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COSTA RICA | Top of growth league? Confirmation that growth in the first half of the year reached 6.2%, with all sectors registering expansion, has strengthened the expectation that GDP growth for the year as a whole will reach 5.3% (WR-03-31), two points more than the original forecast and probably the highest rate in Latin America. 

With export earnings increasing by 21%, to US$3.17bn, (faster than the 6.3% growth of imports), the trade deficit was reduced by 28%, to US$665m, and the country's international reserves rose to a record US$1.57bn at end-July. The GDP growth rate in the first half of last year was 2.1%. 

HONDURAS | Dramatic construction slump. The lack of public funds to maintain the road system will lead about 100 construction firms to suspend operations, starting now, according to the Cámara Hondureña de la Industria de la Construcción. The chamber says this, in turn, will lead to the loss of 45,000 jobs. There could also be a collateral impact, as the poor state of the roads will combine with a severe rainy season to impede cargo transport. 

DOMINICAN REPUBLIC | Fate of media empire uncertain. The Dominican government appears to have changed its mind about returning the Báez Figueroa media empire, as ordered by a court on 29 July [WR-03-30]. It had initially signalled that it would comply with the court order. The Listí­n Diario group, which includes the country's oldest newspaper (plus three others, four TV stations and more than 70 radio stations), was seized by the government after the fraudulent collapse of Baninter. The former editors of the group's media outlets are filing a suit with the Inter-American Human Rights Commission.

The national assembly did not meet the deadline set by the supreme court to appoint a new electoral council [WR-03-31], so now it is up to the court to appoint a provisional one. In order to ensure the legitimacy of this move, the supreme court requested a formal opinion from the citizens' power, a new power of state created by Venezuela's new constitution, formed by the offices of the chief prosecutor, the public ombudsman and the comptroller-general. The citizens' power responded promptly approving the action, and issuing two exhortations: one to all people and institutions, to `respect' whatever the supreme court decides; the other to the supreme court, to bear in mind the list of 81 candidates which the national assembly had been considering. The court has set its own deadline for the selection task: 25 August. 

The opposition has announced that it will go ahead and submit to the electoral councils the signatures it has already collected endorsing the call for a mandate-revocation referendum - despite the fact that many in their own ranks have cast doubts on their validity. Former and possibly future presidential candidate Henrique Salas has said that it is `most probable' that the electoral council will reject the signatures, but has defended their submission as a gesture. 

Background noise has continued to come from Washington, most recently in the form of urging President Hugo Chávez to do what the constitution says regarding the referendum. As sharpwitted analysts in Caracas have been quick to point out, the constitution does not say the President has to do anything about the referendum: it is up to the opposition to request it, meeting the requisite conditions, and for the electoral council to call it and supervise it. At most what the President must do, if the vote goes against him, is step down.

Embattled presidents would be able to dissolve congress and call new legislative elections; day-to-day rule delegated to a prime minister...

Latin America's political systems are in crisis, and the only solution is to adopt a `semi-parliamentarian' régime. This is the message that former Colombian President Ernesto Samper is spreading through Latin American capitals, seeking to enlist the support of other former rulers. Samper, who ruled Colombia from 1995 to 1998, was the only Latin American President whose resignation became an overt (and unsuccessful) aim of the US.

According to Samper, `corruption, drug-trafficking and the crisis of the neoliberal model are threatening Latin American democracy; xenophobia, terrorism and the aggravation of social conflicts are some of the problems resulting from a mistaken model of development.' He finds examples of the crisis, in differing degrees, in Colombia's internal conflict, the difficulties of Chile's transition to complete democracy, and the increase of poverty and social exclusion in Brazil.

He says the region needs a mechanism to deal with the risk of social and political destabilisation, and proposes what he calls `semi-parliamentarianism'. This is a system whereby presidents facing institutional crises would be able to dissolve their legislature and call new legislative elections. Day-to-day rule would be entrusted to a head of government elected by the parliament. His formula does not, however, envisage reducing the President's role to that of head of state: it is closer to the French than the German model. What he does say he wants, though, is a less `monarchic' presidency.

He also suggests the adoption of mechanisms such as the plebiscite or other forms of consultation to determine whether the President himself should be removed from office.

