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Political spin (and complaints abroad) have obscured the actual scope of Argentina's new arrangement with the IMF.

The official line in Argentina is that President Néstor Kirchner successfully `stood up to the IMF' and got a favourable arrangement. This has been reinforced by the flurry of criticism of the IMF (even from some of its own director) that the institution had `gone soft' on Argentina, and by Brazilian President Lula da Silva's statement that Argentina's deal was a `model' which his own country would build upon.

All of this has to do with the conditions attached to the agreement, not to the size and nature of the deal. What Argentina got was a three-year, US$12.55 bn standby credit arrangement and just enough to allow it to keep current with what it owes the IMF. No `fresh' money was involved. Few in Buenos Aires recall that when the negotiations began, the government said it was seeking at least US$9bn in fresh money and a small enough sum compared with the US$30.4bn received by Brazil since September last year, but then Argentina had defaulted and Brazil had not.

The headline `resistance' item was that Kirchner only committed Argentina to a specific fiscal surplus of 3% of GDP for 2004, leaving the ensuing targets dependent on the country's economic performance. This has been contrasted by some commentators with Brazil's commitment to a surplus of 4.25%, but this high level was self-imposed as a tactical move to impress `the markets'.

Still, the 3% commitment is hardly a small one: it means setting aside for Argentina's creditors, as pointed out by opposition senator Rodolfo Terragno, as much as the joint budget appropriations for health, education, science and technology, housing, water supply, energy and fuels, communications, transport, environmental protection, the judiciary, security and prisons. It is the highest such sum ever committed since Argentina joined the IMF in 1956.

The commitments  

Overall, the conditions Argentina has agreed to, as reported by the IMF, are:

• Growth & inflation: GDP growth is targeted to reach 5.5% in 2003 and stay at around 4% in 2004-06. Core inflation is expected to be maintained in single digits.
• Fiscal policy will aim to raise the consolidated primary surplus from 2.5%of GDP in 2003 to 3% in 2004. Beyond 2004, the authorities have committed to primary surpluses at levels sufficient to cover net payments on performing debt and obligations that may result under a debt-restructuring agreement.
• Structural fiscal reforms are envisaged to underpin the programmed fiscal consolidation and facilitate the phasing out of tax distortions. The reforms are sequenced to give time to build consensus. The authorities have committed to submit tax reform and intergovernmental reform legislation to Congress during 2004, with a view to their being introduced in the context of the 2005 budget.
• Monetary policy will continue to aim at entrenching low inflation expectations, with base money growth driven mainly by the accumulation of international reserves. The authorities are considering moving to an inflation tar-geting regime by end-2004, and implementing supportive reforms aimed at increasing the autonomy of the central bank.
• Banking reforms: The program aims at strengthening the soundness of the overall system and putting public banks on a sound financial footing. By end- 2003, the authorities plan to eliminate temporary forbearance on the classification and provisioning of private loans and compensate banks for asymmetric pesoisation and asymmetric indexation. As regards losses experienced by banks because of the legal injunctions (amparos), the authorities have committed to assess their impact and to identify measures to strengthen the system by end of 2003.
• Debt-restructuring: The authorities have also committed to advance negotiations with external creditors that is consistent with medium-term sustainability. They aim to conclude negotiations by mid-2004.
• Utility companies: The authorities aim to obtain congressional approval by end-2003 of new legislation that delegates powers to the executive branch to renegotiate public concessions and effect interim tariff increases.
• Predictable legal framework: the authorities will commit to review the effectiveness of the insolvency system with a view to putting in place a legal and regulatory framework conducive to progress in private corporate debt restructuring.

The debt offer  

Adding to the projection of a `tough' image is the debt-restructuring package that has been outlined to Argentina's creditors holding the defaulted US$94bn worth of bonds. Three options are made available:

• A discount bond which is a straight reduction of 75% of the amount owed. It is not clear yet whether the reduction is to be calculated on face value or net present value (NPV) and which in real terms could mean cuts of 90% or 40% (the former only acceptable, at best, to bid creditors who have already written off the debt, the latter likely to cause a political uproar, apart from being unsustainable).
• A parity bond, with no reduction but repayable over longer terms at greatly reduced interest rates (neither yet specified).
• A bond with a yield indexed to Argentina's GDP growth.

