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The country's exports increased by 11% in 2005 to US$7bn. Industrialised exports, led by the high-tech industry, were up by 13% compared with 2004. The deputy foreign trade minister, Doris Osterlof, said that the country was on course to hit its target of US$11bn in exports by 2010.

The biggest individual rises in exports were in agricultural exports. Mango exports were up by 43% and pineapple exports were up by 27%. Yucca exports were up by 25%.

High-tech manufactured goods were not the only industrial sector to do well. Tyre exports were up by 33%; processed wheat exports were up by 23% and wire and cable exports were up by 24%. Bakery exports were also up significantly, by 20%.

In the first 11 months, the central bank reported that integrated circuits and micro-processors came to US$712m, while other bits of computer innards came to US$610m. Textile exports were US$489m and banana exports US$431m.

The US was the country's main export market, buying 40% of the total exports. The next most important markets, in order, were Venezuela, Taiwan and Brazil. Then came El Salvador, Guatemala, Hong Kong, and Holland followed by the rest of Central America.

Despite the increase in exports the trade deficit in 2005 was also up. In the first 11 months of 2005, the central bank reported that the deficit was up by 37% at US$2.44bn. Unlike the rest of Central America, remittances do not cover more than about 15% of this deficit.

The central bank reported that imports were up by 17%. In the first 11 months, at US$8.89bn. The central bank tried to put a positive gloss on the figures by pointing out that imports of raw materials came to US$45.1bn while consumer good imports were just US$1.48bn.

Inflation: In the first 11 months of 2005, the inflation rate came to 12.9%, while the lagging 12 month rate was 14.2%.

A Brazilian mining group, Companhia Vale do Rio Doce (CVRD), announced on 24 October the purchase of 75.66% shares of the Canadian mining company Inco. The deal makes CVRD the second-largest mining conglomerate in the world. The biggest is BHP Billiton.

The Inco deal is the largest-ever acquisition by a Brazilian company, at US$13.2bn. Inco's shareholders, who chose to sell to CVRD, will be paid tomorrow (26 October). In a statement, CVRD postponed its deadline for buying out the remaining shareholders, therefore delisting the company from the Canadian stock market, until 3 November. If all the shares are tendered, CVRD will have to pay out US$17.5bn. Local analysts reckon that CVRD's earnings before interest, tax, depreciation and amortisation will be around US$14bn this year. 

The deal received the green light from the Canadian Competition Bureau and from the US Federal Trade Commission earlier this month. Last week the deal was also approved by the Canadian government after CVRD promised it would not dismiss workers in the country for at least three years. 

The deal is being financed by Credit Suisse, UBS, ABN AMRO and Santander Banks. CVRD also hopes the Brazilian National Economic and Social Development Bank (BNDES) will join the syndicate. The bond market in Brazil also expects CVRD to issue US$2.4bn in bonds to refinance its debt. This will be the biggest ever corporate issue by a Brazilian company. It is not clear how much of the bonds will be issued locally and how much internationally. 

Analysts approved of the deal, despite an expected fourfold increase in CVRD's current US$5.9bn debt. The CVRD shares on the São Paulo Stock Exchange rose by more than 4% after the deal was announced. Following the purchase of Inco, CVRD will lessen its dependency on iron ore and simultaneously diversify its operations. Until now, 98% of the company's business was in Brazil. This ratio has now fallen to 60%.Besides its huge iron business, CVRD is also the world's second biggest exporter of manganese. It also produces copper, aluminium, potassium and Kaolin. 

Inco is the second-largest global producer of nickel, controlling the world's largest reserves with mines in Canada, Indonesia and New Caledonia. Nickel prices are at their highest level in 20 years. Inco posted a record US$653m profit in the last quarter, a 311% increase on the same period last year. The CVRD nickel business will be controlled from Canada.

The country's trade deficit in the first half of 2007 was US$2.08bn, 12% higher than for the same period of 2006 when it was US$1.48bn.

In the first half of 2007 imports were up by 26% at US$3.18bn while exports were up by 6% at US$1.1bn. In the whole of 2006 the trade deficit was US$3.49bn, 24% higher than in 2005.

The central bank argued that the increase in imports was a result of a larger demand for capital goods, which pointed towards an improvement in the economy in the long term. The import bill was also affected by the run up in oil prices and a surge in consumer goods.

Gabriela Núñez, the president of the central bank, emphasised that the country could not go on running Duch hefty deficits indefinitely. She called on exporters to increase their sales. The main reason why the country is able to finance such a deficit is the strong inflow of remittances from Hondurans working in the US. In 2006 remittances came to US$2.36bn. The government had been hoping that remittances would top US$3bn this year, but this now seems unlikely given the general slowdown in remittances from the US to Latin America. There are around 1m Honudrans working in the US, most of them illegally.