It is worth mentioning that systems approaching what Samper is proposing already exist, on paper at least, in Peru and Argentina, where the president of the council of ministers or the jefe de gabinete are supposed to run the administration. Practice is closer to theory in Peru than in Argentina, where the prime-ministerial post has become little more than decorative (it certainly did not shield Fernando de la Rúa). Similarly, the use of plebiscites and referendums has been spreading and, as our readers know only too well, the institution of the mandate-revocation (or recall) referendum is embodied in the Venezuelan constitution, and its effectiveness is currently being put to the test.

PFL and PSDB side with state governors in opposition to government plans for a perpetuated `cheque tax'.

The second of President Lula da Silva's big reform initiatives, the one intended to overhaul the tax system, may prove even more difficult to push through -- at least in its original version -- than the pensions reform has been so far. Aligned against the government this time are not only the leftwing parties and the radicals within the ruling Partido dos Trabalhadores (PT), but also heavyweight players like the Partido da Social Democracia Brasileira (PSDB) and the Partido da Frente Liberal (PFL) - erstwhile partners during the Cardoso government.

They signalled their intention of fighting over much of the government's draft when they delayed its first consideration in committee by denying it the necessary quorum. On 22 August they eased the pressure enough to approve the reform in general, but only to return on 26 August to submit an array of amendments.

Main sticking-point

The most important of these concerns the government's intention of making permanent the tax on financial transactions (popularly known as the `cheque tax') which has been periodically renewed since it was introduced five years ago. The government expects to raise annually some R$24bn (US$8bn at the current rate), which it wants earmarked for the reduction of the social security system's deficit. In other words, it sees this as a complement of the pensions reform.

The difficulty is that another politically important group - the 27 state governors - want the proceeds shared out among themselves, with autonomy as regards their allocation. The PFL and PSDB are playing to this constituency.

The PFL, largest of the parties in outright opposition to the government in the lower chamber, concedes that it might not have its way at committee stage, but is confident that it will succeed when the legislation goes before the full chamber of deputies. Their congressman José Carlos Aleluia is categorical about this: `The draft presented by the government is doomed; it has no salvation - so we shall have to come up with a new draft that takes into consideration the opinions of all Brazilians.'

A lateral issue: reelection

In several recent interviews, President Lula da Silva returned, albeit not too emphatically, to a theme that had barely been mentioned since he was on the campaign trail: his criticism of the institution of presidential reelection, introduced in a 1997 amendment of the constitution. He refused to be drawn, though, on whether he might avail himself of this institution come the next general elections in 2006.

One of his tactical allies, congressman Geddel Vieira Lima, of the PMDB, wants to save him any agonising over the issue: he intends to submit to congress this week a draft constitutional amendment barring the reelection of the President and state governors for successive terms of office. Vieira Lima is what might be described as a flexible politician: he is a great defender of former President Fernando Henrique Cardoso, and was one of the most vocal defenders of the 1997 amendment which allowed FHC to stand, successfully, for re-election. Vieira has also been a consistent opponent of Lula.

This may remain as no more than a picturesque sideshow -- unless, that is, Vieira Lima finds enough of his peers willing to endorse the submission of his draft amendment to the constitution and justice committee. If that happens, it could become a bargaining chip.

Disproportionate response to spat with Vice-President draws attention to hitherto unnoticed character traits.

Many eyebrows were raised last week at the ferocity with which President Néstor Kirchner responded to his very public differences of opinion with his Vice-President Daniel Scioli. The President, after letting it be known that he would not be seeking a reconciliation with Scioli, removed from their posts all officials associated with the Vice-President.

Scioli was not a weighty player within the government, so the victims were fairly low in the pecking order: Germán Pérez (who had been Scioli's deputy at the tourism & sports secretariat during the Duhalde presidency, then his successor when Scioli left to run for the second place on Kirchner's slate); the coordinator of sports planning, Ví­ctor Groupierre; and the two top officials at the administration of national parks, Sergio Zaragoza and Oscar Triani. Even at this level, Kirchner opted to ensure loyalty by appointing as Pérez's successor the man who had worked at the same job under Kirchner in the province of Santa Cruz.

As was evident in his choice of top military commanders, the circle of people Kirchner knows personally is very largely confined to those he dealt with in his capacity as governor of Santa Cruz.

Kirchner is not Lula

So what had Scioli done to merit this kind of backlash? First, he had said he believed any deal with the IMF would include lifting the freeze on rates for public services (an issue that has been the object of much lobbying and negotiation, on which Kirchner has so far adopted the stance that there will be no rate increases, for now).