The market seems to be expecting a 70% cut. Some creditors have gone on the record expressing relief after having heard that the Argentine government would be seeking an 80% `haircut'. The strongest complaints have come from Argentine pension funds, who jointly hold about 20% of the defaulted debt.

General Roberto Bendini, Argentina's army chief of staff, has been accused of anti-Semitism for having told war college students that one current `conflict hypothesis' focused on foreign- power designs on Patagonia and the Littoral (the eastcentral provinces), manifest in the actions of `small groups [...] under the guise of tourism.' Some of those small groups, he said, were Israeli. Bendini issued a non-denial denial; a twomember `commission' of inquiry concluded that he hadn't actually made the offending statements, and the government said it was satisfied. Now the senate wants to hear directly from Bendini.

Police in São Paulo capture a key player in the Farc's local cocaine transshipment network, aimed at Europe.

Brazil may have offered to provide a venue for conversations between the guerrillas of the Fuerzas Armadas Revolucionarias de Colombia (Farc) and the UN, after having blocked an attempt to have the OAS declare the Farc a terrorist organisation and but it is also determined to keep Brazil clear of Farclinked drug-trafficking.

São Paulo police last week celebrated the capture of a man they had been after for the past eight years, described as a key player in the Farc's drug distribution network. He is the French-born Pierre Jacques Delanoy, or Hernandes, who claims to be a Canadian citizen and has a background as a military pilot and instructor. In two separate operations the police arrested him together with the Colombian Carlos Arcila, described as associated with both the Farc and `the nearly moribund Cali cartel', and seized half a tonne of cocaine.

Police spokesman Antônio Carlos Silveira said that the Farc ensures safe territory for coca growing and cocaine production, in exchange for a quarter of all cocaine produced. Thanks to this arrangement, say Silveira, the Cali cartel has been given a new lease of life. The two shipments intercepted last week had been flown from Colombia, crossing Brazilian and Paraguayan airspace, to end up near São Paulo. The plan was to send the cocaine on to Spain via Africa.

Earlier this year Brazilian police arrested other reputed members of Delanoy's network in Belem, Pará, as they were readying a yacht to transport 400 kilos of cocaine to Spain via Trinidad & Tobago. According to Ivaney Cayres de Souza, director of the antinarcotics department of the police, this network has been shipping every month more than a tonne of Colombian cocaine to Europe.

At about the same time, police in Rio arrested an alleged member of the Farc suspected of training drug traffickers in the use of rifles and explosives. The Rio connection is not new. The best-known local drug-trafficker, Luiz Fernando da Costa (alias Fernandinho Beira-Mar), boss of the Comando Vermelho, was arrested in Colombia in April 2001. The Colombian security forces said he was involved in a drugs-for-weapons arrangement with the Farc. Fernandinho was deported to Brazil, where he is now serving time in a maximum-security prison and from which he is reputed to continue running his operations.

The UN-Farc talks  
The proposed UN-Farc meeting on Brazilian soil has become a distinct possibility, according to Brazilian defence minister, José Viegas and who says that this initiative is perfectly compatible with Brazil's policy of non-intervention in other countries' affairs. Officials from his ministry, speaking off the record, have suggested that the venue for the talks could be São Gabriel de Cachoeira, an Amazonian locality only 160 kilometres from the Colombian border, close to an area where in years past the Brazilian military have clashed with elements of the Farc that had crossed into Brazil. Incursions by the Farc and drug traffickers continue to be reported along the rivers that descend from Colombia towards the Amazon.

São Gabriel de Cachoeira is also one of the points the Brazilian military have marked for reinforcement in their current drive to redeploy the army towards the country's Amazonian borders.

Capitalism and economic plans based on neoliberalism have been effective in generating wealth and raising productivity, but have failed in the area of social equity. This came from President Nicanor Duarte, addressing the permanent council of the OAS last week.

In Latin America, he said, inflation has been controlled after countries made a great effort to put in order their fiscal policies and carry out extensive privatisation programmes - but the end-result is a greater number of poor people.

