the network could be profitable with a relatively small rating--a 1 rating in prime time, compared with the 9.7 average of number one NBC in 1997-98. Pax TV was generally ranked seventh among the broadcast networks, following ABC, CBS, NBC, Fox, the WB, and UPN. Some, however, placed it behind two Spanish-language networks, Univision and Telemundo. The former dominated the Spanish-language TV business in the U.S. and owned the top-rated TV station in Miami, Fla. On Oct. 29, 1998, former U.S. senator and astronaut John Glenn was relaunched into space, and television was relaunched as a digital medium. A handful of television stations (24) broadcast Glenn's lift-off in high-definition television (HDTV) to the handful of sets that could receive a digital signal. It marked the beginning of the new digital broadcast TV service that most expected would gradually expand throughout the U.S. during the next several years. With digital television (DTV), programs were delivered as bits of data. As a result, broadcasters could carry more information than with current analog technology. Most broadcasters planned to use that extra capacity to transmit HDTV, with its superior resolution. Others planned to deliver several channels and other information services. Still others sought to provide a mix of the two, broadcasting multiple channels for some part of the schedule and broadcasting prime-time shows, movies, or sports events in HDTV. At a minimum, broadcasters were required to deliver at least one stream of programming that was equal to or better than their current analog signal. According to the Federal Communications Commission, which was overseeing conversion to digital, "most Americans will have access to DTV [programming] by 1999 and everyone in the country will have access by the year 2002." Traditional analog service would continue side-by-side with digital until 2006, after which broadcasts would be only in DTV. Affiliates of ABC, CBS, NBC, and Fox would have to be delivering a digital signal in the top 10 markets (about 30% of the country) by May 1, 1999, and in markets ranked 11-30 (another 53% of the country) by Nov. 1, 1999. All commercial stations would have to be delivering digital service by May 1, 2002. To receive a digital program, viewers would have the option of buying a converter for their existing sets or purchasing a digital set. By late 1998 some stations had launched digital channels, but the HDTV programming needed to fill them remained a scarce commodity. As the year neared its close, delivering TV programming over World Wide Web sites (termed "streaming") was still in its infancy, with pictures often small and jerky, a function primarily of bandwidth limitations rather than underpowered computing. Most homes used telephone lines for Internet access at either 28.8 kbps (kilobits per second) or 56.6 kbps. Video optimally needed 500 kbps-2 megabits to run fluidly. Nonetheless, cable and telephone companies were working to provide high-speed digital lines to the home, and broadcast and cable executives continued to increase their Web output. An International Data Corp. (IDC) study revealed that 780,000 Internet-TV devices were activated in 1998. Using these devices, consumers could browse the Web or chat with friends while watching the Super Bowl. Dutch TV production company Endemol entered the British market through Guardian Media Group (GMG), publisher of The Guardian newspaper. The partnership with GMG's Broadcast Communications, one of the largest independent producers in the U.K., was the latest move by Endemol to enter European countries outside its main markets of Germany and The Netherlands. A month earlier Endemol had bought 45% of the Italian entertainment group Aran. Exploiting entertainment formats in other markets by forming local partnerships with production companies accounted for 15% of the company's total revenues. Italy's state broadcaster Radiotelevisione Italiana (RAI) changed its chairman and entire board of directors, appointing seasoned industry professionals rather than people with political connections. Pier Luigi Celli, formerly chief of personnel for ENEL, the Italian national electrical utility, became the new director general. The new leaders faced RAI's serious loss of audience to the private Mediaset networks of Silvio Berlusconi, Italy's former prime minister. For the first time, Mediaset Channel 5 overtook RAI's flagship evening news in the ratings war. RAI's lead weekend variety show "Fantastico" was also overtaken by an old-fashioned Mediaset variety show. BBC launched News 24, a 24-hour news service, in late 1997. BBC Worldwide's Rupert Gavin spearheaded the change (and increase in revenues) by recycling materials from the network's massive archives. Commercial broadcasters complained about the misuse of public funding and pointed out the unfair competition, as BBC was a public-sector, taxpayer-funded corporation. The 20-strong European Commission unanimously vetoed on May 27 an alliance involving German media giants Bertelsmann and the Kirch Group, together with Deutsche Telekom. Karel Van Miert, the European