Second, he openly expressed doubts regarding the effectiveness of the congressional `annulment' of laws shielding members of the military from prosecution for crimes committed during the `dirty war' of the 1970s, suggesting that this had been little more than a political gesture. As our readers know, he was hardly alone in this interpretation [WR-03-32], but Kirchner was playing along with the political impact of the move, which he had instigated - possibly as an extra element of pressure on the supreme court, which must rule on the validity of those laws.

Among the few acknowledged critics of Kirchner one can find nowadays in Buenos Aires political circles, his reaction has been contrasted with the manner in which Kirchner's Brazilian peer, Lula da Silva, handled openly critical pronouncements by his Vice-President, José Alencar. On the whole, Lula ignored him; when pressed, he brushed the matter off as the kind of thing one would expect to hear from Alencar. And Alencar's statements had been explicitly critical of government policy (on interest rates), whereas Scioli's, at worst, might have interfered with negotiating tactics on public-relations spin.

One reading, contributed by an oldtime critic of Kirchner from his Santa Cruz days, is that Scioli had drawn attention to the fact that the emperor was wearing no clothes - or rather, that Kirchner's reaction had had that effect. This particular critic's take on Kirchner is that he has a strong autocratic streak, well known to those who have crossed him in Santa Cruz. [He is also sceptical of Kirchner's crusade against Menem's `stacking' of the supreme court, recalling that Kirchner had done exactly the same when elected governor.]

Recent zigzagging reflected two overlapping power contests - one with Fox, the other within the PRI itself.

Just after our last issue began to circulate, the opposition Partido Revolucionario Institucional (PRI) announced that energy and fiscal reforms would be at the top of its legislative agenda for the next congressional year, which begins on 1 September. Also on the agenda will be economic reactivation, job creation, the celebration of a `social pact' and enhancing public security by, inter alia, introducing greater severity in sentencing.

The very next day, party leader Roberto Madrazo, accompanied by the leaders of the PRI's legislative blocs, senator Enrique Jackson and congresswoman Elba Esther Gordillo, met President Vicente Fox at the official residence of Los Pinos and told him that they were willing to work together with the government and the ruling Partido Acción Nacional (PAN) on the more urgent reforms, such as those of the energy and tax régimes. Indeed, they emerged suggesting that the energy and tax reforms might well be approved before the end of the year.

If this seems confusing after the PRI's recent very public zigzagging, it is because two overlapping power games are being played out. The first is between the PRI and the government, with the former driving home the point that its congressional majority gives it a decisive voice in these matters. The second is between factions within the PRI: on one side, that of bloc leader Gordillo (who is also the party's secretary-general), and on the other, the one headed by Manlio Fabio Beltrones, often referred to as the `popular' or `orthodox' wing and frequently used by Madrazo as a foil.

How it works

An illustration of how the contest works - beyond the well-publicised clash of personalities between Beltrones and Gordillo - is the recent internal debate on tax reform. Gordillo was willing to give way on the government's proposal to extend the scope of the value-added tax (IVA) to such currently exempt items as foodstuffs and medicines, while the `popular' faction insisted on keeping the exemptions for social reasons. The solution: no mention was made of the IVA in the PRI's announcement of its legislative agenda. This merely shunts the confrontation further down the line. With both factions apparently matched in the legislative bloc, this gives the PRI an extra negotiating tool in its dealings with the government.

Governors deal themselves in

The PRI's internal factions will also come into play in another arena in which it holds a dominant position overall vis-í -vis the government: the Conferencia Nacional de Gobernadores (Conago), initially a cabal of opposition state governors seeking a greater say in the distribution of the federal revenues, and joined last week by the governors of the seven PAN-ruled states. The enhanced Conago has forced the government to agree to hold a Convención Nacional Hacendaria (a national fiscal convention) in late September in Nuevo León to thrash out a new tax-sharing and revenue-allocation deal - which will inevitably influence the federal tax reform legislation.

The man who got junta leaders convicted says that congress erred in doing what is a prerogative of the courts.

The most recent criticism of the annulment by congress of the Alfonsí­n laws [WR-03-32] is not only a renowned jurist, but a man beyond suspicion of harbouring sympathies for those who had been shielded from prosecution by those laws. He is Luis Moreno Ocampo, the man who in 1985 successfully prosecuted Argentina's former military rulers for the crimes committed during the `dirty war', and saw them imprisoned (until President Carlos Menem pardoned and released them). Moreno Ocampo is currently serving as the first prosecutor at the International Criminal Court (ICC).

