To keep things on track, the United States has rewarded even the smallest baby steps by North Korea, most recently by sending the New York Philharmonic to visit. Washington even overlooked instances of backsliding, such as Kim’s alleged transfer of nuclear technology to Syria. The administration hopes a breakthrough will lead to a regional accord, including a peace treaty between North and South Korea. To sweeten the pot, Washington offered Pyongyang normalized relations if it cooperates in verifiably abandoning its nukes.
Supporters of the administration say the approach has already borne fruit. Last fall, Pyongyang began the process of disabling its main reactor at Yongbyon, going far beyond the commitment it made in 1994 merely to freeze the program. Bush backers also point out that getting the world’s most secretive state to admit to possessing 30 kilograms of fissile material—as it also did last fall—represents progress and is reason enough to keep talking, even though U.S. intelligence officials suspect North Korea actually has nearly twice that much.
But the administration’s dovishness is causing splits in the conservative Washington firmament, leading some hawks to attack the president’s policies. Hard-liners think it is a mistake to deal with North Korea till there’s proof Pyongyang is nuke-free and ready to reform its authoritarian ways. Last month, at a speech to the conservative American Enterprise Institute, Bush’s own special envoy for human rights in North Korea, Jay Lefkowitz, cast doubt on the administration’s approach, condemning North Korea for continuing to counterfeit dollars, smuggle drugs and sell nuclear technology to hostile countries. Though Lefkowitz stopped short of criticizing Bush directly, his inference was clear: the White House doesn’t take Pyongyang’s human-rights abuses seriously enough and is naive to think it can do business with Kim.
Lefkowitz was stiffly rebuked by Secretary of State Condoleezza Rice, but the North Koreans haven’t made things any easier. They partially disabled the reactor at Yongbyon, but recently missed deadlines for dismantling it altogether, providing a detailed report of refining activity and for declaring whether North Korea had shared technology with others. A meeting in Beijing last week between senior U.S. diplomat Christopher Hill and Kim Kye Gwan, Hill’s opposite number from Pyongyang, produced little more than commitments for more talks. The December election of South Korean President Lee Myung-Bak, a conservative wary of Pyongyang, may have put North Korea in an even less conciliatory mood.
Still, the Bush administration hasn’t given up. In a scheduled visit to Asia this week, Rice plans to smooth things over. The administration is also hoping China will convince North Korea it will be easier to cooperate with Bush than wait for his successor—possibly a hawkish John McCain. But Beijing, angered by a U.S. attempt to shoot down a defunct spy satellite last week, may not be inclined to do any favors, and might even prefer to perpetuate the dialogue than resolve it. After all, an embargoed North Korea dependent on China for basic goods and services is easier to control than one with open relations with the world. John Park, a Korea expert at the United States Institute of Peace, argues that even short of a deal, it’s crucial that negotiations continue. “The North Koreans are being asked to give up their [nuclear] capabilities, and they can’t take them back later on. That’s a lot to ask, and it’s important to keep the momentum going.” Even if it means ignoring eight years of angry rhetoric.
title: “Looking For A Legacy” ShowToc: true date: “2023-01-04” author: “Steven Stickland”
That kind of talk has become standard fare on the campaign trails of presidential candidates from Venezuela to Argentina. But the depth of disenchantment with austerity budgets and neoliberal economic policies takes on a whole new meaning when the speaker happens to be the richest man in Latin America.
Slim, 63, is thinking big thoughts these days. He caused a stir in July when he publicly called on Mexican President Vicente Fox to invest more in infrastructure projects and worry less about inflation and budget surpluses. Slim has also become fast friends with Mexico City’s left-leaning Mayor Andres Manuel Lopez Obrador, the early favorite to succeed Fox in the 2006 presidential election. And as the blue-chip brainstorming session of last spring demonstrated, the industrialist is eager to explore new ideas to create the jobs and prosperity needed for a stable Latin America. “You cannot wait until you die to leave a legacy,” Slim told NEWSWEEK. “You must do as much as you can while you’re alive.”
This new and rather public activist persona is an unfamiliar role for the man referred to as “El Ingeniero” (the Engineer). When he was amassing his $7.4 billion fortune in the 1980s and 1990s, Slim kept a low profile and quietly cultivated contacts inside the Mexican political establishment. “Slim used to be very enigmatic and reclusive,” says a Mexico City magazine editor. But in recent months the mogul has held press conferences and given a number of speeches to tout his plans for revitalizing the historic center of Mexico City, where he grew up as a boy. He lined up Bill Clinton as the keynote speaker for a recent student-scholarship ceremony sponsored by his Telmex Foundation. He can afford to spend more time in the limelight because his three sons, along with a couple of sons-in-law, now largely manage his sprawling empire. “People and some media seem to pay more attention to what I say now,” he says.
Slim was introduced to business as an 8-year-old boy, when his father, Julian, asked him to help out at the Orient Star, the family-owned general store named in honor of their Middle Eastern roots. After earning a bachelor’s degree in civil engineering from the National Autonomous University of Mexico City, he inherited substantial real-estate holdings from his parents and made a series of daring investments in the early 1980s. The 1982 nationalization of the country’s banking system and a draconian peso devaluation shattered investor confidence, triggering Mexico’s worst economic crisis in 50 years. Slim defied the conventional wisdom when he went on his buying spree; he quickly acquired Mexico’s leading tobacco company, a profitable auto-parts maker and the popular Sanborns restaurant and gift-shop chain. “They were very cheap,” he says simply.