Union's (EU's) competition commissioner, said that the merger would create in German digital TV a monopoly that newcomers would be unable to challenge, largely because of the three firms' control of the set-top decoders. JSkyB, Rupert Murdoch's digital satellite multichannel service in Japan, merged with PerfecTV, a competitor. JSkyB, jointly owned by News Corp., Sony, Softbank, and Fuji TV, had yet to start services, and PerfecTV, whose shareholders included Japan's leading trade companies, had been struggling to gain more subscribers. Programming. In the U.S. the broadcast networks and dozens of cable channels continued to fight for a fragmenting television audience in 1998. The combined prime-time viewership of the big three broadcast networks--ABC, CBS, and NBC--continued its precipitous slide, mustering 47% of the TV audience in the 1997-98 season, compared with 61% only five years earlier. Skyrocketing programming costs and the decreasing audience shares caused network executives to ask their TV station affiliates for help in paying for sports rights; the networks also told the stations that they could no longer afford to pay them to carry their programming. Almost all network executives agreed that one of the keys to remaining competitive was to persuade the affiliates to allow "repurposing" of network shows. ABC, for example, was testing the delivery of its soap operas on cable, where they could air in the morning, in prime time, and on weekends for viewers who could not watch them on weekday afternoons. Networks were also increasingly trying to produce more of the programs that they aired and to earn a greater share of the profits earned by programs produced for them by others. A major reason behind the networks' cries for help was the almost $18 billion that broadcast and cable TV networks agreed to pay for rights to the National Football League for the eight years ending in 2005. The networks were even more concerned when the initial ratings for those football packages were less than stellar. For the month of September, ESPN's ratings were down 18% compared with former rights holder TNT; ABC was down 15%; Fox was down 3%; and CBS's ratings were flat compared with those of former rights holder NBC a year earlier. Disney Co. Chairman Michael Eisner said that broadcast affiliates of Disney-owned ABC had to share the cost of NFL football and give up "compensation" payments from the network. If they did not do so, he said, ABC might move its programming to cable. One network that did not have to worry about paying for football was NBC, which lost the rights to the American Football Conference games to an aggressive bid by CBS. Also out of football was Time Warner's Turner Broadcasting System, which was outbid by rival cable network ESPN. Although NBC was saving money on football, it was paying dearly to retain its Thursday- night anchor program, "ER." To keep the top-rated hospital drama on the schedule, the network agreed to pay the show's producers $850 million over the next three years. Consequently, each episode would cost the network $13 million, compared with the $1.5 million-$1.8 million the show had been commanding. One reason that NBC was willing to pay so much for "ER" was that it was losing its other top Thursday night performer, "Seinfeld," after nine seasons and an estimated $350 million-$400 million in earnings. The network had reportedly offered to boost Jerry Seinfeld's salary from $1 million-plus to $5 million per episode to keep the show on the air, but the star, who would collect hundreds of millions from the show's syndication run, chose to draw the curtain on "the show about nothing." The show about fighting, also known as "The Jerry Springer Show," was another TV program much in the news in 1998. While critics and the producers of the syndicated talk show continued their tug-of-war over how much fighting the show featured and how much of it was staged, Springer (see BIOGRAPHIES) continued to achieve higher ratings than those of his competition. Thanks in part to its change to a no-holds-barred style that put more emphasis on action than talk, Springer had gone from not even cracking the top 50 shows in syndication in the 1996-97 TV season (according to Nielsen Media Research) to the 10th-most-watched syndicated show in 1997-98. For the first eight weeks (September through October) of the 1998-99 season, it was the top-rated talk show, surpassing longtime talk queen Oprah Winfrey, and was the seventh-ranked syndicated show. NBC continued to dominate the ratings race in 1997-98, but its attempts to expand its power base beyond Thursday night were not so successful. The network had the top four shows: "Seinfeld," "ER," "Veronica's Closet," and "Friends"--but they were all on Thursday night, as was newcomer "Union Square," the eighth-ranked show of the season. CBS came in second in households, helped by shows, such as "Touched by an Angel," that appealed to older people. The network finished fourth, however, in the coveted 18-49-year-old demographic group. ABC placed third in households with sitcoms such as "The Drew Carey Show" and "Spin