Speaking in Buenos Aires last week after the senate had given final approval to the `annulment' bill, Moreno Ocampo argued that this had been a macana (blunder) for two reasons: the first - a view he holds in common with a number of jurists - because declaring a law null is beyond the powers of congress: it resides exclusively with the courts. Indeed, he says, several lower courts have already challenged the validity of the Alfonsí­n laws, so it must be left to the ultimate arbiter, the supreme court, to decide.

His second objection is that the `annulment' law `generates a sort of social demand for punishment' which in his view will only create more problems for the judiciary.

Moreno Ocampo does not favour leaving unpunished the military and members of the security forces, but says that righting this would be incomplete if at the same time there were no investigation into the crimes committed by the guerrilla organisations. `We must ask ourselves,' he said, `how it was possible for idealist youths to kill a policeman just because he was a policeman, or for [military] officers to torture.'

It is not only in Chile that relatives of the disappeared or victims of rights violations have been disappointed. In Mexico last week a court turned a suit to have the trials of the military accused of such crimes to be heard by civilian courts rather than military tribunals. Afadem, an association of victims' relatives, had sought an injunction in the case of two generals, Arturo Acosta and Humberto Quirós, accused of enforced disappearances and other offences.

Both are serving prison sentences for drug-trafficking. The military prosecutor's office is trying them on charges of `qualified homicide' of 143 dissidents and members of guerrilla groups between 1975 and 1979.

Amid the plaudits, the IMF urges the government to work on removing constraints to growth.

Chile's main challenge continues to be to `return to higher, sustained growth and to reduce unemployment.' This was the message tagged on by the IMF's executive board to its abundant praise for the Lagos government's prudent fiscal and monetary management. The authorities, they said, should seek to `enhance progress to date in addressing constraints to growth and investment through regulatory, capital market, and social sector reforms, including those in the "pro-growth agenda" [of 2002].'

The Fund's outlook: for 2003 and 2004, recovery is expected to gather momentum as slack capacity is taken up, while inflation remains close to 3%. Over the medium term, potential output growth should gradually increase on account of both higher capital accumulation and productivity growth.

As demand recovers, the modest current account deficit will widen, but only slowly, since the terms of trade are expected to improve. As both output and copper export prices recover over the medium term, the actual government balance is projected to converge to the structural balance target (a 1% surplus).

ARGENTINA | IMF talks `get technical'. The first round of talks between an IMF mission and the Kirchner government has ended inconclusively, with the chief IMF spokesman, Thomas Dawson, dodging all attempts to elicit an assessment of progress made, and his colleague Francisco Baker denying reports that the Fund had agreed to extend a payment coming due on 9 September. John Taylor, the US Treasury's undersecretary for international affairs, has come up with a more upbeat view: the negotiation is `moving along really well' and has gone into `a more technical' phase. He reckons that a deal can be reached before the payment is due.

ARGENTINA | Confidence in banks is returning. Argentines are taking their stashes of dollars out from under the mattresses and entrusting them once again to the banks. By 19 August dollar-denominated bank deposits had risen to US$1.28bn, just over twice as much as at the end of last year. There is no special enticement: these deposits are not earning more than 2%.

ARGENTINA | Government now expects 6% growth. Macroeconomic experts at the economy ministry now say that the Argentine economy will growth this year by 6%, two percentage points more than the latest IMF forecast.

BRAZIL | First bold step into growth mode. On 20 August the central bank's monetary committee cut the benchmark interest rate by 2.5 points (one more than predicted), leaving it at 22% - its lowest since the end of last year. There had been two other, more timid cuts since July that had brought the rate down from its peak of 26.5%. Industrialists welcomed the reduction but, predictably, said it was still not enough to boost growth significantly.

The same day as the rate was cut, Ibge reported that unemployment nationwide had fallen slightly from its peak of 13% in June to 12.8% in July - leaving it almost one point higher than a year earlier.

If it was a probe, it showed that the new strategy goes beyond formalising administrative arrangements.