According to Duarte, the big challenge is to `rebuild politics and overcome the economicism that has impregnated the life of the states.' Beyond that, he offered few details apart from the need to conduct an educational reform; at home, he has admitted that Paraguay has yet to put its fiscal situation in order, and he has ruled out privatisations.

BRAZIL | Jobless rate rises again. The official open unemployment rate in August reached 13%, prompting the inevitable headlines about a new record. It was actually only slightly higher overall than the 12.8% registered in July, though this was the outcome of very uneven performance in the urban centres regularly surveyed by Ibge. A 4.2% fall in Rio's jobless rate did much to offset significant rises elsewhere. These ranged from 1.8 points in São Paulo, the country's industrial hub, to more than three points in Recife and Salvador.

The unions, which had tried to put a brave face on the unexpectedly small lowering of interest rates last week, have begun to sound a more strident note. Força Sindical president Paulo Pereira da Silva has described government policy as `recessive, privileging high interest rates to the detriment of production.' Luiz Marinho, his peer at the CUT (the confederation most closely associated with the ruling PT), lamented that `before 2004 we shan't have unemployment rates that are not records.'

The bad news on the jobs front came as the government decided to acknowledge wwhat virtually all economists were saying and formally lower its GDP growth forecast for this year from 1.88% to 0.98% - and also cut the budget by a further RS$319m (US$110m).

ARGENTINA | Economic activity perks up. Economic activity in July was up 1.8% on June, which took the seven-month total to 6.9% above the comparable period of last year (with July up 8.8% in the year). This comes just after full GDP figures for the first half showed a 6.6% annual increase.

The latest figures have prompted economy minister Roberto Lavagna to hazard that the growth rate for the year as a whole could exceed the 5.5% he had been forecasting. Next year's budget estimates a growth rate of 4%.

URUGUAY | Foreigners buying up land. Not since 1997 had more land been sold in Uruguay in just over half a year: 240,000 hectares have changed hands, and at least 56.5% of that was bought by foreigners (22.5% Brazilians, 16% Argentines, 18% Europeans). Another 28% was bought by companies whose ownership cannot be readily ascertained, so it is likely that there were more foreign purchasers. The whole lot fetched US$110m, which gives an average of US$458 per hectare.

The opposition now has a clear horizon to work towards; in the background, the government seeks to control the supreme court.

Bluster, mainly on the part of President Hugo Chávez and his officials, has continued to dominate the headlines in Venezuela, but the real business of politics was being conducted elsewhere last week. On the one hand, government and opposition reached enough of a consensus to signal acceptance of the referendum rules adopted unanimously by the electoral council, the CNE. On the other, government and opposition clashed in the national assembly over the enlargement of the supreme court and selection procedures for its members.

The referendum  
The rules for revocation referendums, heavy on verification mechanisms, place strict time limits both on the collection of signatures endorsing the request for a referendum (four days) and on the CNE's validation of the signatures (a month). Allowing for campaign time and the logistics of the operation, the opposition now reckons that the referendum could be held in February or March.

The establishment of a clear horizon for the referendum will act as a cooling factor, shifting attention towards headcounting and electoral strategy. Indeed, a survey by Datanálisis has already got this started, by showing President Chávez 's approval rating at 35.9%. This may look dangerously low, but what could matter most is that it represents a five-point increase on two months ago. Similarly, the proportion stating an intention to vote against Chávez , at 66.1%, is 2.5 points lower than in July.

At the same time, political parties appear to be slowly climbing back from the troughs in their public standing. This is most noticeable in the case of the social-democratic Acción Democrática (AD): at its worst, in 1999, only 3% of people surveyed claimed affiliation with it. Now, that has risen to 9.6%. To put this into perspective, the party with the highest rate of affiliation at present, 18%, is the ruling Movimiento Quinta República (MVR). Completing the picture, Datanálisis reports that 35% of respondents (dubbed the ni-ni, or `neither-nor') reject both the government and the opposition.

