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Ploy to separate President's wife from her `springboard' charity has backfired.

So keen are some Mexican politicians to ensure that Marta Sahagún, President Vicente Fox's wife, will not be running for the presidency in 2006, that they are unwittingly pushing her in precisely that direction. The most recent illustration of this was what appeared to be a rather crude manoeuvre to remove her from the `Vamos México' charitable foundation, which she presides (and which many see as the springboard for her presidential bid).

On 8 September the newspaper Reforma devoted a frontpage headline to the news that Sahagún had resigned the presidency of the foundation, and that all that remained was a formal announcement by its board. Interior minister Santiago Creel, an intellectual who in party terms is a relative newcomer to the ruling Partido Acción Nacional (PAN), swiftly confirmed the accuracy of the report, but said that he would leave it up to the presidency to make the formal announcement and provide the details.

Sahagún's spokesman, Guillermo Velasco, promptly said that there was no truth at all in the story. Then Sahagún herself came forward, saying, `I have not resigned the presidency of Vamos México. This is a civil organisation made to last.' As to herself, she intends to `redouble efforts.'

Successor of murdered Cardinal Posadas is accused by the man he accuses of covering up a `crime of state'.

Just over 10 years ago, a Mexican cardinal was shot dead — officially because he wandered into a shootout between rival gangs of drug traffickers. Now another Mexican cardinal is being investigated on suspicion of laundering drugs money. There is at least one direct connection between the two events.

Cardinal Juan José Ocampo, archbishop of Guadalajara, was killed on 24 May 1993 at Guadalajara airport. The official version is that he got caught in the crossfire between gunmen of two rival drug gangs: that of Joaquí­n Guzmán (`el Chapo') and the Tijuana cartel. The man overseeing the investigation was the chief prosecutor, Jorge Carpizo. Ocampo's successor in the archdiocese, now-Cardinal Juan Sandoval, insisted from the outset that Ocampo's killing had been deliberate; a `crime of state' engineered, or at least covered up, by Carpizo.

Now it is Cardinal Sandoval who is being investigated on suspicion of money laundering, as the result of an accusation filed by none other than Carpizo. Though the public prosecutor's office, the PGR, invokes the secrecy of the inquiry to withhold details of the case, leaks to the press have been filling in some gaps. The newspaper Reforma was given the photocopy of a confidential request from the PGR to the banking and securities commission (CNBV), for information on the accounts held by Sandoval and members of his family. The newspaper Milenio says it was given sight of reports by intelligence agencies pinpointing the origin of the investigation in alleged `donations' by drug cartels to the archdiocese of Guadalajara.

Fox chooses 11 September anniversary to tailor anti-terrorism legislation to the needs of the US.

President Vicente Fox has been making efforts to convey to Washington the message that Mexico's reservations about the war against Iraq are not extensive to the `war on terror', and that in this latter area Mexico is a reliable ally. The most recent gesture in this regard came on the anniversary of the 11 September 2001 attacks on New York and Washington, when Fox submitted to congress a bundle of legislation designed to `fine-tune' the provisions on terrorism in the penal code and the federal law on organised crime.

Mexico is not considered a target for international terrorism, but fears have repeatedly been aired about its potential role as a launching-pad for attacks on the US. Thus, apart from classifying terrorism as a `grave' crime and stiffening penalties, the Fox package makes provision for the `preparation in Mexican territory of a terrorist act committed or intended to be committed abroad.'

Both US and domestic sensitivities have come into play in provisions for the extradition of alleged terrorists: this is allowed in fairly restricted circumstances, hemmed in by considerations of Mexican sovereignty and rejection of anything that might smack of a foreign power trying to `exercise an extraterritorial jurisdiction contrary to law.'

Fox has also enlisted Mexico in exercises simulating an international `bio-terrorist' attack, being conducted by the Global Health Security Action Group (GHSAG) with participation of Nafta, the European Union and Japan.

ECONOMIC GROWTH | Santander produces lowest forecast. The Santander Serfin financial group has lowered its growth forecast for this year to only 1.5%, the lowest prediction among the big banks regularly monitoring the economy. Four months ago, Santander Serfin was forecasting 1.9% growth.

Its main reason is the conviction that the recovery of the US economy, which it says is decidedly taking place, will not be immediately felt in Mexico, and that the time-lag is likely to be most marked in manufacturing — which affects job creation and hence the vitality of the domestic market.

The central bank has lowered its own forecast from 2.2% to 2%, and the finance ministry has said it will be adjusting its prediction of 3% to about 2.1%. The consensus of the economic forecasters regularly surveyed by the central bank is that the economy will grow this year by 1.73%.