Inflation: In the 12 months to the end of July inflation was 6.3%. In calendar 2006 the rate was 5.3%.

Ten days of violent protests to back demands for mining companies to make higher payments to local governments finally appeared to end in Moquegua on 18 June. At its height, the protesters seized 60 police officers and their general and threatened to hang them.

Protesters also blocked a stretch of the Pan-American Highway to demand a bigger slice of mining royalties. Demonstrators also blocked a key bridge to the neighbouring Tacna department, causing food and petrol shortages.

On 20 June the Peruvian government sacked the police general, Alberto Jordán, as head of the XI Dirección Territorial de la Policí­a de Perú, for acceding to the protesters demands in order to save his life and those of 60 of his men. 

General Jordán has asked for an audience with President Alan Garcí­a after Garcia accused him of “feebleness, physical fear, innocence and silliness." Jordán said that President Garcí­a had been misinformed. He pointed out that neither he nor any of his men were carrying weapons when they were taken hostage. He all but claimed that he had been made a scapegoat by the interior minister and the country's police chiefs. He argued that the situation was dangerous and could have led to 30 people being killed.

The protests began on 10 June to demand that more of the royalties on mining operations in the area went to local municipalities rather than to the federal government. The protests in Moquegua had an added edge because the neighouring state of Tacna was awarded a higher royalty. Southern Peru Copper (SPCC), now owned by Grupo México, operates in both Moquegua and Tacna.

The protest blocked access to Southern Peru Copper's Toquepala copper mine in Tacna, and the Cuajone mine and Ilo smelter in Moquegua. The protests had international consequences, pushing copper prices on the London Metal Exchange up to their highest point in a month.

On 16 June about 100 police officers tried to break up the blockade of the roads in Moquegua but were overtaken by 15,000 rock-throwing demonstrators. Some 57 officers were injured, and 60 were held hostage and General Jordán humiliated before being released. 

The Moquegua protesters wanted the royalty changed so that it was tied to the amount of metal produced rather than the tonnage of metal-bearing earth that is removed from the mine. Moquegua residents complain that Tacna receives more money from its mine because of the greater tonnage of earth hauled, even though the mine produces less copper.

SPCC, Peru's second biggest company, now pays an annual royalty of NS$712m (US$253m) in Tacna; but in Moquegua it pays royalties of only NS$188m (US$64m). The Moqueguanos wanted extra royalties of NS$469m (US$167m), backdated to 2007.

The terms of settlement have not been published but it seems that the federal government has bought off locals by offering the new investment. The prime minister, Jorge del Castillo, said that each mayor in Moquegua would get a new building or bridge.  “Each mayor will go home with at least one project under his arm," Del Castillo said. 

The government also proposed that Southern Copper manage accounting separately for each of the four regions in which it has mining operations, del Castillo said. The protest was the biggest uprising in the region since 2000, when a group of army reservists led by former presidential candidate Ollanta Humala took over SPCC's Toquepala mine.

“Violence broke out because the police provoked the feisty population of Moquegua,"' Humala declared. “And the people won." The Cámara Nacional de Comercio Producción y Servicios (Perucámaras) said that the protests in southern Peru cost the country US$16m in lost output.

Copper: Chile's copper exports fell by 33% year-on-year in value terms in May to US$2.84bn. In April 2008 copper rexports came to US$3.72bn. The main reason for the fall in May was a strike by subcontractors at the state-owned Corporación del Cobre (Codelco). For the first five months of 2008, copper export revenues were up by 6% year-on-year at US$17.48bn. In calendar 2007 copper export revenues came to US$37.56bn, providing over half the country's total export revenues of US$67.64bn.

On 28 May the finance minister, Guido Mantega, downgraded his forecast for real GDP growth in 2010 from 4.5% to between 3% and 4%. What is surprising is that the downgrade came days after the best consumer confidence figure, from the Fundação Getúlio Vargas, since September 2008, before the economic crisis struck Brazil.

Mantega admitted that the economy was now in recession. The scale of the recession will not be clear until the consolidated first quarter figures are published on 9 June. In the final quarter of 2008, the economy contracted 3.6% on a seasonally adjusted basis. Our guess is that the first quarter contraction will be a bit less than in the final quarter of 2008. The government's anti-crisis measures have probably taken the edge off the slowdown.

Indeed in April 2009 industrial production was 1.1% higher than March. This is an impressive result because the later Easter this year meant that there were fewer working days in April than March. To be fair, the April figures did not show an economy rebounding strongly: in the first four months the motor industry's output was 14.7% down on the same period of 2008.
 