'Stacking' the supreme court  
In the assembly, government and opposition are at loggerheads over proposed reforms of the supreme court's composition and selection procedures. The court is already large, with 20 justices. The government, arguing that even so it cannot cope with its workload, want to add another 12. The opposition say the real intention is to `stack' the court in its favour, upsetting the current rough balance between those who tend to vote for and against the government's positions.

The government also wants to change the current selection system, which demands approval of appointments by a two-thirds majority in the assembly - ostensibly to prevent blocking actions such as the one that held up the appointment of the CNE. Instead, it wants a simple majority: the current distribution of seats is 87:78, in the government's favour.

Unions and the opposition MAS announce strikes and `mobilisation' of their own as the peasant protest enters its third week.

The public impact of the protests launched in mid-September by peasant leader Felipe Quispe has been such that almost everyone in the opposition has been clambering on board. On Thursday the umbrella labour organisation, Central Obrera Boliviana (COB), announced a general strike, to be enforced by roadblocks, starting on Monday 29. On Friday, Quispe's archrival, Evo Morales, announced a protest march for Tuesday 30, while the legislators of his party, the Movimiento al Socialismo (MAS), warned that if by then the government had failed to respond to popular demands, the next step would be `permanent mobilisation', also to be enforced with roadblocks.

While up to a week ago the ostensible chief demand of the protesters was a halt to plans for the export of natural gas to the US, by this last weekend it had been replaced by a more concrete, immediate political demand: the resignation of President Gonzalo Sánchez de Lozada.

How effective?  
The government's official line is that the protests have so far failed to gain widespread support. Yesterday's strike was described as a failure, and the police reported that the only roads still threatened by blockades were those leading northward from La Paz, towards the townships of Achacachi, Sorata and Warisata and the latter being the scene of the recent clash between protesters and security forces, that left a toll of five dead (WR-03-37). Police commander- general Jairo Sanabria said the roads to the Peruvian border through Copacabana and Desaguadero had been `unblocked', and that the La Paz- Oruro highway, which leads on to Chile, is `expedite'.

Deputy interior minister José Luis Harb sums up the situation as `not alarming'. He says, `Of the country's nine departments, there are only problems in one and and in this one the problems are only in three of its 20 provinces.' Harb has dismissed the COB action as a bid for prominence by its secretary general, Jaime Solares.

The first day of the general strike was only really noticeable in La Paz, where thousands of shopkeepers took to the streets to join the protests, but the general impression was that most shops were closing for security reasons rather than in support of the strike. This situation could change if the truck drivers carry out their threat of blocking all accesses to the capital with their vehicles.

Less confrontation  
Over the past week, only minor scuffles have been reported between police and protesters. Local analysts have taken note that Evo Morales and the MAS have studiously avoided any mention of `mobilisations' of the coca-growing heartland of Cochabamba and continuing with their policy of not providing any excuse for large-scale military action in the area.

The security forces have abstained from further attempts to rescue groups of people isolated by the roadblocks, clearly wishing to avoid any repetition of the confrontation at Warisata. Instead, human rights organisations took over that task. A contingent of 198 tourists and pilgrims was safely convoyed back to La Paz on Sunday, after a three-day odyssey which involved ferrying them across Lake Titicaca.

Bill submitted to congress would penalise ransom payments, related hostage negotiations and kidnap insurance.

A group of senators, headed by the president of congress, Germán Vargas Lleras, have submitted a bill amending the constitution to outlaw kidnapping for ransom and in such a manner that even those paying the ransom are liable to penalties, and to the freezing of their bank accounts and interdiction of assets. `Unfortunately,' says Vargas, this seems to be the only instrument available to fight effectively against this scourge.'

Among those supporting the bill is a former kidnap victim, Vice-President Francisco Santos, who says, `The very moment we put on our trousers and say we will not pay, we'll put an end to kidnapping.'

Not everyone agrees. The wives of two former senators, Luis Eladio Pérez and Jorge Eduardo Gechem, both held hostage by guerrillas, have not only rejected the bill but stated that they would ignore it if it became law. Also among those opposing the bill is interior minister Fernando Londoño, who has a very practical objection. `This,' he says, `would create a paradox: our security forces would end up pursuing the victims' families instead of the kidnappers.'

