Originally created 04/18/99

Latin America battles with Y2K



BOGOTA, Colombia -- Uncertain their radars' Year 2000 computer problems will be solved, air traffic controllers in this Andean nation are taking refresher courses in guiding planes the old-fashioned way -- with radioed position reports and paper charts.

Federal bookkeepers, meanwhile, may have to switch to paper ledgers until their computers are fixed.

With a handful of exceptions led by Mexico and Chile, Latin American governments were late in grasping the severity of the "millennium bug." They now realize they lack the time, money and programmers to forestall potentially crippling public sector failures when 2000 arrives.

In the United States, where tens of billions of dollars have been spent on ridding computers and other electronic equipment of the date-sensitive glitch, failures are expected to cause disruptions akin to a bad snowstorm.

"For us it could be like a volcanic eruption," said Hernando Carvalho, a Colombian civil engineer and lawmaker who began surveying government readiness in December and found it woefully lacking.

Among Latin politicians, Carvalho is a lonely voice trying to raise consciousness where little exists.

World Bank experts and independent analysts say Latin and Caribbean governments can now do little more than focus on preventing disasters brought on by the Y2K problem, a legacy of the days when software writers saved space by expressing years with two digits. That means an unfixed computer won't be able to tell 2000 from 1900 and might shut down in confusion.

Like most governments in the developing world, they're feverishly working on plans for skirting unreliable computer systems to ensure the delivery of essential services like water, electricity and public payrolls.

"Basically everybody's in the same boat. They're only focusing on critical systems and contingency plans," said Rafael Hernandez, an information specialist with the World Bank.

Nearly all Latin governments rely heavily on informatics. And at precisely the moment last year that they should have been investing heavily in Y2K fixes, the Asian financial crisis hit their economies hard.

Now there is an almost universal shortness of cash.

Media coverage of the Y2K bug has been scarce in the region, and many presidents, including Colombia's Andres Pastrana and Argentina's Carlos Menem, haven't even mentioned it publicly.

"I don't want to be an alarmist, but we do want to prepare the people for reasonable precautions. There could be a run on banks, real bad, and declared bank holidays," said Jim Cassell, research director for the information technology analysts GartnerGroup who has worked extensively in the region.

Gartner analysts predict half of all Latin American companies and state agencies will see at least one critical failure -- from power outages to air transport interruptions -- in Argentina, Colombia, the Dominican Republic, Guatemala, Jamaica, Panama, Puerto Rico and Venezuela. Even worse off are Costa Rica, Ecuador, El Salvador and Uruguay, they say.

Social unrest and paralyzed commerce are tangible fears.

In this part of the world, "the public doesn't protest with phone calls and letters -- it riots and destabilizes the government. There's lots of potential for that," said Ian Hugo, deputy director of Britain's industry-backed Taskforce2000.

Argentina received a $30 million World Bank loan earlier this year to deal with Y2K problems, and the Inter-American Development Bank expects to open a $2 billion line of credit by May for confronting the bug.

Yet many of the countries scrambling to draft loan requests still "haven't identified the trouble areas (and) don't know how much money they need," said Jamie Dos Santos, vice president for Latin America at Bellcore, a leading international Y2K contractor.

On the whole, Latin American Y2K officials are divulging few details of their countries' progress. They know international investor confidence is at stake. Brazil, for one, is still trying to meet the conditions for a $41.5 billion bailout package from the International Monetary Fund.

"Lack of confidence in a country's infrastructure could cause multinational companies to close their operations," a U.S. Senate report warned in early March.

Among nations where officials have been more open is Colombia, where the government's Year 2000 Office, created in September 1997, only just kicked into gear in December.

Managers of the state-run health care system are struggling to determine how to keep Y2K failures from scrambling the records of its more than 8 million patients. And public hospitals are just beginning to inventory medical devices for bug-related defects.

Colombian civil aviation officials say their radar systems will fail without repairs worth more than $11 million, money the federal government says it cannot provide. Without radar, controllers will rely on voice communications and keep planes spaced more widely apart, delaying flights.

Carvalho said foreign carriers will refuse to fly to Colombia unless the radars and other aviation systems are fixed by July 1, the cutoff date after which U.S. officials expect to begin releasing warnings about countries with worrisome Y2K status.

American Airlines, the dominant U.S. carrier in the region, called Carvalho's claim speculative. "We'll make those decisions when the time comes and obviously safety is our major concern," said Martha Pantin, a spokeswoman for the airline.

In Venezuela, civil unrest could well be on the menu.

"We're going to have a food-supply shortage," predicts Alejandro Bermudez, the government's information systems manager.

He estimates 40 percent of Venezuela's food-processing plants will be paralyzed when unfixed computer chips in automated factories shut down production lines.

Another anticipated failure: 2,500 elevators in Caracas, the capital, will automatically halt. "We know it's going to happen," Bermudez insists.

Only about 10 percent of Venezuela's electricity distribution system has so far undergone computer fixes, and the government says the country desperately needs $1.5 billion for Y2K fixes, adding that even with that money, repairs will take two to four years.

Multinational corporations and major banks have invested heavily in fixes throughout the region and all but a few are expected to be ready before the new year. But many are worried about their suppliers -- and about power generation and water supplies.

Cassell said some companies in Venezuela, Brazil and Argentina are building water reservoirs and holding tanks with diesel-powered generators to weather any lengthy water outages.

Businesses also are taking precautions in Central America.

Scott Robberson, executive director of the American Chamber of Commerce in Guatemala, is buying a gas-powered refrigerator and stocking up on extra food, water and propane. He said his electric company hasn't even started Y2K work, only two of Guatemala's 30 banks are ready, and few buildings in Guatemala City are fixing elevators and time-sensitive computerized building security locks that are vulnerable to failure.

Not every Latin government may need to practice triage.

Mexico and Chile actually budgeted explicitly for Y2K last year. And Mexico has stricter reporting requirements for financial institutions than the United States, said Carlos Guedes of Brazil, deputy controller and chief information office for the Inter-American Development Bank.

The Brazilian government's Y2K coordinator, Marcos Osorio, said his country's energy and telecommunications sectors are running behind in repairs. He predicts only "isolated problems" but adds that Brazil's electrical utilities are already "taxed to the limit" and highly susceptible to brownouts.

"Essential government services should be operating well enough not to cause any damage to the population," he said, without offering specifics.

Guedes said, however, that Brazil's chief public data-processing agency, SERPRO, had worked diligently on Y2K but was still short $35 million to finish fixes. SERPRO handles 60 percent of the Brazilian government's data processing -- everything from tax collection to national finances to the federal payroll.

Independent software consultant Carlos Vargas of the Softtek company in Sao Paolo doesn't doubt that government programmers are hard at work. But he is skeptical of rosy forecasts.

"Nobody knows if the government or companies are being honest," he said.