INDUSTRIAL PERFORMANCE | Production still heading downwards. Overall industrial production in the first seven months of the year was 0.9% lower than in the same period of 2002, and the trend is downwards: July output was 1.9% lower than a year earlier.

The July result was dragged down by manufacturing, which in July was down 3.5% year-on-year (with the broader `transformation industry' bracket showing far greater contraction than the maquiladoras). Extractive industries were up by 5.1% (boosted by oil), and construction by 3%.

Dismissal of the social security chief acts as catalyst on an atmosphere of growing discontent — with elections on the way.

It is unlikely that President Mireya Moscoso could have foreseen the consequences of dismissing, on 10 September, the director of the deficit-ridden social security institute, Juan Jované: the biggest protest demonstration in years, met by repression that has triggered a chain of further demonstrations and strike actions intended to culminate in the first general strike since she took office four years ago.

The government announced the `immediate provisional removal' of Jované for his `manifest inability' to do his job, citing `a long list of events and situations that affect the administration' of the Caja de Seguro Social (CSS).  

Formally, the board of the CSS had asked for Jované's dismissal, citing five instances of `patrimonial harm' and four of `bad administration'. It had also rejected the budget submitted by Jované due to its `unacceptable' provision for a deficit of more than US$90m.

The government had been underlining for some time that the CSS was heading for bankruptcy, not due to its poor administration but to the demographics underlying the state pension system. Without some kind of reform, it will become unsustainable by 2014. Indeed, the government's insistence on this had persuaded the unions that the intention is to privatise the CSS.

Jované, however, says that the real reason for his dismissal was that he refused to go along with a government demand that the CSS should buy a new issue of government debt. `What they wanted,' he said, `was for the institution to buy US$500m of public debt, to be spent on the electoral campaign, politicising the CSS [...] in an electoral year.'

Spread of protest action
The effect of the government's action was to turn Jované into an instant idol of the labour movement. CSS employees took to the streets to protest his dismissal; members of other unions joined in, and in ensuing clashes with the police scores of demonstrators were arrested. This prompted unions from across the spectrum to join up with student and civic organisations to march on 12 September through Panama city in demand of Jované's reinstatement and against the privatisation of the CSS. The organisers claimed a turnout of 50,000; the police estimated 10,000. Either way, it was the biggest protest demonstration the capital had seen in a long time.

The protesters have announced a string of staged strike actions, and another mass rally on 18 September, culminating in a national strike five days later.

Underlying causes
It is quite clear that Jované's dismissal was only the catalyst of a mood of discontent that had been building up for some time. Despite her protestations that she had spent more public money on social investment than any of her predecessors, and that she had equipped a million Panamanians with the wherewithal to rise from below the poverty line, her popularity rating has fallen below 30%.

The economy is no longer growing at the 5% average rate of the 1990s; open unemployment is at 18% and likely to worsen with the crisis in the agricultural sector (which accounts for one out of every four jobs). Underemployment has been calculated at 30%.

The government has indeed spent about US$5bn since 1999 on an array of social projects, but these alone have not been able to change this picture. Public perceptions, moreover, have been strongly coloured by Moscoso's penchant for flashy spending of public money: new limousines for visiting summiteers, designer watches as gifts for legislators, a huge outlay on the Miss Universe beauty contest.

Moscoso is in her last year as President, and all this does not bode well for her Partido Arnulfista, which had been counting on playing the usual game of uniting as many parties as possible to defeat the Partido Revolucionario Democrático (PRD), which usually commands 35-40% of the vote. This time round the PRD is fielding Martí­n Torrijos, son of the legendary General Omar Torrijos, and polls suggest that he might break the party out of its traditional constituency and carry the elections.

Elections in five districts put the PJ close to a majority of its own, but do not yet clearly show the outcome for Kirchner.

Sunday 14 September was the most important date in Argentina's busy second-half electoral calendar: authorities were up for renewal in five districts, including the most populous and therefore politically most weighty. The conclusion that has been parroted by virtually all political commentators is that President Néstor Kirchner was the undisputed winner. This is not, necessarily, the case.

What the elections did was reaffirm what had become glaringly obvious in the last presidential contest: that the ruling Partido Justicialista (PJ) is the overwhelmingly dominant political force throughout most of the country [wr-03-16]. Those presidential elections had also shown that the PJ was deeply divided — that, in a sense, competitive politics had largely shifted from a contest between parties to a contest between factions of a single party.