Second attempt  
Vargas has stated quite explicitly that he is seeking to reinstate a 1993 law that penalised the payment of ransom and but was ruled inapplicable by the constitutional court; hence the current attempt intends to amend the constitution.

The court said the law was in breach of constitutional guarantees, noting that `the rights to life and freedom cannot be sacrificed by the person for the sake of the common good save when the person himself accepts the sacrifice, voluntarily and freely.'

It is worth pointing out that Colombian legislation already places some constraints on the payment of ransom. As the US State Department warns its nationals, `Under Colombian law, those who fail to coordinate their efforts to resolve kidnapping cases with the Office of the Anti-Kidnapping Director (Ministerio de Defensa/Programa Para la Defensa de la Libertad Personal) could face criminal prosecution.'

Vargas's bill would penalise any hostage negotiations involving the payment of ransom, as well as kidnap insurance, which is taken out by many wealthy Colombians and foreign companies operating in the country. Even under normal circumstances, the bill would take close to a year to work its way through congress; with people of Londoño's stature opposing it, it could take much longer, if it is not shelved outright.

Kidnap tally  
Before the most recent abduction of a group of tourists in the Sierra Nevada de Santa Marta, 1,276 kidnappings had been reported in January-July by the Paí­s Libre foundation, and NGO set up in 1990 by Vice-President Santos. This total was 29% lower than that for the same period of last year.

The guerrillas of the Fuerzas Armadas Revolucionarias de Colombia (Farc) were responsible for 34% of the kidnappings; the Ejército de Liberación Nacional (ELN) for 19%, and the paramilitary organisations for 8%. Half of the remaining 40% are attributed to common criminals; the other half are unattributed.

Legislators snub social development minister in week when the IDB submits its antipoverty strategy for Chiapas, Guerrero and Oaxaca.

Poverty made the headlines in Mexico last week, not so much because the IDB unveiled its strategy for the country's three poorest states, but as a result of political posturing in congress. The occasion was an address to congress by social development minister Josefina Vázquez Mota on what the government had been doing about poverty.

Her predecessor Luis Maldonado, now a deputy for Convergencia, challenged the claim made by President Vicente Fox in his state-of-the-nation address that an Eclac report showed poverty in Mexico shrinking by 17% since he had taken office. Maldonado said he had checked the report, and that no such calculation existed; Fox, he added, was `creating false expectations' with such claims. He also said that the government's target of reducing poverty by 40% by the end of its term in 2006 was totally unrealistic.

Minister Vázquez Mota said that there were still 51m Mexicans living below the poverty line, and that this was a grave situation that allowed for no complacency -- but she was left without much of an audience: only 218 of the 500 deputies turned up for the session, and when she spoke, more than half of them walked out.

Strategy for the south  
A day earlier the IDB had presented a study the government had commissioned, Estrategia de Desarrollo de los Estados del Sur de México, which policy recommendations for the country's three poorest states: Chiapas, Guerrero and Oaxaca. The diagnosis is grim: despite being wealthy in resources (including 80% of Mexico's drinking water), that area's per-capita GDP is less than half that of the rest of Mexico. The three states are held back by the high cost of doing business, the scant exploitation of competitive advantages in natural resources and activities such as tourism, administrative inefficiency, poor-quality education and an inequitable judicial system. In an aside, the report notes that armed conflict in the area is `largely due to the conditions of extreme poverty and a sense of exclusion of the rural and indigenous communities.'

The IDB does not think the solution lies mainly in throwing money at the problem. A key finding of the study is that improved use of existing funds could achieve much. For instance, says Gillette Hall, the IDB economist who led the work, `in five years all households in the region could have electricity, water and sanitation without any increase in [public] spending - if the costs of supplying [these services] are reduced to international standards.'

Further along the line, though, the study recommends reforming the régime for the distribution and use of federal resources. Specific recommendations include deregulating the local cargo transport sector, promoting eco-tourism, expanding access to micro-credit and - central in an area which has the highest concentration of indigenous population - sorting out land tenure problems, which also entails reforming the judiciary.

Despite prime minister Beatriz Merino's best efforts during her recent visit to the US, Washington is not yet convinced that the country is ready for a resumption of antidrugs interdiction flights. Merino returned from the US saying that the flights might start up again in six months' time.