City." Fox finished fourth in households, but its edgy programming pushed it into second place in the 18-49 group for the first time. Helping it overtake ABC were the animated "King of the Hill" (see Photoessay) and the quirky hit "Ally McBeal." The WB got strong performances from "Dawson's Creek" and "Buffy the Vampire Slayer" to help push it past UPN into fifth place. It was the only network whose average rating did not decline compared with the 1996-97 season, posting a 12% increase on the strength of its programming and a station lineup bolstered by defections from rival UPN. By contrast, UPN was in a rebuilding year, repositioning itself with shows like "Love Boat: The Next Wave" from an urban-targeted to a more middle-American audience. For the first five weeks of the 1998-99 season, the major networks continued their ratings slide. NBC was down 20% in household ratings, followed by ABC, down 4%, and CBS, down 3%. Of the big four, only Fox showed growth at 3%, although that was in part due to its coverage of the World Series. Although the series (a four-game blowout of the San Diego Padres by the New York Yankees) recorded its lowest ratings ever, they were enough to boost Fox's fortunes. Of the small networks, UPN was down an alarming 38%, whereas the WB continued in the plus column, up 14%. In the face of its ratings drop, NBC shook up programming executive suites in October, replacing NBC Entertainment's president, Warren Littlefield, with station group head Scott Sassa. U.S. Pres. Bill Clinton's relationship with intern Monica Lewinsky dominated TV news from its first reports in early January to the impeachment hearing that was being conducted at the year's end. In between, it powered cable news channels to some of their highest-ever ratings and filled the broadcast airways with subject matter that would have been unheard of--except on shock jock Howard Stern's radio and TV shows--only a few years earlier. For the fourth year in a row NBC dominated the Emmy awards, winning 18, including 4 for "Frasier." ABC was second with 16, and HBO third with 14, including 3 for Tom Hanks's multipart epic "From the Earth to the Moon," and, finally, one for comedian Garry Shandling (see BIOGRAPHIES) after 19 nominations. One of the ceremony's biggest surprises was the three awards for ABC's "The Practice," which was produced by David E. Kelley. (See BIOGRAPHIES.) One was for best drama, in a category that included such critically acclaimed shows as "ER" and "NYPD Blue." One cable program that became recognized as an innovator and ratings power featured four foul-mouthed third graders animated in a style that could best be described as early construction paper. Comedy Central's "South Park," described by Broadcasting & Cable editor John Higgins as a "twisted version of Peanuts," debuted in the summer of 1997, but it did not attract a large following until late in the year. In October 1997 it was averaging a 1.6 rating, but by February 1998 the show was the top-rated program on cable, with a 6.4 the week of February 2-8, and had become a cultural phenomenon. The catchphrase "Oh my God, they killed Kenny," a reference to the fact that the character Kenny died in almost every episode, was threatening to become a part of the vernacular. Though it gained audience share, cable continued to demonstrate its greatest strength in a limited programming range. Aside from the big-ticket movies and occasional hit series, cable was dominated by major sports, wrestling, and children's shows, with those three programming types claiming 23 of the top 25 cable programs, according to the October 19 Nielsen ratings. Recognizing the need to broaden their programming base, the cable networks pledged to spend hundreds of millions on original programming with high production values. USA Network, for example, spent more on the two-part original "Moby Dick" ($20 million) than on any other program in its history, and the show returned the investment by achieving the highest-ever ratings for original entertainment on basic cable, an 8.1 (or an average 5.9 million households). TV soap-opera addicts were cheered by University of Oxford professor Michael Argyle's claim that people who watched soaps were happy people. The results of his 11-year study, analyzing thousands of questionnaires, were revealed late in 1998. The key to happiness, Argyle told the Sunday Telegraph, was to have one close relationship and a network of friends. Through TV watching, Argyle theorized, people made imaginary friends. A Vietnamese soap opera with sympathetic HIV-positive characters was aired to reverse early propaganda and misconceptions about AIDS. Funded by the EU and provided with technical assistance by Australia, CARE International Vietnam taped several episodes of "Wind Blows Through Dark and Light" and aired them until mid-June. "Mirada de mujer" ("A Woman's Gaze") became a hit for Mexico's TV Azteca in late 1997 despite protests from family-values groups complaining that the program promoted adultery. A petition drive to cancel it was welcomed by Ricardo Salinas Pliego, Azteca's chief executive. The controversy