Kirchner was a compromise candidate elected with the lowest share of the total vote on record, and he won against his PJ rivals on the strength of the votes provided by the outgoing provisional President Eduardo Duhalde, whose powerbase is the province of Buenos Aires, Argentina's largest electoral district. Because the presidential elections were held early, Kirchner was given a unique opportunity: to make full use of his political skills and build a solid following of his own, not so much among the provincial governors — though that does matter — but above all in the lower chamber of congress, half of which would be up for renewal in the second half of this year.

Measuring success
Real success for Kirchner would have to be assessed on two planes. First, he would have to help the PJ hold, even expand, its representation; any defeat for the PJ would be a defeat for Kirchner. But PJ victories would not necessarily be victories for Kirchner unless the winners could be seen as somehow belonging to his `camp' within the PJ. Coming from a background as governor of a remote and sparsely populated province, Kirchner had no organised following countrywide, just the opportunity to start building one from the presidency.

The results of the Sunday 14 elections have not yet been analysed in sufficient detail to discern where Kirchner himself, as distinct from the PJ as a whole and in relation to other powerful leaders, can count gains.

The Sunday contest
Elections were held in the autonomous district of Buenos Aires city and the provinces of Buenos Aires, Chaco, Jujuy and Santa Cruz. The PJ won in all except Chaco, which was held by the Unión Cí­vica Radical (UCR). The only district in which there was a clear contest between Kirchner and another PJ boss was that of Buenos Aires city. Kirchner openly supported the incumbent, Aní­bal Ibarra, of the left-of-centre Alianza (an otherwise defunct creature). Duhalde, slightly less ostensibly, supported PJ candidate Mauricio Macri, businessman and owner of one of Argentina's biggest football clubs. Ibarra (and hence, to some extent, Kirchner) won.

In all the districts taken together, 43 seats in the chamber of deputies were at stake: the PJ won 24, which means that with only one seat more it will have a majority of its own in the lower chamber, a situation it already enjoys in the senate. Precisely what this means in Kirchner's terms will only become apparent when the process of renewing the lower chamber is completed in November, and the PJ bloc gets around to electing authorities.

Elections are still to he held in nine provinces: Misiones and Neuquén in late September; Formosa, La Pampa, Mendoza and San Juan in October; and Entre Rí­os, Chubut, and Salta in November. The PJ is expected to carry all but two or three. In all the provinces where elections had taken place before last Sunday — Catamarca, Córdoba, Rí­o Negro, Tierra del Fuego and Tucumán — the PJ won.

Rizo waves threat of resignation after President Bolaños accuses him of conspiring with PLC dissidents.

When, on 9 September, Fabiola Salinas de Rizo, wife of Vice-President José Rizo, resigned her honorary position on the board of the Rubén Darí­o national theatre, the political milieu of Managua took it for granted that this heralded the imminent departure of her husband. The Vice-President had told the leadership of the ruling (but split) Partido Liberal Constitucionalista (PLC) that he was `studying' the possibility of resigning as a result of `profound disagreements' with President Enrique Bolaños.

At a meeting between the two the previous Friday, Bolaños had accused Rizo of conspiring against him — as a result of a string of meetings Rizo had held with the faction of the PLC that supports the jailed former President Arnoldo Alemán. Rizo's line was that he had only been trying to rebuild a `democratic majority' in the national assembly by reuniting the PLC.

`Critical conscience'
In the event, Rizo decided not to resign, but to stay on, acting loyally but also as the `critical conscience' of the government. His role, he said, was that of `the President's collaborator, not his subordinate'. He also openly criticised President Bolaños for consulting more frequently with the opposition Frente Sandinista de Liberación Nacional (FSLN) than with the PLC, on whose ticket he was elected in 2001. The pro-Alemán faction, a majority of the PLC representatives in congress, broke away from Bolaños in March, when the President refused to order the release of Alemán, placed under arrest while facing trial on corruption charges. Explaining his actions to the press, Rizo said, `I must confess that the Vice-President's activities have had as their only aim to prevent the FSLN from dictating this country's political agenda, bullying votes in the national assembly and gaining ever greater quotas of power.'

This time round, the legislation might even get past the Senate — but will probably founder on a presidential veto.


On 10 September the US House of Representatives approved, in a 227:188 vote, a bill introduced by representative Jeff Flake (a Republican from Arizona) which bars funding to enforce the government's ban on travel to Cuba — which indirectly amounts to lifting the ban. Nobody, however, expects the bill to become law.

Similar legislation has been approved in the past by the House, only to founder on opposition in the Senate. This time, though, that hurdle might be overcome, since the Senate has sprouted a bipartisan Cuba Working Group similar to that of the House, and it has been lobbying hard to lift the US embargo on the island. Nonetheless, even if the Senate does approve the bill, President George Bush Jr has vowed to veto it (unsurprising with the onset of an electoral year in sight).