Mantega argued that the concept of a recession (two quarters of economic contraction) was not particularly useful because what policymakers (and individuals) want to know is what is going to happen moving forward. His view is that this year will be a poor one for developed economies but that in 2010 there will be a recovery, led by emerging markets.

Foreign investors are betting heavily on Brazil leading this recovery. In the year to 20 May they bought R$9.8bn more in Brazilian equities than they sold. In the first 20 days of May there was a net inflow of R$4.7bn into the stock market. This was the highest sustained inflow since April 2008.

The real question about what will happen to the Brazilian economy is what will happen to domestic demand. Here the signs look encouraging. The fall in interest rates has shored up domestic consumption and prevented unemployment surging. Rising unemployment would have tipped people who had just emerged into the middle class back into uncertainty and poverty. The key point is that this does not seem to be happening. Indeed in April, the urban unemployment rate fell for the first time in 2009, to 8.9%.

On 26 May the president of the central bank, Henrique Meirelles, said that the decline in interest rates was structural not cyclical. With lower real interest rates, consumption (fuelled by bank credit) is likely to grow even faster. It is worth noting that in April bank lending rose for the second consecutive month, as borrowing rates fell to their lowest level for a year.

The month-on-month rise in bank lending was only 0.4% from R$1.24 trillion at the end of March 2009 to R$1.25 trillion (US$621bn), but year-on-year, lending was up by 23%. In GDP terms, lending is now at 42.6% of GDP. The Brazilian Bankers Association expects bank lending to increase by 14% in 2009: in most economies such a figure would be welcomed in 2009. In Brazil it is dismissed as the slowest rate of growth since 2003.

Meirelles also gave a strong signal that the bank was not running a policy of exchange rate management. He said that under inflation targeting, which is the government's policy, policymakers make their decisions based on the state of the domestic economy, not to ensure that there is equilibrium in the balance of payments.

This statement is important because the Real has rallied strongly this year (20% since the end of March) and on 1 June went through R$2/US$ again. Exporters and industrialists will begin to complain if the Real strengthens much beyond R$1.90/US$. Despite Meirelles's statement of the bank's policy stance, the central bank reported on 28 May that it had bought US$2.4bn in US dollars to try to brake the rise of the Real. The bank is currently sitting on US$206bn in reserves. The Real peaked, in August 2008, at R$1.55/US$.

Current account: In April 2009 the country recorded its first current account surplus for 19 months. The surplus came in at US$146m. The deficit is likely to return as the currency strengthens and exports run into headwinds. For the past 12 months the current account deficit stood at US$19.8bn, or 1.4% of GDP. In December the deficit peaked at US$28bn.

Trade:  In April the country posted a trade surplus of US$3.7bn, bringing the accumulated surplus for the year so far to US$6.7bn.

Fiscal surplus: The country's primary fiscal surplus fell by 46% in the first four months to R$33.4bn (US$16.7bn), the equivalent of 3.5% of GDP, down from 6.9% in the comparable period of 2008. The main reason for the fall was a decline in fiscal revenues. The government's target for 2009 is to run a primary fiscal surplus of 3.3% of GDP.

Inflation: In April the national rate of consumer price inflation (INPC) was 0.48%, up considerably on 0.2% in March. This brought the accumulated rate for the first four months to 1.72%. The annual rate was 5.5%, significantly higher than the 5.9% rate for calendar 2008.

Taxing savings: On 12 May the finance minister, Guido Mantega, announced that the government would begin to tax the interest on some savings accounts from 2010. The move, which is designed to prevent investors migrating away from government bonds towards fixed rate savings accounts as the benchmark Selic interest rate declines, is politically sensitive, particularly ahead of the 2010 elections. The opposition has already seized on the move to accuse the leftist government of President Lula da Silva of robbing the hardworking middle class and of mimicking the 1990 move by the disgraced former president, Fernando Collor (1990-1992), to seize savings accounts.

In reality, 99% of existing small savers will not be affected by the move, which will affect savings accounts of over R$50,000 (US$23,900). Under a law enacted in order to combat hyperinflation in the 1980s, savings accounts in Brazil guarantee a rate of return of 6.0%. The fear is that as the Selic, which is currently at a historical low of 10.25%, drops down to single digits for the first time ever, investors will migrate towards savings accounts where the rate of return is guaranteed - and is also tax free. This means less appetite for treasury bonds - and less investment financing for the government. It might also encourage speculation on savings accounts.