added to the 40% prime-time audience share taken from rival Grupo Televisa, Mexico's one-time TV monopoly and the world's largest producer of Spanish-language TV programming. Azteca in 1998 owned the top-rated evening news broadcast and crime newsmagazine show. "Teletubbies" Tinky Winky, Dipsy, Laa-Laa, and Po from the hills of Teletubbyland were introduced in Britain in 1997 and began to air in the U.S. on the Public Broadcasting Service (PBS) in April 1998. Each Teletubby head carried an antenna, and the characters' stomachs beamed in video clips of real children in the real world, which triggered criticisms in both countries that viewing children were being hooked on TV before they had the language skills to protest. British creator Anne Wood referred to her work as a kind of "Sesame Street" primer. A BBC documentary on the life of Field Marshal Lord Kitchener, turned out to be a bitter disappointment, especially to the members of the Kitchener family. Dwelling little on his achievements, "Kitchener--the Empire's Flawed Hero" portrayed him as obstinate and brutal, using snippets of interviews with relatives, veterans, and historians to debunk his reputation. The French commanded and controlled TV coverage of all 64 matches of the 1998 World Cup. Broadcasting from Paris, "France 98" was watched by a cumulative worldwide audience of 37 billion people. Also in regard to soccer, England's Premier League rejected in May a proposal by BSkyB to televise the next season's games live on a pay-per-view basis. With soccer as a key attraction to subscription, BSkyB had hoped to use live pay-per-view matches to persuade customers to sign up for its new digital TV service. Greece was singled out in May for immediate action by the World Trade Organization for having failed to crack down on rampant theft of TV programming. Some 150 Greek stations continued to broadcast American films and television programs without paying American copyright holders. TEXTILES Worldwide growth in the textile industry leveled out to near zero in 1998, following high growth in 1997, when textile demand rose 6%, twice the 3% annual average. This correction created an excess of capacity at every level of the industry, and prices for fabrics and yarns fell dramatically. In addition, the fluctuation of exchange rates created winners and losers; South Korea improved its competitive edge, as did Indonesia, making Chinese exports more expensive relative to other Asian suppliers. Textiles from Asia were priced low, which caused textile mill activity to remain flat in Western Europe and increase only slightly in North America. Although most parts of Asia experienced a rise in exports, local demand was weak, resulting in a reduction in overall textile activity; production also fell in the Middle East. China registered a slight increase in production, and India boosted its output. In such a volatile market, retailers tried initially to increase their profit margins by buying in volume, but competition rose for them, too, resulting in lower prices for the consumer. In 1998, 48,600,000 metric tons of textiles were produced, including 1,600,00 metric tons of wool, 19,200,000 metric tons of cotton, and 27,800,000 metric tons of manufactured fibres. Quality, however, suffered as a result of the price wars, and only toward the end of the year was there any sign of a return to more stable conditions. The IMF's Changing Role by William Glasgall Even for an organization that had worked to alleviate its share of financial panics during more than five decades of existence, the International Monetary Fund (IMF) had an extraordinary year by any standard in 1998. As one tense month gave way to the next, the financial crisis that had begun the year before in Thailand spread to East Asia, Russia, and Latin America and was threatening to engulf the industrialized world as well. (See Spotlight: The Troubled World Economy.) According to IMF Managing Director Michel Camdessus, the crisis had "already cost hundreds of billions of dollars, millions of jobs, and the unquantifiable tragedy of lost opportunities and lost hope for so many people, particularly among the poorest. . . . Even countries with well-managed economies have not been spared." Yet the traditional remedies the IMF had employed in the past to alleviate such global financial stresses--loans to troubled countries in return for pledges to restrict monetary expansion and rein in budget deficits--seemed curiously inadequate. It was not until the U.S. and other major economies took a series of striking steps that the crisis began to stabilize. After months of debate, the U.S. Congress in October 1998 approved an $18 billion contribution to the IMF's capital base, giving the organization $90 billion for additional emergency loans and easing fears that it was about to run out of money. Indeed, the move enabled the IMF and other government leaders to pledge to make available $41 billion in credits for Brazil, where steep budget deficits left the nation's currency vulnerable to speculative attack. The U.S. Federal Reserve and central banks in Japan and several European