The House has also approved two other pieces of legislation designed to ease the embargo: one of them removes restrictions on remittances from the US, while the other prevents the administration from banning `people-to-people' travel exchanges with Cuba.

Flake sees the administration's approach to Cuba as outmoded and ineffectual. He says, `We have had a policy in place for over 40 years that obviously has not brought Cuba any closer to democracy. It's clear that change in Cuba would be greatly hastened by a change in our own policy [...] If the US is serious about undermining Castro and bringing democratic reforms to Cuba, the best thing we can do is lessen Castro's control over the island by allowing Americans to travel to Cuba.'

DOMINICAN REPUBLIC | Government takes over power distributor. The government of President Hipólito Mejí­a has bought back the shares held by Unión Fenosa of Spain in the power distribution utilities Edenorte and Edesur, claiming that the company had failed to fulfil its obligation to provide a reliable service. Critics say the agreement is not a beneficial one: in 1999 Unión Fenosa paid US$210m for the concession, they note, and now it is being paid US$423m to withdraw. 

DOMINICAN REPUBLIC | Downturn in first half. The Dominican Republic's GDP contracted by 0.8%, according to the central bank. It was dragged down by declines in commerce (-15.4%), transport (-9.8%), agriculture (-7.2%), manufacturing (-6.7%) and construction (-3.7%) — which offset expansion in tourism (+33.6%) and mining (+20%).

CENTRAL AMERICA | Trade deficit grows. Despite a 15% increase in export earnings, to US$4.85bn, Central America's trade deficit in the first half of the year rose to US$6.47bn, 2.3% higher than that of the comparable period of 2002. Just under two-thirds of all exports were made by two countries: Costa Rica (US$1.96bn) and Guatemala (US$1.19bn). Imports in the first half totalled US$11.48bn, or 7.3% more than in the first half of last year.

Moving beyond eviction orders, a São Paulo judge has begun to use the criminal law against activists.

The government of São Paulo's chosen method of dealing with the movement of landless peasants, MST, is to put matters in the hands of the courts, which allows it a good measure of political deniability. Until recently this had translated mainly into eviction orders that are making their way through the appeals process. Now, however, one judge is emerging as a far more drastic scourge of the MST, going after its activists with the criminal law — and already the MST is crying foul.

The name of judge Atis Araújo de Oliveira, of the municipality of Teodoro Sampaio, was cast into the limelight last July when he sentenced an MST leader, José Rainha Júnior, to two years and eight months in prison on charges of forming a criminal gang and bearing an unlicensed firearm. Rainha had been the MST coordinator at the huge camp set up in the Pontal do Parapanema, which had attracted several thousand families of landless peasants.

Filling the jails
Judge Araújo has become enamoured of the notion that organising a mass land squat, or `invasion', is tantamount to forming a criminal gang (an offence which is somewhere between criminal conspiracy and racketeering). On 10 September he used that same charge to hand down prison terms of two-and-a-half years on 11 members of the MST who had been acting in the same area. 

At the same time police picked up, at the Pontal do Parapanema camp, Rainha's wife, Diolinda Alves de Souza, who will probably be the next in line for similar treatment.

The national coordinator of the MST, Gilmar Mauro, is convinced that judge Araújo is acting on behalf of the local landowners. `We are facing an offensive of the rural élite and the judiciary against those who fight for land,' he says. `That person is not a judge; he is a provocateur.' According to Mauro, Rainha and another MST member, Procopio dos Santos, are being held in unusually harsh conditions: `Even to speak with their lawyers they are bound hand and foot.'

Gilmar Mauro says that, given the government's unwillingness to intervene, the next step for the MST is to launch an international campaign to demand the release of jailed activists, and, should it be necessary, take up the matter before the OAS .

Prison directors dismissed for laxity, while others are attacked outside for imposing strict régimes.

Faced with evidence that it is being overwhelmed, Rio de Janeiro's prison service authorities have asked the state government to declare the service in a state of emergency. In late July the coordinator of the Bangú prison complex, Paulo Roberto de Almeida, was shot dead on the street by hitmen. Days later an attempt was made, also on the street, against the life of the director of the Bangú III prison, Abel Silveiro de Aguiar. Both events recalled the September 2000 murder of the director of Bangú I, Sidneya Santos de Jesus, outside her home. 

The common thread was that the three officials had introduced severe controls to prevent the introduction to their prisons of guns, mobile phones and drugs. On 8 August, the secretary of the state prison authority announced the dismissal of the director, deputy director and security chief of another of the 14 prisons in the Bangú complex, for having done the exact opposite: they had colluded in allowing the inmates the use of mobile phones and access to drugs. A fortnight ago, seven guards at the Ary Franco prison were dismissed and charged with torturing a Chinese trader who refused to reveal where he kept his money; he was left in a coma and died shortly afterwards.