The first manifestation of a Caracol in action took place on 20 August. A Caracol (literally `snail') is the seat of one of the new Zapatista `good governance' boards. The Caracol Roberto Barrios issued a communiqué denouncing increased military presence in the vicinity of four Zapatista settlements, in the wake of the 8-10 August launch of the new Zapatista régime [WR-03-31]. Concluding that the purpose of the military was to `breach the peace [and violate] our individual and collective rights', the Caracol `demands from the federal government the withdrawal of the army from our communities.'

In the same communiqué the Zapatistas state their opposition to the construction of a tourism complex close to Palenque. `We warn Vicente Fox and Pablo Salazar,' they say, that we will not allow them to continue ignoring our rights as indigenous peoples, such as the right to self-determination of the territory we inhabit and the right to be consulted on the plans they may have regarding our lands.' Should the tourism project go ahead, they say, `we shall take measures beyond denunciation.'

The authorities have not acknowledged any increase in military activity in the area, but they may well have been conducting probes to test the extent to which the EZLN, the armed wing of the Zapatista movement, has actually dissociated itself from the new administrative régime of the 30 `autonomous municipalities'. The EZLN had said that it would remain on standby for `defensive' purposes, and that the Caracoles would act as their `eyes and ears' apart from being the official mouthpieces of the municipalities.

The response of the Caracol Roberto Barrios suggests that the Zapatistas are taking seriously their reaffirmation of `resistance as [their] main form of struggle', and that their new strategy is not merely a matter of formalising an administrative structure - the benign interpretation that the government has chosen to adopt publicly.

Preempting congress

At the core of the new Zapatista strategy is the preemption of new federal legislation on indigenous rights: they are not waiting for congress to get around to amending the charter introduced in 2001. Moreover, they are urging Mexico's other indigenous communities to do the same.

At least some people in the government seem willing to grant them a window of opportunity to advance along that path. Xóchitl Gálvez, the Hñahñu (or Otomi) who heads the official Comisión Nacional de Desarrollo de los Pueblos Indí­genas (CNDPI), is calling for the judiciary to start validating indigenous `uses and customs in the administration of justice'.

This is a very tricky issue: the potential clash between jurisdictions was at the root of the change introduced to the draft legislation on indigenous rights by congress in 2001. An example: can a member of an indigenous community invoke his rights under Mexican law against a ruling based on indigenous custom? It is a fact, though, as Gálvez argues, that the Mexican state has long tolerated local government according to indigenous custom in many places, and that in Mexican law many Indians simply do not exist because, due to official neglect, there is no registry office in many indigenous villages.

Chávez 's term has reached midpoint; with the appointment of a new electoral council the procedural clock starts ticking.

The contest intended to solve Venezuela's political crisis has `gone live'; the preparatory jostling for positions ended on 19 August, when President Hugo Chávez reached the midpoint of his term - the constitutional threshold for his opponents to try to unseat him legally through a mandate-revocation referendum. As these lines are being written, the supreme court is expected to announce the appointment of a new national electoral council (CNE), the body entrusted with overseeing such a bid.

Perhaps the last preparatory move was the visit by Brazilian President Lula da Silva, clearly tailored to counter the anti-Chávez gloss which the US government has been trying to put on events [WR-03-30]. On 25 August, as he was preparing to depart for Caracas, Lula said, `I want to discuss [the referendum] with Chávez because we have committed our word in this matter, and we want this to be conducted between his government and the opposition, without interference by any other country.' He pointedly added, `It is not a matter of defending [the referendum] because it is envisaged in Venezuela's constitution; it will take place as long as transparent legal procedures are followed.'

The opposition marked the opening of the real contest by turning up the following day at the premises of the CNE with `more than 2.7m signatures' collected back in February to endorse the call for a referendum. Chávez has said they will be ruled invalid because they were collected before the kickoff date of 19 August, and a pro-Chávez organisation has already filed a suit seeking their rejection on those grounds. Legal opinion on this is divided, because neither in the constitution nor in the statute books is there any reference to the timing of such an event - only to when the call for a referendum may be filed. Still, there are more grounds for objections, and even among opposition leaders there are those who doubt that enough signatures would withstand the thorough vetting expected from the new CNE (these also add that the opposition could easily collected the requisite number of valid signatures at the drop of a hat).

So when might it happen?

