Some Abroad Say the Y2K Fix Was In

By Anthony Faiola
Washington Post Foreign Service
Thursday, January 6, 2000; Page A01

BUENOS AIRES, Jan. 5U.S. computer experts predicted massive blackouts in Argentina with the turn of the year. And so Mariana Gonzalez fumed as if the practical joke of the millennium had just been played on her as she stood on a Buenos Aires street corner under the glow of vast electric billboards that have not even flickered in the days since the calendar turned to Jan. 1, 2000.

"We're a country that can't afford to waste money, and that's just what we did with this hoax!" said Gonzalez, 36, who was peddling cheap calculators and talking about the estimated $1.5 billion spent in Argentina for Y2K readiness. "We can't feed our families and we spent millions on a sham to make foreign companies rich."

Gonzalez is not alone in her dismay. The money spent on updating computers is drawing widespread popular outrage here and in many other nations outside Europe and North America, where suspicions of overspending on the Y2K bug that never materialized are increasing with every normal day that passes.

"So, what was all the fuss about?" asked David Higgins, the Sydney Morning Herald's BIZ.COM editor. He added, "Can we get a refund?"

But Victor Guerrero, technical secretary of the National Commission for Y2K Information Conversion in Mexico, looked at the expenditure of $6.5 billion by his country's public and private sectors in a different light. A report from the U.S. Senate Special Committee on the Year 2000 Technology Problem predicted last summer that a third of Mexico's computer systems would crash, but in fact the first days of the year have been largely glitch-free--making the expense well worth it in Guerrero's eyes.

"We had to take the problem seriously, and we've come out on top," he said. "The quality of equipment and infrastructure has improved and more companies are now using computers as a result of this experience."

As reports from the first days of the year indicate that nothing approaching the widely predicted doomsday in Latin America or the rest of the developing world came to pass, Gonzalez and Guerrero personify two emerging schools of thought about Y2K fever:

First, that a bunch of technology companies and consultants, perhaps for profit, overestimated the potential repercussions of the bug, encouraging governments and businesses to spend scarce funds and manpower.

"This is a man-made millennium worm that scares the average Joe to death," went one Chinese poem, posted in a chat room run by SinaNet, one of China's biggest portals. "Counting money with both hands, the American bear laughs a good laugh."

Second, that concern over the bug gave the developing world a good reason to upgrade technologically outdated systems, providing a vital advance into the computer age. In fact, advocates say, the Y2K craze, even if overstated, became the force that kicked small nations into high gear during the last part of 1999, spurring them to make the changes that prevented big problems.

"Should they have spent less? I don't think so," said Lee Tablewski, a senior research associate at the University of Miami's North-South Center, who monitored Y2K readiness throughout the Americas. "There will be a Y2K dividend for Latin America. Because they've done a good job of fixing utilities, improving government databases, those kind of emergency management systems will be better prepared for the future."

The Hong Kong government, for instance, spent more than $68 million to fix Y2K-related problems, and the secretary for information technology, Kwong Ki-chi, said the expense was worth it. "The problem could have been much more serious," he said. "The government and other sectors providing essential public services spent enormous efforts in tackling this problem."

Rightly or wrongly, however, many fingers are pointing toward governments and technology companies in the United States and Europe for generating what is now taken to be hype. One Havana newspaper called the Y2K bug a capitalist plot, hatched to generate profits for wealthy foreign interests.

"You Americans were too paranoid about this from the beginning," said Alejandro Prince, director of the Buenos Aires-based economics and technology consulting firm Prince & Cooke. Prince has conducted extensive research on Y2K problems in Argentina, and had long played down the severity of the risk here. "It's just like when you all jog around with your natural, purified, filtered spring water for your good health. . . . Americans go overboard on everything. We knew there could be problems, but there was probably more pressure from U.S. and European consultants and governments than was warranted."

Some nations did not discount the risk entirely but were able to prevent problems inexpensively. In Paraguay, a poor, landlocked nation between Brazil and Argentina that dissolved its Y2K task force because of lack of funds, only $11 million was spent to secure vital systems, and mayhem had been predicted for the first days after the New Year. But Paraguay's harshest problems have been a few hotel bills and government identity cards issued with incorrect dates.