There are 19,000 inmates in the Rio prison system, and 2,400 guards; an overall ratio of about one guard for every eight prisoners, though in some prisons the guard-inmate ratio rises to 1:125.

Canny tactics manage to avoid confrontation with the police while sending a message about their ability to disrupt.

Paraguay's peasant organisations, key actors in a still predominantly rural country, have sent a strong message to the recently installed government of President Nicanor Duarte by organising a mass mobilisation — which, unlike previous such events, did not end in clashes with the police. This was because of a swift-footed tactical move by the umbrella Mesa Coordinadora Nacional de Organizaciones Campesinas (MCNOC), which represents 40,000 families.

Their original intention appeared to have been to mount the by-now traditional roadblocks on the main highways as they launched the protest on 10 September. Agriculture minister Antonio Ibáñez warned them that this would not be tolerated. The MCNOC's response was to deploy pickets to a large number of vital crossroads, but to keep off the road, signalling their ability to disrupt and their willingness to keep things peaceful. They also cannily changed the venue of their closing rally from a square in central Asunción to Coronel Oviedo, 120 kilometres away. 

The protest was widely, and peacefully, observed throughout the eastern region, and in three departments with particular problems of their own — Canindeyú, Guairá and Misiones — it was extended for a further day. The peasant organisations are demanding a restructuring of state-owned banks so as to improve their access to credit (an aim explicitly included in Frutos's electoral platform); secure access to markets; preferential electricity rates; an end to official harassment of peasant activists; and withdrawal of an anti-terrorism bill submitted to congress `at the behest of the US'.

Appeals court will decide on the applicability of the amnesty the military granted themselves.

A court case crucial to many of Chile's pending human rights trials has reached appeal stage. Last week a panel of the fifth appellate court in Santiago incorporated to its docket the review of a lower-court ruling that refused the benefit of amnesty to four officers and two NCOs involved in a 1975 abduction and `disappearance'.

The ruling, handed down last April, said the 1978 amnesty the military granted themselves was inapplicable because it only referred to crimes committed up to March 1978, whereas kidnapping, when the victim had not been produced by then, was to be deemed an `ongoing' crime. Similar reasoning has allowed Argentine courts to reopen old cases.

ARGENTINA | Scene is set for debt rescheduling. Having paid its US$2.9bn arrears with the IMF, Argentina can now expect the Fund's board to approve, on 19-20 September, a deal which effectively rolls over, for three years, US$12.5bn owed to that institution. This agreement paves the way for further such restructuring, of US$5.62bn owed the World Bank and IDB, and US$3.49bn owed the Paris Club and other bilateral creditors.

The deal does not include explicit commitments on issues hitherto held dear by the Fund: a calendar of utility rate adjustments (Argentina plans to renegotiate the contracts with privatised utilities); compensation to banks for losses due to the asymmetric `peso-isation' of deposits and loans; and the privatisation of state-owned banks (there is reference to strengthening them). A primary fiscal surplus target of 3% of GDP is set for 2004; for ensuing years it will depend on performance. This has displeased holders of the US$76bn in bonds Argentina has defaulted on, who see it as a harbinger of a big `haircut' in the restructuring offer expected to be put to them later this month. Economy minister Roberto Lavagna has predicted that creditors will react initially with `long faces', but that `realism' would prevail: `They know,' he said, `that Argentina cannot pay if it doesn't grow.'

BRAZIL | Eletropaulo `renationalisation' saga ends. The long-drawn-out saga of US firm AES's default on obligations with the development bank BNDES has concluded with an agreement whereby the latter buys back 50% of the former's shares in Eletropaulo, the electricity firm serving São Paulo (the biggest of its kind in Latin America). This will be followed by the creation of a new company, Novacom, owned by BNDES and AES, which will include three of the AES power utilities in Brazil: Eletropaulo, AES Tieté and Uruguaiana. AES will have a one-share majority in Novacom. After this, AES's debt with the Brazilian state will be halved, to US$600m. When AES defaulted, the spin put on the situation by some market analysts and financial media was that BNDES intended to `renationalise' the AES power utilities.

URUGUAY | At last, a visible upturn. After four years of recession, in the second quarter Uruguay's GDP grew by 3.3% on the first. This still leaves first-half GDP 6.8% lower that a year earlier. In the inter-annual comparisons, only agriculture is up, by 1.3%.