His big score came in 1990 when President Carlos Salinas de Gortari put up for sale the state-owned Telefonos de Mexico monopoly. A consortium led by Slim paid $1.76 billion for Telmex, a bargain-basement price that drew howls of protest from the left-wing political opposition at the time. Slim and his partners rode out the firestorm, and the company now has a market capitalization of more than $20 billion. Far and away the largest privately owned company in the country, Telmex is the jewel in the crown of a business empire that employs over 250,000 workers and accounts for more than 40 percent of the Mexico City Stock Exchange’s total capitalization. America Movil, the wireless operator that Slim spun off from Telmex, has used acquisitions across the hemisphere to become Latin America’s largest cellular operator, with about 40 million customers.
Foreign companies trying to crack Slim’s dominance of Mexico’s telecom market have been foiled. Telmex still controls more than 90 percent of Mexico’s fixed phone lines. Two of Telmex’s fixed-line competitors, one 49 percent-owned by AT&T and the other 45 percent-owned by Worldcom, are in serious financial trouble. On the wireless side, Verizon and Vodafone have sold their stakes in the cellular provider Iusacell, which has dropped out of the Mexican market. Each company lost about $1 billion on its Mexican investment. Mexico’s calling rates are still about double those in the United States, and according to a report from Merrill Lynch, Telmex’s so-called interconnection rates, the fees it charges other carriers (wireless and fixed) to access its network, are among the world’s highest. (They ballooned to 14 percent of Telmex’s revenues in 2002.) Javier Lozano, the former head of Mexico’s Federal Competition Commission, says that the agency’s deregulation efforts have been lax. Slim contends that his foreign competitors have made strategic mistakes and “want to find someone else to blame” for their troubles.
Slim and his sons have lately been paying more attention to investment opportunities in the United States. In recent years the family has acquired shares in Philip Morris (now called Altria), OfficeMax and Saks Incorporated. In 1999, Telmex bought a controlling interest in a Miami-based prepaid wireless communications firm called TOPPTelecom (TT) for $57.5 million. Carso Grupo Telecom (CGT), Slim’s telecom group, is targeting low-income, predominantly Hispanic consumers in the United States who have little or no access to credit. The family has also partnered with Bill Gates to create a successful Internet portal for Hispanics called T1MSN.
Not all of Slim’s U.S. forays have been successful. The $800 million purchase of the CompUSA retail chain went through just as the Internet bubble was about to burst. The Carso retail and industrial group is now trying to revive the company. Slim also wants to buy Circuit City, the U.S. chain of consumer-electronics stores, but some analysts believe he would be better off sticking to Latin American markets. “There are lots of sellers and very few buyers in Latin America, and that allows Slim to do what he does best–buy assets on the cheap,” says Whitney Johnson of Merrill Lynch. “Any investor looking for telecommunications exposure can find better opportunities [outside the United States], and in Slim’s case that is his own backyard.”
As he approaches his golden years, Carlos Slim seems less obsessed with balance sheets and bottom lines. The 1999 death of Soumaya Domit, his wife of 32 years, left Slim a widower, and he reserves Monday evenings for a family dinner with his six children and their spouses and kids. Over the years he has accumulated an impressive collection of European and Latin American paintings and Rodin sculptures, and he frequently indulges a weakness for Cuban-made Cohiba cigars.
At the same time, he’s increasingly absorbed by the big picture. He no longer subscribes to the so-called Washington Consensus, the U.S.-backed prescription for economic development in the past two decades that advocated the promotion of exports, drastic reductions in government spending, the lowering of tariff barriers and the privatization of inefficient state-owned companies. In Slim’s judgment, that model only deepened the recession within Latin America by forcing governments in the region to slash subsidies and raise taxes even as their economies were stagnant. “We must be integrated to fight poverty,” Slim argues. “It is time to change from a model dedicated to stabilization to one of development and the generation of employment and growth.”
Against that backdrop Slim and Mexico City Mayor Lopez Obrador might not seem like such strange political bedfellows. The entrepreneur accepted the left-of-center mayor’s invitation to chair a committee in charge of supervising the revival of downtown Mexico City. Slim has set up a foundation with a $100 million budget to restore landmark buildings and provide subsidized housing for people working in the area. For the record, Slim denies harboring any political ambitions or secret partisan loyalties. “I don’t belong to any political party,” he says. “I give money to any candidate who asks me because I unconditionally support the democratic process.”
For a man who almost died during open-heart surgery six years ago and needn’t work a single day for the rest of his life, Slim could be forgiven for thinking about retirement every now and again. But he insists he feels the same sense of calling that inspired the 19th-century masters whose works of art he so avidly collects. “You don’t ask an artist to retire just because he has already finished a number of paintings,” says the Engineer. “It is his vocation, and to me work implies not only a social and business responsibility but also an emotional need.” If he continues to feel that tug, Carlos Slim is sure to play a crucial role in the region’s affairs for years to come.