Chávez and a number of government officials have openly expressed their conviction that the opposition will be unable to get its referendum before the end of the year. This is, of course, open to speculation. One scenario worth taking note of is that outlined by former supreme court justice Carlos Escarra. He says the timetable starts running with the appointment of the new CNE. Its first task is to lay down norms for a cleanup of the electoral rolls and regulations for the various aspects of the referendum, from campaign advertising to the deployment of officials. Keeping in mind that this is a first, Escarra reckons that this will take two months, so only by mid-October will the CNE begin the vetting of signatures (Escarra believes that those collected in January, if genuine, are valid; they must also be sufficient). For this it has a mandatory 90-day deadline, which takes the process up to January 2004 - and that would be with the CNE going at full tilt and encountering no major snags.

Washington opposes a resolution to protect UN personnel because it brings the International Criminal Court into play.

Once again Mexico and the US are heading for a spat in the UN Security Council, this time due to a Mexican-sponsored resolution condemning the killing or mistreatment of UN aid workers and urging governments to punish those committing such acts. What Washington does not like about the resolution is that, to put some teeth into it, the Mexican drafters included the statement that attacks on UN personnel were to be deemed war crimes actionable before the International Criminal Court (ICC). The Bush administration has not only refused to ratify its predecessor's signature of the treaty creating the ICC, on the grounds that it could be used for politically motivated suits against US nationals, but has been waving the threat of sanctions against countries refusing to enter `non-surrender' agreements guaranteeing the impunity of its nationals.

The US had threatened to veto the Mexican resolution when it was first proposed back in May. Mexico decided to reintroduce it in the wake of last week's attack on US personnel in Baghdad, and is said to enjoy the support of most Security Council members. For now, Washington is pressing Mexico to excise the reference to the ICC. Richard Grennell, spokesman for the US mission at the UN, said on 23 August, `We are making our views known to the Mexican authorities and others on the Security Council.'

EMPLOYMENT | Jobless rate continues to worsen. Mexico's official `open unemployment rate' (TDA) rose again in July, to 3.52% (from 3.2% in July) - more than what most economist and financial analysts had been expecting. The July rate is the highest in five years, only a smidgen off the peak of 3.53% registered in February 1998. The worst rates were recorded in Chihuahua (6%), Toluca (5.5%), Durango (5.2%) and Saltillo (5.2%); the best in Campeche and Cancún (0.9%), and Acapulco (0.5%).

The TDA counts as unemployed only those over 12 on the social security rolls who haven't managed to work a single hour in the week of the survey. A more revealing picture comes from comparing the number of people on the social security rolls as employed (up 84,000 over the past two-and-a-half years) and the number of people entering the jobs market (and estimated 2.5m in the same period). Unemployment has become a major political issue [WR-03-32].

ECONOMIC GROWTH | June was flat, with manufacturing falling. The already gloomy picture that emerged from the QII GDP figures has been made slightly gloomier by the publication of the IGAE economic activity index for June. Stripped of seasonal factors, it shows overall activity only 0.6% higher than in May, and 1.6% higher than in June last year. Manufacturing output ran 3.1% lower than a year earlier; the overall industrial index was barely up thanks to construction (up 2.4%) and mining (3.5%). The overall result for June was much influenced by a rare 10% expansion in agricultural output, which pushed the services into second place as an engine of growth.

GDP growth in the first half of the year was 1.2%.The government has already lowered its growth expectation for this year from 3% to 2.1%.

Those who have taken up `alternative development' protest that they have become the victims of this power struggle.

The government agreed to negotiate, and the coca growers of the Monzón valley called off - temporarily - the indefinite strike they had launched in support of their demand for a halt to the coca eradication programme [WR-03-32]. Even before talks got under way, however, a furore has erupted over the concessions granted by the government to the cocaleros so that they would reopen the road running through the valley.

Local organisations representing about 1,000 Monzón valley families that have opted for the `alternative development' activities supported by the government say that negotiations have been purchased at their cost. During the 30-day suspension of the cocalero strike, the government has agreed to suspend all activities in support of the legal alternatives to coca: rice, cacao, coffee, cattle breeding and reforestation.

Moreover, these organisations say, the Asociación de Productores del Alto Monzón, which represents the 2,500-or-so coca growers in the area [not 25,000 as originally reported], has been `harassing, coercing and threatening' them and forcing their members `to go on growing coca for the illegal market.'

The alternative croppers have called for government intervention to `guarantee the continuation of legal activities [and] restore the rule of law' in the upper Monzón valley.