countries cut interest rates and helped ease the crisis further by shoring up global stock markets that had been falling precipitously for months amid fears of a worldwide recession. The Group of Seven (G-7) industrial countries agreed to set up a new IMF facility to provide emergency loans for countries affected by "contagion" from other distressed economies and called for more and better disclosure of emerging-market finances and flows of capital among hedge funds and other large international investors. At the same time, G-7 members called for improved supervision of financial flows from investment banks, hedge funds, and other lenders to emerging markets, the better to spot potentially destabilizing financial bubbles. The fact that the IMF and the world financial system needed emergency assistance to get over the latest global crisis should have been no surprise. The size and scope of IMF-led financial-aid programs had increased in recent years, accelerating dramatically after the fall of the Soviet Union and other communist countries in 1989 thrust a new wave of emerging nations into the world economy. The organization itself, however, had not changed significantly since its creation in Bretton Woods, N.H., in 1944 by the U.S. and 43 allies as a critical element in the American-led Western post-World War II alliance. Designed to foster monetary cooperation, the IMF sought to enforce strict rules of behaviour in a world based on the gold standard and fixed currency-exchange rates. To help bolster international trade, the IMF also provided short-term financing to countries encountering balance of payments problems. The U.S. abandonment of the gold standard in 1971, however, led to the collapse of the Bretton Woods system of fixed exchange rates two years later. The move to floating exchange rates in Western economies forced the IMF to end its role as traffic cop of the world monetary system and to concentrate instead on providing advice and information to its members, which in 1998 numbered 182 countries. That role was key in helping nations in Latin America, Africa, Asia, and Central Europe restructure their economies following the 1982 debt crisis. Later the IMF sought a more ambitious role as an international lender of last resort to the world economy. It first assumed that position in the international bailout of Mexico in 1995. In return for the imposition of an economic austerity plan, the fund, along with the U.S. and other major industrial countries' central banks, provided credit lines and other facilities totaling $47.8 billion. Although the assistance gave rise to criticism that the IMF was bailing out international investors and not the Mexican economy, the fund in 1997 and 1998 increased the amount each member contributed and expanded its lending activities further by establishing a $47 billion line of credit--called the New Arrangements to Borrow--with two dozen countries. The increase in borrowing authority would allow troubled IMF members to draw well in excess of what would normally be allowed, a move that was well timed. In the 1990s capital had flooded into emerging economies--such as Thailand, Indonesia, and South Korea--with little attention to borrowers' creditworthiness. When economic problems started to occur, foreign and domestic investors alike rushed to get their money out of those countries. In the ensuing panic, currencies and stock and bond markets imploded, cutting off financing and swiftly throwing entire economies into recession. The crisis persisted, even amid billions of dollars in IMF and Western loan commitments. With the IMF estimating that world economic growth was only 2.2% in 1998, half what it had forecast in late 1997, it became apparent that more forceful moves would be required. Along with the IMF's fortified capital base and widened lending authority, it still was unclear whether widening the disclosure of emerging economies' foreign-currency reserve levels, publicizing their growth estimates, and announcing capital inflows and outflows would help forestall the next crisis--much less put a decisive end to the one that drew headlines in 1998. This was because the entire face of international finance had changed since the IMF was created. Financial flows were once controlled by a handful of major banks that could be easily corralled into restructuring problem loans in cooperation with relatively modest IMF assistance. In the late 1990s, however, flows were dominated by thousands of banks; securities firms; and mutual, pension, and hedge funds that could move capital in and out of countries with a click of a computer mouse. The number of countries seeking international investment, meanwhile, had proliferated, as had the diversity of debt, equity, and other financial instruments. This array of investors and instruments made coordinating any response to financial crises "extremely difficult," concluded Moody's Investors Service Inc., a major global credit-rating agency.
YEAR IN REVIEW 1999: SPOTLIGHT
Meaning of YEAR IN REVIEW 1999: SPOTLIGHT in English
Britannica English vocabulary. Английский словарь Британика. 2012