Under the law, which must first be approved by congress, the tax will only take effect if the Selic falls below 10.5%. In April the central bank cut the rate to 10.25%. The measure will be accompanied by temporary tax breaks on fixed income funds for this year, also in order to maintain investor interest.

The economy contracted 3.3% on an annual basis in 2009, after five straight years of growth, according to the central bank. In the final quarter of 2009 real GDP contracted 5.8% compared with the same period a year earlier.

These figures were much worse than most economists had expected and show how damaging the power cuts have been. The cuts have had a major effect on oil-related GDP, which fell 7.2%. Non-oil GDP was also down 4% in the fourth quarter and 2% for the year. Retailing fell 13.9% year-on-year and manufacturing by 6.9% in 2009, while only non-tradeables grew.

The government is only predicting growth of 0.5% in 2010, based on a low oil price scenario (US$40/barrel in the 2010 budget). There was a balance of payments deficit of US$10.26bn in 2009, after a surplus of US$9.28bn in 2008, showing how reliant Venezuela remains on high oil prices and the failure of the government, despite claims to the contrary, to diversify the export economy.

Oil exports (accounting for over 90% of total exports) were valued at US$54.20bn in 2009, down from US$87.44bn in 2008. Inflation finished 2009 on 25.1% and, with January's devaluation, will remain high this year.

The current year has got off to a tricky start. The construction industry is worried about rising input costs. Even without wage increases, the industry claims that its costs rose 30% in 2009. The problem is that the economic slowdown has meant that family houses have been harder to sell. This sticky market has prompted the industry to hold, rather than increase, house prices. Under government rules, the maximum it could increase prices anyway, according to Oswaldo Carrillo, presidente of the Comisión de Vivienda de la Cámara Venezolana de la Construcción (CVC) is only 10%. Currently, a cheap new house (vivienda económica) on an estate costs BF350,000 (US$81,400).

The other big problem facing businesses is rising wages. Some forecasters expect inflation to accelerate to 39% in 2010. Even a modest pickup in prices will force wages up, since there are crucial legislative elections in late September and the government is already under pressure because of its failure to resolve the electricity crisis quickly.

Electricity : On 21 March Vice President Elí­as Jaua announced that 96 companies would have their electricity supply cut off for 24 hours for failing to meet energy reduction targets, with the possibility of further sanctions for other high-use business customers. The government blames the weather for the problem, but there is growing evidence that the government failed to manage the problem effectively. A recent report from the state company, Corpolec, pointed out serious flaws in the management of the country's electricity sector. The problem for the government is that things could get worse until the rainy season starts in May. Jaua admitted that water levels at the main Guri reservoir at the end of March were approaching critical levels.

The Corpolec report admits that the country's electricity system is verging on obsolescence. The government of President Hugo Chávez nationalised the electricity sector in 2007 and claims it inherited an industry already in crisis.   However, private sector analysts claim that the sector has lurched from bad to worse under state ownership. Corpolec has a medium term investment plan of US$5.3bn, of which US$3.2bn is destined for additional generation.

Current account: In the final quarter of 2009 the country ran a current account   deficit of US$4.95bn. Exports in the quarter were US$16.75bnn (up 56.2% year-on-year), amid stronger oil prices, while imports came to US$8.41bn (down 42% year-on-year). For 2009 as a whole exports came to US$57.59bn (down 40% year-on-year), while imports were US$38.44bn (down 22%).In 2009 the overall current account surplus was US$8.5bn, down from US$37.4bn in 2008 (and down 77% year-on-year).

Inflation: Inflation appears to be pretty stable. In February the official rate was 1.6%, much the same as in January (1.7%).

President Ricardo Martinelli forecasts that in 2011 the economy will grow by between 8% and 9%. This forecast is much more bullish than the World Bank, which reckons on growth of around 5.4%.  

Martinelli claimed that the economy grew between 6.5% and 7% in 2010. The statistics institute Inec has year-on-year growth for the third quarter at 8.4% and GDP growth for the first nine months of 2010 at 5%, compared with the same period of 2009.

Martinelli claimed that his government's ambitious infrastructure programme, which includes the first metro in Central America, will ginger up growth this year. He noted that his government will invest US$14bn on infrastructure projects between now and 2014, when his period in office expires. This US$14bn figure excludes the US$5.2bn that is being spent on expanding the capacity of the Panama Canal.

Foreign direct investment: In the first nine months of 2010 the country attracted FDI of US$1.66bn. This was US$189m more than it managed in the same period of 2009.

Inflation: Inflation in 2010 in Panama City was 4.9%. December consumer prices in the city rose by 0.6%, while in other urban areas prices jumped by 0.9% in the month.