A most valuable asset

According to the UNODC, about 8,800 hectares of the Monzón valley were devoted to coca cultivation in 2002; 23% more than in the previous year. Most of the increase, says the UN agency, was achieved by rehabilitating abandoned coca fields - those ostensibly left in favour of the alternative crops and activities. The plantations, with a lower-than-average bush density, are harder to detect than in other coca-growing areas.

The Monzón valley is estimated to account for about 57% of all the coca leaf produced in the Huallaga basin area; about 19% of the national total. It is also the priciest coca leaf, because its alkaloid content is considerably higher than average. There is, however, one problem for the growers: there appears to be little scope for new plantations. All this helps explain why the growers are so protective of their industry - but it would also suggest that the upper Monzón valley would be a prime target for anyone seriously considering eradication.

Antiterrorist police in Peru are trying to figure out if they are witnessing the first sign of a serious split within a Sendero Luminoso (SL) unit operating in the Ayacucho jungle. On 22 August a man bearing an AKM rifle, ammunition and a grenade turned himself in to the provincial prosecutor at San Francisco. He identified himself as Daniel Matí­as Acevedo, also known by the nom-de-guerre `Silverio', and said he was a member of SL - specifically, of a 60-strong `column' led by `Alipio', reputedly the regional commander and the only one of SL's `historic' leaders still at large. Acevedo told a tale of dissent that had led him to desert, only narrowly escaping pursuit by his former comrades. Dircote, the antiterrorist police, are investigating.

Quiescent coca growers refrain from violence, but appear to be rising to the challenge from the oil industry.

For some time now, the word in La Paz has been that the government, and a number of high-ranking army officers, have been eagerly awaiting a plausible excuse to launch a long-planned military offensive against the Chapare region, to `clean out' the coca growers, seen as jeopardising Bolivia's relations with the US. Wary of this, the leader of the cocaleros, former presidential candidate Evo Morales, has been reining in the more radical elements in his federations of coca growers, promising them a serious political assault on power which would start with the forthcoming municipal elections.

Hopes in the war party were raised a couple of weeks ago when it seemed that the radicals were about to rebel against Morales, but nothing came of that. More recently, the waters were muddied by the coca growers' decision to call off all negotiations with the government - and to seek instead to negotiate directly with the US ambassador, David Greenlee. They said they wanted to volunteer their collaboration in a countrywide antinarcotics offensive, in exchange for being allowed to continue cultivating coca for legal customary use. This is in line with their constant argument that they are in no way involved in the drugs trade, only in growing coca.

Official policy, accepted by the US, has long been that the 12,000 `core' hectares devoted to coca plantations in the Yungas area close to La Paz suffice to satisfy `traditional' demand, which makes all the coca plantations of the Chapare region (anywhere between 6,000 and 12,000 additional hectares) surplus to requirements and hence illegal and subject to eradication.

Last year, in what now looks like a negotiating ploy, the government offered to commission a major independent survey to reassess the volume of coca leaf consumed in `traditional' form, if the cocaleros would agree to accept the findings and eradicate any excess. The US government was not overjoyed, and the cocaleros were distinctly unenthusiastic, so the government has allowed that initiative to languish on the shelf. Our most reliable source in La Paz tells us that neither the government nor the ambassador will respond to the coca growers' overture - which will revive the potential for conflict.

New angle: oil in Chapare

The war party, meanwhile, has begun to pin its hopes on another development: the discovery of oil in the Chapare. Repsol YPF has reported a find and is now drilling a second well to confirm the assessment of potential (there is talk of more than 3m barrels, with the added advantage, according to company officials, that drilling there costs less than a tenth of what is being paid to drill for gas in the Chaco).

The connection with the cocaleros is that the latter, donning an environmentalist mantle (which is rich given the wholesale dumping of solvents by the cocaine-processing business), have announced that they will oppose, by force if necessary, any pollution of the area by the oil companies. Some of their leaders have gone further, saying that they will prevent any extraction of non-renewable resources.

So far there has only been belligerent rhetoric, but the government is watching for any hint of action that might provide the excuse it has been awaiting.

Some denounce the exposé as a government montage to weaken the opposition; a recent returnee says he is not surprised.

After a lengthy buildup of expectations, last week the book penned by Arleen Rodrí­guez and Lázaro Barredo, with material kindly provided by state intelligence, El Camaján (`The Chameleon'), was published. It had been billed as an exposé of the `dark side' of the world of Cuban dissidents; in the event, the most striking feature of the 67-page book turned out to be the claim that one of Cuba's best-known rights campaigners, Elizardo Sánchez, had been an informant of the security services, codenamed Juana, since 1997. The book shows Sánchez photographed at what was purportedly a ceremony at the interior ministry where he was honoured for his services.