Roger Noriega, US Assistant Secretary of State for Western Hemisphere Affairs, has said that his government is not interested in getting involved in planned works to enlarge the Panama Canal. Noriega had remarked that the US had done its bit by financing the construction of the Canal, and that private enterprise should take care of the enlargement. Panamanian officials say that China has taken an interest in the project, which is expected to cost somewhere between US$4bn and US$6bn. A spokesman for the Japanese embassy in Panama said that this government was also interested in taking part with financing; a decision would be confirmed when the total cost is known. The main users of the Canal are the US, Japan and China. [The US took on the Panama Canal when Nicaragua refused exclusive right and decided to court Russia and Japan instead. It also helped overthrow the Nicaraguan government.]

"Eduardo, I congratulate you." "Néstor, I also congratulate you."

President Néstor Kirchner and former President Eduardo Duhalde of Argentina, after Sunday elections widely portrayed as a victory for Kirchner, but which also strengthened Duhalde.


"I'm the President's collaborator, not his subordinate."

Nicaraguan Vice-President José Rizo, after deciding not to resign over a row with President Bolaños.


`This is a novelty in our foreign policy: going out to seek markets instead of waiting for them to discover us.'

Brazilian President Lula da Silva, on announcing plans for a joint summit with Arab leaders.

LATIN AMERICAN REGIONAL REPORTS CARIBBEAN & CENTRAL AMERICA - NOW AVAILABLE We provide a special feature on the current state of the tourism industry in the Caribbean and prospects for the future. We also focus on the booming energy sector in Trinidad & Tobago; political tension in Grenada; the tussle between China and Taiwan over the Caribbean; rocky relations between Cuba and the EU, and the Dominican government's efforts to solve the country's interminable energy crisis. In Central America, Guatemala's Efraí­n Rí­os Montt edges into contention as presidential elections approach; Honduran President Ricardo Maduro feels the heat as protesters march on the national assembly and subregional border disputes once again come to the fore. For more information or to subscribe call +44 (0)20 7251 0012 or send an email to [email protected]

Special Report: Indigenous peoples and power in Latin America However briefly, this year witnessed, in Ecuador, the first case of an indigenous party sharing power at cabinet level. This came just after Bolivia had seen, last year, the candidate of another indigenous party, Evo Morales, coming a very close second in the presidential elections. Slotted between the two events, in Mexico the Zapatista rebels, after almost a decade of holding their ground in Chiapas, launched a new strategy based on formally adopting autonomous indigenous rule in 30 municipalities, and urging indigenous communities elsewhere in the country to follow suit_ These are just a few of the issues discussed in the latest Special Report from Latin American Newsletters (LAN): Indigenous peoples and power in Latin America. The full 25-page report is available in English or Spanish, in electronic format (HTML/PDF), priced at US$130/ £90. Latin American Special Reports are published bi-monthly and an annual subscription to the full set of six titles is available at the special price of US$484/ £345. For more information, call Subscriptions on +44 (0)20 7251 0012 or email [email protected] (Discounted rates available to academics and NGOs -please enquire for details).

Lula is talking of linking the oceans and holding a joint summit with the Arab world; Goni floats a`Latin American Community'

Headlines worldwide have trumpeted the assertiveness of the developing countries at the WTO meeting in Cancún. Those who have kept their eyes on Latin America will have noticed that the mood is continuing — largely, but not wholly, in the shape of a major diplomatic offensive being launched by Brazilian President Lula da Silva.

He has already called for a South American summit to make decisions on an array of infrastructure linkages between Brazil and its neighbours, the ultimate aim of which is to expedite traffic from one ocean to the other, opening an array of new markets for the region. `It is up to us [the Brazilians],' he said last week, to take the initiative to open up roads for trade to improve, between the countries of Latin America — and those of Africa.'

That last allusion is linked with Lula's plans to bring together the heads of government of Latin America with those of the Arab world. The idea is to hold a bi-regional summit in May next year. Lula said he would start `opening up a new trench' in November, with a series of preparatory visits to Egypt, Lebanon, Syria and Libya by Latin American presidents, ministers and businessmen. The overall strategy, says Lula, is to go and seek markets `instead of waiting for them to discover us.'

At the October meeting, Lula said, he wanted hard decisions on the financing of specific projects which, taken together, will demand about US$24bn.

Lula was not the only one moved to propose new diplomatic initiatives. Bolivian President Gonzalo Sánchez de Lozada, while visiting Mexico, floated the idea of a new Latin American `political forum', parallel to the Rio Group — which in his view `failed to act on Venezuela and to come up with a clear position of what was happening in Iraq [...] leaving Mexico and Chile to act in the Security Council without regional support.' He said he wanted to launch this idea `of creating the Latin American Community' at the Ibero-American summit to be held in Santa Cruz de la Sierra in November. He added that he hoped to see Fidel Castro there.