Peru registered its third consecutive positive monthly trade balance in July, thanks to an increasingly dynamic export sector. Exports totalled US$761m in July, a 6.1% increase on the previous year. Exports were driven by mining, which climbed 4.6% (to US$349m), and agriculture, up 32% (to US$84.3m) compared to the same period in 2002. Total imports were US$746m.

Significantly, Peru's exports to the Mercosur trading bloc, with which it signed a free-trade agreement earlier this week, have also started to pick up. Although they only totalled US$27m in July, this is a 70% increase on July 2002 and exports should grow apace with the opening up of the new markets. A total of 91% of Peru's exports went to Brazil, with which Peru has established especially close relations, having formed a 'strategic alliance'. Peru still has a negative trade balance with Mercosur, however: US$75.2m in July.

Exports to the US accounted for 43.5% of total exports as Peru continued to benefit from the special trade preferences under the Andean Trade Promotion and Drug Eradication Act (Atpdea), which was enhanced last November. The Apec countries remain the main destination for Peru's exports. These totalled US$363.4m in July; imports US$351.3m.

The Consejo Nacional Electoral (CNE) approved the application to hold a recall referendum on President Hugo Chávez . It also approved the other 46 applications for recall referenda on whether (mostly opposition) governors, deputies and mayors should continue in office.

The applicants for the referenda now have five days (ie, until Monday) to tell the CNE when and where they will gather the signatures needed to back the petition. The applicants have to gather the signatures over four days: they need to get valid signatures from 20% of the electorate to trigger the next stage in the referendum process. The opposition will need to get 2.4m valid signatures to advance the process to hold a referendum on Chávez . There are 12m voters in the country.

While the opposition Coordinadora Democrática has applied for a referendum against Chávez , the chavista Movimiento V (Quinta) República has asked for recall referenda on 38 opposition deputies, seven governors and the mayor of Caracas, Alfredo Peña. The president of congress, Francisco Ameliach, who is also a prominent chavista says that the MVR will now apply to the CNE for referenda on a further 500 opposition politicians right across the country.  

Once the signatures have been gathered, the CNE has three months to validate them. Once it has done that, it decides on the date for the recall referendum. The president of the CNE, Francisco Carrasquero, said that the CNE has a draft form for collecting the signatures. He added that the CNE had not decided whether all the referenda it has so far approved should be held on the same day, or whether they should be held separately. Nor has the CNE decided on whether Venezuelans resident abroad can sign up in support of the referendum.  

The opposition argues that the referendum on Chávez should take priority over all the other referenda and thus come first. The government argues that the referenda should be held according to other criteria such as when the target first became eligible for a referendum by completing half his (or her) mandate.  

Even the opposition does not believe that it would be possible to hold a referendum on Chávez before March 2004. And that is if everything goes smoothly and none of the CNE's decisions are challenged in the supreme court or in other ways.  

There have been seven significant national elections or plebiscites since 1998. In all these votes, the CNE has used computerised, rather than manual, counting methods. The service has been provided and supported by Indra, a Spanish computer services company. Earlier this week there was controversy when the CNE hinted that it may not renew its US$55m contract with Indra. The opposition has criticised the way the 7,350 automatic scrutiny machines are used. The CNE retorts that there is no evidence that there has been any fraud in any of the elections Indra has run.

The government has floated the idea of reverting to a manual count for the referenda. It is also threatening to cut the budget for the CNE. The toing and froing over Indra shows the lengths to which the government is prepared to go to delay the referendum.  

Even if the referendum takes place and there is a majority in favour of recalling Chávez , it is not clear whether he could then stand in the subsequent election to pick his successor. The problem the opposition faces is that although there is a two-thirds' majority, according to the opinion polls, against Chávez , he remains the country's most popular politician, supported by the a third of the electorate. This support could be enough to win the election after the referendum.

Paraguay's chamber of deputies yesterday initiated impeachment proceedings against four members of the supreme court accused of corruption and pedalling of influence.

The cases were brought by the leaders of all Paraguay's political parties with representation in parliament. The four judges, Carlos Fernández Gadea, Felipe Santiago Paredes, Luis Lezcano, and Bonifacio Rí­os (the court's president) face some 20 charges of abuse of power. Congress is demanding that the four face trial in a civil court after their impeachment.

The judges' impeachment represents the next step in President Nicanor Duarte's campaign against the supreme court, and the judiciary in general, embarked upon when he became president in August. Two members of the supreme court, Raúl Sapena and Jerónimo Irala Burgos, quit last week after Duarte announced his intention to get rid of six members of the nine-man court.