Frame-up vs good cover story

Sánchez is the head of the Comisión Cubana de Derechos Humanos y Reconciliación Nacional (CCDHRN), an organisation declared illegal by the government. He reacted to the publication dismissing it as a `montage' designed to weaken the Cuban opposition.

He also distributed copies of an interview he had granted back in 1988, in which he openly admitted to maintaining `regular contacts with high-ranking officers of the island's political police.' At the time he argued that such contacts were unavoidable when seeking to solve problems given the nature of the régime: `There were no other channels.' In the interview Sánchez says his discussions with the police were about `concrete, practical problems of my human rights group.' Cynics say this would be a good cover story.

Sánchez's version was immediately endorsed by other renowned members of the opposition, such as Vladimiro Roca and Oswaldo Payá. The US State Department chipped in as well, through spokesman Richard Boucher, who said that this was just another attempt by the Cuban régime to `created divisions in the opposition by pitting those dedicated to real reform, one against the other.'

If that was the purpose, the result was one apparent success. Eloy Gutiérrez Menoyo, the former comandante who recently returned after 20 years in exile (WR-03-31). His response to the claim in El Camaján was that it had not surprised him `in the least'. When he announced his decision to stay in Cuba to engage in opposition politics, he himself took a swipe at the dissident milieu, saying that `an independent opposition is not an opposition manipulated by the US Interests Section.'

Elizardo Sánchez's reaction to Gutiérrez Menoyo's return was to suggest that it had been staged by the government: `It could be that this was a decision taken at the highest level within the island.' Much the same attitude was adopted by the main organisations of Cuban exiles in the US.

First to demobilise will be the groups in Urabá and the Caribbean coast departments.

The government's news managers last week laid almost all the emphasis on how fast the paramilitary demobilisation process is advancing. Former senate president Eduardo Espinosa, of the negotiating team, reported that a draft document on the mechanics of demobilisation was already in President Alvaro Uribe's hands; he revealed only that the first `reinsertions' will take place in the Caribbean coastal departments of Córdoba and Sucre and in the banana-growing region of Urabá.

Peace commissioner Luis Carlos Restrepo added that the government hoped that `by year-end 1,500 to 2,000 members of the autodefensas will be demobilised.' By 2005, he said, the figure could reach 18,500 [which, according to some analysts, is far more than the number now engaged in demobilisation talks].

Only barely noticed was the fact that on 21 August the government submitted to congress a bill which will allow surrendering paramilitaries to avoid prison sentences if they promise not to fight again and to make reparations to their victims.

COLOMBIA | New Telecom counts its chickens. Confident of having won the test of wills on the labour front, the Uribe administration is now painting a rosy future for the new Empresa Colombia Telecomunicaciones - also known as Telecom, just like the old Empresa Nacional de Telecomunicaciones, whose liquidation was ordered two months ago [WR-03-23]. Minus two-thirds of its predecessor's workforce, the new Telecom will serve 940 of the country's 1,070 municipalities, starting off with 64% of the national long-distance market and 33% of the international one (the remains of the monopoly the old Telecom enjoyed until five years ago). This, says company president Alfonso Gómez Palacio, will translate into an operating profit this year of Col$230bn (US$80m) as against the Col$470bn (US$162m) losses that had been projected for the old Telecom.

ECUADOR | Foreign investment dribbling in. In the first seven months of the year the companies' superintendency tallied US$162.4m in foreign investment, which only looks impressive when compared with the mere US$56.3m recorded in the same period of last year. The bulk of the investment (US$161.1m) went into capital expansion of existing firms; 48% went into the services, 23% into agriculture. Ecuadorean investment in January-July was slightly more - US$231.9m - but this was less than the US$248m invested a year earlier.

BOLIVIA | 'Get more support, tread with care'. The IMF, while praising the Bolivian government for `politically courageous decisions to defer low-priority spending and begin the process of broadening the tax base', has urged it to `secure broad political and social support for their policy agenda'. The Fund said it was worried `about the rising external debt and the increasing pressure toward nonconcessional borrowing', and warned the government to move carefully towards a more flexible exchange rate.