Sánchez de Lozada's host, Mexican President Vicente Fox, echoed his guest's call for a Latin American Community — `not just a close commercial relationship but an authentic community of nations' which will deepen regionwide integration. Fox was also hosting former Brazilian President Fernando Henrique Cardoso, on whom he heaped fulsome praise, which does not suggest that he and Lula are exactly on the same wavelength. The Brazilians, though Lula has made friendly noises towards Fox, see Mexico as too closely tied in with the US to commit itself fully to a `truly Latin American project' like the one Lula is proposing.

Some impatient opposition groups have started calling for a revolt, inviting support from the military.

Among members of the opposition the current interpretation of events is that President Hugo Chávez has either become completely paranoid or is seeking an excuse to impose emergency rule. In the last week Chávez has suspended oil shipments to the Dominican Republic on the grounds that its government was tolerating plots against him, led by former Venezuelan President Carlos Andrés Pérez; called off a trip to the US because of intelligence reports about a CIA-backed plot to blow up his plane; and blamed `coup-mongers' for bombing the barracks of the presidential guard, across the road from the Miraflores presidential palace.

The saying is that even paranoiacs have enemies. Carlos Andrés Pérez was and is dedicated to Chávez 's ouster, and whatever the substance behind the alleged plot to blow up the plane, a powerful explosive device was hurled against the barracks.

Calls for rebellion
At least one segment of the opposition has decided not to wait for a revocation referendum, and has started openly advocating rebellion and a coup.

The Asociación Civil Gente de Mar, the group of sea captains that blocked oil shipments during the strike-lockout which tried to oust Chávez earlier this year, has issued a public call for `generalised public disobedience', as a first step in a `heroic' campaign `which must be supported by our glorious armed forces [to] free us this year of Castro-Communist domination.' They say that opposition leaders err gravely when they `repeatedly insist on keeping the armed forces excluded from the national problem, when they know full well that they are primary factors in the solution of the crisis.'

The Bloque Democrático, which has broken away from the umbrella Coordinadora Democrática, said that it would `openly and publicly promote the constitutional right to generalised public disobedience and non-recognition of the present régime, in order to replace it this very year by a government [formed by] civilians and members of the military.'

On the referendum front
Meanwhile, as regards the processing of the request for a revocation referendum, the CNE (electoral council) decided last week that it would spend more time pondering its draft procedural rules, after having received a barrage of criticism from the opposition. Some opposition spokesmen claimed that the government camp had `gained a majority' in the CNE, as its president, Francisco Carrasquero, had voted with the two pro-government members to reject the signatures collected by the opposition [WR-03-36]. In similar vein, the opposition's indignation at last week's acquittal of chavista gunmen accused of the April 2002 killings has been followed, fittingly if unexpectedly, by the filing of an appeal by the prosecutor.

Admiral Panizo resigns over spying on journalists, but legislators point the finger at Toledo's chief of staff.

Last week President Alejandro Toledo dismissed his fourth intelligence chief and appointed the fifth, and for good measure ordered a complete overhaul of the umbrella state intelligence agency, Consejo Nacional de Inteligencia (CNI). The episode had several dimensions: the role of spying on domestic targets (the immediate reason for the replacement of retired Admiral Alfonso Panizo), the CNI's continuing state of disarray, and a political row that strikes at Toledo's inner circle.

Panizo's last known assignment had been to find out who had planted bugs on President Toledo. The clandestine surveillance had been discovered in August. Within weeks the CNI was being publicly accused of spying on journalists. Panizo did not deny the charge, but said he had been trying to determine who was leaking information from the CNI to the press. The ensuing scandal, which soon spread beyond Peru as defenders of press freedom took up the case, became too much, and on 17 September Panizo resigned.

Panizo had first been called to the job by interim President Valentí­n Paniagua (2000-01), who charged him with cleansing and reorganising the leftovers of the Servicio Nacional de Inteligencia (SNI), which now-jailed presidential adviser Vladimiro Montesinos had turned into the hub of his network of corruption. He only held the position for six months: newly elected Toledo replaced him with Juan Velit Granda, an expert in international law with no prior experience of intelligence.

Velit lasted a year. He was replaced by Fernando Rospigliosi, the former journalist who had just been eased out of his position as interior minister in a cabinet reshuffle. Rospigliosi's tenure was a brief five months: in January this year he was replaced by César Almeyda, lawyer and personal friend of Toledo's — who lasted only three months. Upon Almeyda's resignation in May, Admiral Panizo was recalled to the job.

