THE NEW YORK TIMES,
December 25, 1999

Latin America Takes On Possible Computer Woes
By SIMON ROMERO

SAO PAULO, Brazil, Dec. 24 -- Approximately 37,000 clients of Banco ItaDu S.A., one of Brazil's largest banks, got a glimpse last month of the problems Latin Americans might encounter from the Year 2000 computer problem when they received a letter saying certain fees would be charged to their accounts as of Jan. 4, 1900.

The bank, which attributed the mix-up to human error and not to its technology, quickly remedied the problem with follow-up correspondence correcting the date to 2000. But doubts remained, since ItaDu was said to be among the region's best prepared companies for the Year 2000 problem, having invested more than $30 million to prepare its computers.

With a week to go, no one is quite sure what the fallout will be from Latin America's mixed approach to dealing with the Year 2000 problem. According to analysts dealing with the issue, some of the region's poorest countries, like Paraguay, are drastically ill-prepared, while other nations, like Chile and Mexico, planned ahead and budgeted funds to sufficiently adapt their government computers.

Still, there appears to be a consensus emerging among the people who have been rushing to prepare the region for the changeover to the year 2000: The parts of Latin America most at risk are also the most technologically advanced, while the most underdeveloped regions, while they will almost surely also be affected by the problem, are not likely to suffer as much as the region's pockets of relative wealth.

"It's like bank-robber logic," said Dale Vecchio, a research director at the Gartner Group, a consulting firm based in Stamford, Conn., that has examined preparations for the bug around the world. "Bank robbers search out the bank with the most money, just like Y2K will affect the societies with the most technology."

Perhaps nowhere in Latin America is this relation played out with greater tension than in Brazil, the region's largest country with 165 million people. While many parts of Brazil are relatively underdeveloped and not that dependent on technology, cities like Sco Paulo are highly wired. Ground zero for Brazil's race to prepare for the problem could be said to be along the banks of the Pinheiros, a murky river flowing through this city.

Flanking the Pinheiros are several dozen skyscrapers that developers built during the last decade as Brazil opened its economy in an embrace of foreign technology and investment. These structures, wired with state-of-the-art fiber optics, guarded by a legion of armed security personnel and topped with helicopter landing pads, have spent the last year being prepared to deal with the Year 2000 computer problem.

For Sylvio Roth, the technician in charge adapting computer systems for Jones Lang LaSalle, a London-based skyscraper-management firm that manages some of Sco Paulo's most exclusive commercial buildings, this means his schedule has been put into overdrive. Mr. Roth heads a team stocking up on electricity generators, diesel fuel and water supplies. Concerned with the possibility of a surge in crime after the new year, provisions are also being made for additional armed security forces.

"We've screened our buildings for possible problems, but now our priority is contingency," said Mr. Roth. "We're going to make sure our clients can do business for five to 10 business days after the first of the year, but this depends on things outside our control, like the capacity of electricity utilities and telephone companies."

For the most part, large companies in Brazil are generally prepared for the Year 2000 changeover, thanks in part to the fact that many state firms, including many utilities, were privatized in sales to foreign concerns during the last few years. And the federal government has said its computers will prove resistant to the problem.

Still, while it is generally acknowledged that most large companies could fare decently, many small firms which have not recognized the magnitude of the problem could suffer and thus put a drag on some parts of the economy, analysts said. This mixed approach has created worries in large countries like Brazil, but other nations, like nearby Paraguay, offer a striking contrast in their Year 2000 preparations.

The poorest and most politically and economically unstable member of Mercosur, the customs union also including Argentina, Brazil and Uruguay, Paraguay is considered one of the least-prepared countries for the Year 2000 problem. Things were made worse recently when Walter Schafer, the country's coordinator to deal with the issue, was dismissed after foreign news reports called attention to Paraguay's lack of preparation.

"The people in power got worried about Paraguay's image abroad," said Mr. Schafer in a telephone interview from Asuncisn, Paraguay's capital. "We Paraguayans have so much else to worry about that it's no wonder our effort to deal with the bug was too little, too late, and now almost nonexistent."

Indeed, for the time being, the small country of 5 million seems to have more pressing problems to deal with. In late November, rumors swept Asuncisn that some members of the armed forces were planning a coup. Authorities loyal to President Luis Gonzalez Macchi arrested 14 army members suspected of disloyalty.

According to Carlos Guedes, the official at the Inter-American Development Bank in Washington responsible for coordinating the institution's efforts to help Latin American countries deal with the computer problem, Paraguay's situation is similar to that of other small countries in the region, like Guatemala and Bolivia. In an attempt to help countries like these prepare for the problem, the bank this year opened a $200 million emergency credit line to finance computer upgrades.

"Some of these countries have been hurt by natural phenomena like hurricanes and a decline in the prices of their main commodity exports that make dealing with Y2K more difficult," Mr. Guedes said.

Ecuador is one country in the region that has suffered damage from natural disasters and, until recently, a weak market for oil, one of its main exports. Yet in a sign that the situation in places like Ecuador might actually be better off than some critics expect, the country, like most other Latin American nations, has organized a task force to deal with the Year 2000 problem.

Jacqueline Herrera, the official in charge of the task forces, said she is confident that crucial parts of the economy, such as electrical generation, telecommunications, water treatment and air travel, are prepared for the potential effects.

"We're better prepared than a lot of people might expect," said Ms. Herrera. "And we're in constant contact with other task forces in Latin America, so we know that our efforts are in line with others."

The saving grace of countries like Ecuador and Paraguay may lie in their relatively unsophisticated computer networks when compared with those in rich industrialized nations, or even those in more prosperous Latin American countries like Chile.

Even in those parts of Latin America where the Year 2000 problem might actually do damage, it is being shrugged off by many people. The relative nonchalance among Latin Americans to the issue might have something to do with their approach to the economic, political and social turbulence that have been common throughout the region's history.

"Latin Americans tend to be more passionate than their colleagues above the equator when it comes time to make a decision," said Max Gehringer, a Sco Paulo businessman who writes a column on corporate culture for Exame, Brazil's leading business magazine.

"In practical terms this means we either magnify a problem which really isn't that large or we underestimate something we don't understand entirely," said Mr. Gehringer. "Two things can happen on the first day of January: Either our companies will enter in reactive panic or an absence of problems will have us saying, 'See? It was all just hype.'"

[ENDS]

-- John Whitley (jwhitley@inforamp.net), December 25, 1999

Answers

Gawd, yet another example where an OBVIOUS glitch due to Y2K is claimed NOT to be!! "Well, uh, you see, the notices that go out to clients are computer generated, BUT the dates are left blank so that a HUMAN can fill that part in using a typewriter. Unfortunately, Mrs. Sanchez broke her bi-focals on the way to work, so the poor thing just could not see very well, so she put '1900' instead of '2000'. Oh yes, she is VERY old, so that it was very easy for her to get the centuries confused. Yes, really, this is what happened. We would NEVER try to hide a Y2K problem!"

-- King of Spain (madrid@aol.cum), December 25, 1999.

King, so you know Mrs. Sanchez too?

-- paul leblanc (bronyaur@gis.net), December 25, 1999.