Yesterday's proceedings were, however, overshadowed by a row between Julio Colmán of the ruling Partido Colorado and Gustavo Mussi of the Partido Unión Nacional de Ciudadanos Eticos (Punace). Colmán accused Mussi of offering him US$5,000 to vote against government plans to remove Gadea and Paredes from the court. A special commission has been established to investigate the claims.

The ruling Partido dos Trabalhadores closed ranks behind President Lula da Silva yesterday and expelled the four members of congress who had voted against pension fund reform. The move underlines the grip the party hierarchy still has over the national committee.

The decision to expel Senator Heloisa Helena, a Marxist, and three deputies, Luciana Genro, João Batista Oliveira and João Fontes, was taken by 55 votes to 27 with one abstention. The party decided that the four had failed to support the party line, which had been agreed after discussion, and therefore should be expelled. Helena said that she would not join another party.

Aloizo Mercandante, the PT's leader in the senate, led the case for the prosecution. The case for the defence was led by allies of Eduardo Suplicy, another senator. They argued that the four should have their membership suspended for six months. Fontes, besides voting against the government, had also tried to embarrass President Lula by releasing a video of him criticising the then President, José Sarney. Sarney is now the leader of the senate and a key figure in the Partido do Movimiento Democrático Brasileiro.

Besides the expulsions, the party hierarchy also won on issues such as economic policy. The PT's national committee endorsed the government's economic strategy, even though it largely consists of applying policies the PT opposed when President Fernando Henrique Cardoso was in government.

The crisis in Bolivia took another lurch yesterday when a 10-hour session of a joint session of the senate and the chamber of deputies degenerated into a near riot. The reason for the passion was that congress was trying to pick three members of the new electoral commission (CNE). Today congress will make another attempt, but only to pick one new member.

On top of this, the president of the senate, Hormando Vaca Dí­ez, alleged yesterday that there had been a plot by paramilitaries to take over congress last week. He said that the government had known about the plot but had not warned him. Congress has been accused, by some of the people who brought down President Gonzalo Sánchez de Lozada in October, of continuing to represent the oligarchic groups that supported his government. Union leaders in particular have called for congress to be replaced by a constituent assembly to draw up a new constitution.

As if these two problems were not enough, Evo Morales, the leader of the coca growers, raised the stakes by accusing interim President Carlos Mesa of being a weakling and of dodging any meaningful effort at reform. Morales accused Mesa of being beholden to multinationals and of not being interested in standing up against imperialism. Morales was speaking from Havana, where he is attending the anti-Free Trade Area of the Americas summit.

The congressional problem is probably the most pressing. If congress fails to work, the extraparliamentary pressure for a constituent assembly, which could produce a radical constitution along the lines of that of Venezuela, will mount. 

Last night, each of the major parties had a candidate for the CNE. Each candidate needed 105 votes, equivalent to two-thirds of congress, to be appointed. There seemed to be a deal to get one board member from Movimiento al Socialismo (MAS), another from Movimiento de la Izquierda Revolucionaria (MIR), and a third from Movimiento Nacionalista Revolucionario (MNR). The minor parties were in uproar over what they saw as a stitch-up.

Suddenly, late last night, the position was radically altered when 30 members of congress said that they were breaking with their parties and forming a new dissident bloc. The congressional impasse is likely to mean that the proposed referendum on whether gas should be shipped to the Pacific via Chile will be delayed. The next scheduled elections are municipal elections due at the end of the year.

Morales, who leads the MAS, argued from Havana that, if his party wins the municipal elections, he will have a mandate for a new form of what he called “communal democracy".

The opposition to President Hugo Chávez is becoming divided. Hardliners, such as Henrique Salas Romer, the defeated presidential candidate in 1998, argue that the opposition should have nothing to do with the proposed double-checking of petition signatures. More-moderate members of the Coordinadora Democrática, such as Enrique Mendoza, the popular governor of Miranda and the leader of the CD, argue that the double-checking should go ahead but only after the Consejo Nacional Electoral has cross checked what it says are dodgy signatures on the opposition petitions with the opposition itself.

Mendoza argues that the numbers presented by the CNE do not tally with the Coordinadora Democratica's. He argues that the discrepancy could be sorted out in a day or so. If this was done satisfactorily, the double check could then go ahead.

The key point is that the CNE has validated only 1.8m of the 3m signatures the opposition collect. The CNE now wants to double-check 876,000 of the 1.1m signatures, which it describes as suspect, in most cases because the signatories' handwriting is similar. The opposition needs 600,000 of the 876,000 dodgy signatures to be validated to achieve the 2.4m signatures which will trigger a recall referendum on President Chávez .