The new intelligence chief is retired General Daniel Mora, a member of the ruling party, Perú Posible. Prime minister Beatriz Merino has charged him with conducting a reorganisation of the CNI, `which will entail major surgery, due to its background and the heavy burden this institution has become for the development of the state.'

In-house intrigue
It did not sound as if Panizo had left in disgrace: Merino warmly thanked him for his services and said he would continue to collaborate with the government from a new post, to be announced within days. The reason might be found in the growing conviction among members of the ruling party that Panizo had been made a scapegoat for someone else's doing.

The real culprit, according to Perú Posible's congressional bloc, is Guillermo Gonzales Arica, secretary-general of the presidency (a position akin to that of the White House chief of staff). They have demanded from Toledo, in no uncertain terms, that he get rid of Gonzales. The legislators have not spelt out specifically how Gonzales was to blame for Panizo's departure, but do say that there has been unease for some time over his increasing power. In the words of congresswoman Celina Palomino, he is `a monster who grows dangerously.'

Fumigation is keeping ahead of new plantings; UN figures show a replacement rate of 64% in known areas.

UNODC, the UN's antidrugs and anticrime office, is very excited, and by extension so is the Colombian government. In the first-ever presentation of half-yearly figures on drug production, the Colombian UNODC delegate, Klaus Nyholm, announced last week that the area planted with coca bushes had shrunk by 33%, from 102,000 hectares to 69,000ha. At this rate, he suggested, the reduction could reach 50% by the end of the year.

UNODC had previously reported a decline of 30% in 2002 — twice as much as had been calculated by the US government. As Nyholm put it, `The reduction is heavy, and it seems to be accelerating.' He attributed the decline chiefly to the fumigation of 91,000ha of coca plantations, on top of which he said UNODC knew of instances of manual eradication and abandonment of coca plantations, due to the success of alternative development projects, the fact that legal agriculture fared better than last year, or simply fear of fumigation (see next page).

Nyholm also noted that while reduction had been considerable in the established coca-growing areas of southern Colombia, cultivation has been spreading to other regions and to isolated border areas. Nonetheless, he suggested that this, and the increase in cultivation recorded in Bolivia and Peru, was being outpaced by eradication overall.

Replacement of eradicated coca
The figures produced by UNODC, based on satellite imagery plus projections, indicate that new planting is continuing at a respectable pace in the areas that are being surveyed. The fumigation of 91,000ha should have reduced the cultivated area to a mere 11,000ha between mid-2002 and mid-2003. Instead, the reported total is 69,000ha, which means that coca growers have planted 58,000ha. In other words, 64% of what is destroyed by fumigation is being replaced with new plantations.

Nyholm said that eradication gains would only be sustainable if the peasants could be enticed to stay on the land, devoted to legal farming. He suggested that one way to encourage this would be to speed up the distribution of land seized from narcos [WR-03-35]. Interior minister Fernando Londoño concurred.

To judge by the most recent army claims, the cocaine trade has also been hard hit further along the chain. On 21 September the army high command reported having located and destroyed about 100 cocaine-processing `labs' in eastern Colombia, close to the border with Venezuela. Also destroyed in the operation were five clandestine airstrips. The complex, according to General Carlos Roberto Ospina, is thought to have been run by the Farc guerrillas.

Most interesting were the army's calculations of the impact of the raids. Jointly, the army said, the processing labs were reckoned to be capable of producing as much as 5.5 tonnes of cocaine a week. Annually this would be equivalent to 40% of the 700t Colombia is estimated to be producing.

One detail, though, suggested that the labs were not working at full tilt: the troops seized only 3.5t of cocaine paste — far too little to sustain production at the estimated rate for even one week.

Ecuador gets fumigation study
Under both Andrés Pastrana and Alvaro Uribe the Colombian government has regularly dismissed claims that its policy of wholesale fumigation has had a number of seriously adverse side-effects. The issue will now be put to the test, at the insistence of the Ecuadorean government. Parallel commissions will be set up to look into charges of harm to people, livestock, legal crops, and the environment generally, on both sides of the border.

Ecuador has already announced the names of its 12 commissioners, among whom are the agriculture minister, Rodrigo Lasso, and representatives of the national agricultural research institute, the Pan-American Health Organisation, Instituto Izquieta, Fundación Natura, and the academic and scientific community.

The starting-point for both commissions will be the complaints filed in Colombia, but their specific remit will be to `evaluate the consequences of the fumigations [carried out by Colombia] on the northern border [of Ecuador]'.

This will not be a protracted study; the commissions are expected to produce a joint report by 22 November, when it will be submitted to the bilateral Comisión de Vecindad. The findings will be relayed to the two governments via their foreign ministries.