"I think people in the United States overestimated our reliance on technology," Rafael Borja, Paraguay's chief coordinator in the secretariat of planning. "We just needed little touches to get through this, not huge overhauls."

Similarly, China's banking sector spent about $1.25 billion in dealing with Y2K issues, which pales in comparison to figures in the West. Overall fixes in the United States alone cost an estimated $100 billion. But many of China's banking functions are not computerized, labor costs are low and China often solves problems with "human wave" tactics instead of high technology.

As the China Securities Regulatory Commission geared up for the opening on Tuesday of the country's two stock exchanges, in Shanghai and Shenzhen, thousands of workers in 4,000 government bureaus around China carried out simulated trades in a massive check for "thousand-year bugs," as the Chinese called it.

When the exchanges opened, trading proceeded without any apparent problems.

But other developing nations spent much more and relied more heavily on foreign consultants, dropping an average of 1.5 to 2.5 percent of their gross domestic products on Y2K readiness, said the University of Miami's Tablewski. And high tech companies reaped the profits.

In Argentina, which has Latin America's highest per capita income and is one of its most technologically advanced nations, high tech companies experienced a major windfall in 1999. In a year when GDP fell by almost 3 percent and industrial output was down sharply, spending on technological products and services soared 10 percent. The private sector spent an estimated $1.3 billion, while the government spent another $150 million on Y2K bug prevention.

At Argentina's National Social Security Administration, with more than 4,000 computer terminals and 10,000 users, several major foreign companies--which officials declined to name--submitted bids of $7 million to $15 million to debug the system. An auditor at the agency reviewed the proposals, rejected them, and hired a local agency for a light touch-up that cost $2.7 million. To date, no Y2K problems have emerged at the agency.

"I don't think there's any question that some foreign companies tried to make a buck off us," said Public Action Subsecretary Leandro Popik, who leads Argentina's Y2K task force.

Latin American representatives of U.S. high-tech giants dismissed such ideas. "We think it was a serious threat, and it was a three-year job, but we tackled it and prevented something big from happening," said Microsoft's spokesman in Latin America, Leonardo Ortiz. "Y2K was not a revenue generating opportunity for Microsoft."

The Argentine government program included hiring international and domestic consultants and companies to test computer systems and replace or reprogram outdated computers, including some mainframes. Since the government program was launched in mid-1997, the heads of major state agencies and the providers of vital services were asked to submit frequent updates.

Although some private companies started updating their systems as early as five years ago, analysts estimated that about 40 percent of the total amount spent battling the bug came in 1999. President Fernando de la Rua's new administration, which last month replaced the administration of Carlos Menem, which was was plagued by charges of corruption, is looking into irregularities in the country's Y2K program, which began more than 2 1/2 years ago with a task force of 136 people.

More than $9.1 million was spent on a "public awareness" program that few people can even recall. Popik said he is also looking into possible overspending and inefficient use of funds. His agency is also reviewing contracts with foreign and domestic technology companies and consultants.

But technology analysts insist that the bulk of the developing world's investment in Y2K was put to good use, and said waiting to the last minute led to overly dire predictions in many countries.

Correspondents John Ward Anderson in Mexico City, John Pomfret in Beijing and Keith B. Richburg in Jakarta contributed to this report.

[ENDS]

-- John Whitley (jwhitley@inforamp.net), January 06, 2000

Answers

Not to worry about all those billions and billions that were "supposidly" spent on Y2K, they are most likely safely salted away in secret bank accounts all over the world, never to be seen again. The only way you will come in contact with these billions will be when you are paying them back with your taxes.

-- Notforlong (Fsur439@aol.com), January 06, 2000.

Who can debate the sentiments of foreign residents, John? They certainly seem on-target. It would be overly conspiratorial to say that y2k was a giant hoax or scam, but truth be told, if this is the amount spent of 'fixing' the problem, someone sure got rich.

I am all for making a buck, but off of the anxieties and fears of others?

-- Bad Company (johnny@shootingstar.com), January 06, 2000.