Both wings of the opposition refuse to contemplate the idea that they will not be able to force a referendum on Chávez . They are busy mobilising their international supporters. On Friday there was a strongly critical article in the Wall Street Journal accusing Chávez of being a communist. The Washington Post also ran an editorial on Friday accusing Chávez of attempting a coup by technicalities.

More importantly, human-rights organisations such as Human Rights Watch and Amnesty International, accused the government of persecuting opponents who had protested against the CNE's decision on the dodgy signatures. Among those picked up and tortured was Carlos Izcaray, a cellist and leader of the symphony orchestra. He was beaten up and tortured with electric shocks for 20 hours.

The Organization of American States is due to publish a report on human rights in Venezuela later this month. Last week it requested that the Chávez government respect the rights of the demonstrators the national guard arrested last week during the opposition protests. If the OAS report shows that the government is becoming more repressive, international support for Chávez may ebb. So far countries such as Brazil have backed Chávez on the grounds that he is following the constitution and kept the international observers, the OAS and the Carter Center, onside.

Another sign of the opposition trying to prod the US to act against Chávez was a strange statement from General James Hill, the commander of the US Southern Command, accusing the Venezuelan government of allowing large numbers of young Arab Muslims to live on the holiday island of Margarita.

The Venezuelan foreign minister, Jesús Arnoldo Pérez, said that the US had not been in touch about this issue. He claimed that the general appeared to be confusing Muslims with terrorists.

Chávez raised the stakes again yesterday in his weekly broadcast, Aló, Presidente, when he accused President George W Bush of kidnapping President Jean Bertrand Aristide from Haiti on 29 February.

The Guatemalan government is making a meal out of an incident on the border last week. The foreign minister, Jorge Briz, accused the Belize government of reacting aggressively and disproportionately: a week ago a Belize army patrol opened fire on two Guatemalans who were picking xate. This is sold as an ornamental plant and is one of the main income sources for poor peasants along the border.

The Guatemalan press is urging its government to be less pusillanimous, even though neither of the peasants was killed: one was wounded and left for the Guatemalan authorities to pick up and take to hospital, the other was arrested and taken to Belize

Yesterday the Guatemalan papers were claiming that it was always the Belizeans who attacked Guatemalans never the reverse. The government-supporting Prensa Libre, claimed that the new government should signal a break from the attitude of the previous government and stand up for the rights of Guatemalans. Under a 2000 agreement between the two countries, there is a 1km adjacency zone either side of the border. Guatemala only renounced its claim to most of Belize in 1991

Briz said that Guatemala will take the issue of the border attacks to the Comisión Interamericana de Derechos Humanos next month. Other politicians, such as Manuel Baldizon, want the government to send troops to the border. Baldizón said that the problem with the adjacency line is that no-one knows where the border runs.

The markets were not pleased by the central bank's decision, announced on 19 May, to hold interest rates at 16%. On 20 May the Real slumped to its lowest level in a year: $3.21 against the dollar.

The most worrying move was probably in the interest futures market, where traders are now expecting interest rates to be higher at the start of 2005 than they are now. 

Some traders said that things would have been worse this week if the treasury had not been rolling over R$35bn of debt. This drained liquidity from the market on 19 May and meant that speculative positions were smaller and therefore the pressure on the Real was less. The treasury offered sale and repurchase agreements to try to encourage investors to buy its paper: this was the first sale of treasury paper for two weeks because of the choppiness of the markets.

Development: The Consejo Nacional Electoral is about to issue a ruling which will prevent those people who signed the opposition petition last November calling for a recall referendum on President Chávez from taking part in the referendum count. The CNE argues that that by signing the petition they have impugned their impartiality. The ruling concerns 58,000 of the 180,000 vote counters.

Significance: The CNE decision is another blow for the opposition, which had argued that whether people had signed the petition was immaterial. Now the CNE will use the people chosen by lot in March to replace the volunteers the opposition had mustered. These people chosen by lot will also serve in the regional elections which are scheduled for 26 September.

There are plenty of other issues which still need to be sorted out before the recall referendum on 15 August. It is still not clear how, or indeed whether, citizens living abroad will vote. It is also unclear how the rules for running the referendum will work. The opposition also wants a contingency plan in place to cope with any problems in the new electronic voting machines which will be used for the first time in the referendum.

The opposition alleges that these machines can be manipulated. The opposition is also pressing for the CNE to issue more invitations to international bodies to monitor the referendum. It is not clear what the monitors will be invited to watch over. The opposition is also concerned about the measures to prevent the same people voting several times.

Development: Brazil scored a notable trade triumph on 4 August as the World Trade Organization ruled that European Union sugar subsidies violate trade regulations. Brazil filed the complaint last year alongside Australia and Thailand.

Significance: The ruling could hasten the reform of Europe's sugar regime, forcing it to cut internal subsidies. This would be a boost to Brazil which is already planning to expand its sugar production. The WTO ruled that the 1.3m t quota on EU internal sugar production acted as an illegal export subsidy for another 3m t of sugar outside the quota. The WTO also ruled that it was illegal for the EU to re-export some of the 1.6m t of sugar a year imported from the African, Caribbean and Pacific (ACP) group of former colonies. The WTO did, however, recommend that the EU continue to extend trade preferences to the ACP nations.

EU sugar reform could spell the end for cane industries throughout the Caribbean. The EU announced before the WTO decision that it will reduce the price paid to ACP nations for sugar sold on the European market. The European Commission noted that from 2005 to 2006 ACP sugar producers would be paid 506 euros per ton, down 20% from this year's 632 euros per ton. For 2006/2007 there will be no adjustment, while for 2007/2008 there will be a further 16% reduction, which would see the price paid for sugar move from 506 euros per ton to 421 euros.

Brazil is the biggest sugar producer in the world, churning out over 23m t of sugar a year. If it increases production and prices come down further, Caribbean producers such as Jamaica, Guyana, Trinidad and Tobago, St Kitts and Nevis, Barbados and Belize, are unlikely to be able to compete. Street protests are expected across the Caribbean in the wake of the decision.

Development: The finance minister, Tobí­as Nóbrega, said on 8 September that the government is aiming for inflation of between 15% and 18% in 2005 and growth of between 3% and 5%.

Significance: These forecasts show that the government expects the effect of its economic bounce-back from the crisis of the last couple of years to tail off. This year inflation is likely to be between 25% and 30% (though the government is aiming for a rate of between 20% and 22%) and growth will be well into double digits, probably more than 12%.

This year, Nóbrega pointed out, the UN's Comisión Económica para América Latina has forecast that Venezuela is likely to lead the region in growth. Expansion is being driven by the surge in oil prices: Venezuela is the world's fifth biggest oil exporter and it is the fourth biggest supplier to the US. Oil revenues this year are likely to top US$30bn.

Nóbrega forecasts that oil prices will remain high until at least 2006. Oil revenues will, he says, underpin the budget and provide money for the government to invest. The government's opponents claim that the oil windfall is being squandered: it is going on subsidising food and education for the poor. The government is also confident that its house-building programme will give the whole construction supply-chain a jerk forward. The government is forecasting that it will create 600,000 new jobs this year.

Development: Party managers reckon that they are about 10 votes short of the 105 needed to start a prosecution of the former president, Gonzalo Sánchez de Lozada. Congress votes today (13 October) on whether to prosecute him.

Significance: Party discipline in congress is breaking down which may make it easier for the radicals to get the two-thirds majority they need to start the prosecution of Goni and two of his ministers. Some politicians may well be swayed by the columns of marchers who are converging on La Paz to celebrate the first anniversary of the overthrow of Goni on 17 October.

It seems certain that three parties with 84 seats in congress (the Movimiento de la Izquierda Revolucionaria, the Movimiento al Socialismo and the Nueva Fuerza Republicana) will vote to prosecute Goni. The anti-Goni group is confident that it will get another 12 votes from a range of smaller parties.

The main obstacle is Goni's Movimiento Nacionalista Revolucionario which is certain to vote against the proposal. It is the biggest group in the 157-seat congress. The MNR has 47 seats in total in congress: 36 in the 130-seat lower chamber and 11 of the 27 senators.

Development: Petrobrás's financial director, José Sérgio Gabrielli, said on 12 November the company would not increase the price of fuel.

Significance: Gabrielli's comments came as a surprise to most market analysts, who interpreted Petrobrás's announcement last week that it was preparing a survey on fuel prices as a sign of an imminent increase. At the time, even the mines and energy minister, Dilma Rousseff, assumed a new readjustment was going to be announced.

Gabrielli's comments coincided with Petrobrás delivering its third-quarter figures. The company's profits in the period increased 43% when compared to the previous quarter. In the period from July to September, the company earned R$5.488bn (US$1.9bn). Profits, however, were 10% lower when compared to last year's figures. In the first nine months of 2004 Petrobrás earned R$13.29bn (US$4.74bn).

When asked if the results would have been better if Petrobrás had raised prices to consumers reflecting the current price of crude oil on the international market, Gabrielli said it was in the company's interests 'to keep prices low to maintain the health of the internal market as a whole'. According to analysts, Petrobrás' revenues would have been 6% higher if the company's prices reflected the price of oil in the international market. The company's petrol and diesel prices are 21% cheaper than the average prices charged abroad.