In the meantime, US sources say, training of Peruvian pilots will continue until it is reasonably certain that there will be no repetition of the incident two years ago when a Peruvian military plane shot down a light aircraft and killed a US missionary and her child. The Peruvian blamed US spotters for erroneously identifying the target; the US blamed the Peruvian pilot for not following agreed verification procedures.

Nils Ericsson, head of Peru's antidrugs agency, the Comisión Nacional para el Desarrollo y Vida sin Drogas (Devida), says a commission will be set up in October to monitor progress, and that `non-lethal' flights would be the first step towards full resumption. The US will provide four specially equipped surveillance aircraft, as well as refitting an unspecified number of Peruvian aircraft with radars. When in full swing, the interdiction programme is expected to cost about US$22m a year.

Eradication claim  
Ericsson claimed in late September that 5,000 hectares of coca plantations have been eradicated; almost two-thirds of the target for the year. The figure has raised eyebrows, as it would entail a trebling of the monthly average recorded in January-May, at a time when strikes by growers and military reluctance are widely assumed to have reduced the rate of eradication.

COLOMBIA | Jobs market shrinking. Employment in Colombia in the first seven months of the year was down 1.58% on the same period last year, and the trend is worsening: the July employment rate was down 2.46%. The breakdown provided by Dane shows two things: first, that the proportion of permanent jobs is shrinking (from 65% to 62% over the past year) while that of temporary contracts is growing (from 35% to 38%); second, that job losses have been far greater among white-collar employees (-3.5% in the year) than among blue-collar workers (-0.64%). This fits data showing that industrial production and sales have been increasing: in the first seven months they were up 4.46% and 5.08% year-on-year, respectively.

VENEZUELA | Oil sector recovery far from full. Venezuela's oil industry has not recovered as fully as the government has been claiming. Oil export revenues are currently running below US$1bn a month, as against an average of US$1.3bn before the December-January opposition strike that brought the industry to a standstill. Despite the shortfall, Venezuela's international reserves have been mounting steadily - a phenomenon directly attributable to the shrinkage of imports, with the exchange-control system playing an important role in keeping them depressed. Cadivi, the exchange-control agency, has sold to importers in February-July only US$900m: what the Venezuelan economy, hitherto reliant on imports for 70% of its consumption, used to spend in a month. All these figures come from Domingo Maza, a director of the central bank.

Sceptics point to conflicting calendars and agendas on the tax front, and to PRI diehards on the energy reform.

The impression is spreading (`realist' or `defeatist', according to political standpoint) that the two main reforms pursued by the Fox administration are unlikely to materialise, at least in the form intended, in what remains of the year. This opinion is shared by legislators from both the ruling Partido Acción Nacional (PAN) and the opposition Partido Revolucionario Institucional (PRI), though the government continues to insist that broad agreement is possible.

The tax reform appears to be still stuck in disagreement over the value-added tax (IVA) - the government seeking to extend it to exempt activities such as foodstuffs and medicines, while reducing the rate from 15% to 10%; the opposition in favour of retaining the exemptions. The `realists' note that the `dialogue table' set up in August for political, economic and social actors to debate the tax reform, will be concentrating solely on changes meant to balance the books next year, not the more far-sweeping issues.

Also, a national fiscal convention (Convención Nacional Hacendaria) bringing together the state governors and the federal executive to discuss the crucial problem of revenue-sharing, has been scheduled for February. No comprehensive tax reform is feasible without agreement in this area, particularly given that the majority of state governments are in the hands of the opposition, and the governors have been acting ever more assertively on fiscal matters since last year.

Regarding the energy reform, though the government has submitted to the PRI an outline of its current thinking - including a commitment to retain the `commanding role' of the state in this sector - diehards within the PRI continue to oppose any greater private-sector participation. This reform requires amending the constitution, and its opponents, like Oaxaca governor José Murat, say that the PRI's own statutes would need amending as well, because they commit the party to the current constitutional provisions.

The need for (some) reform in both areas can be summed up very briefly: only 18% of Mexico's economically active population pay any tax, and the electricity sector needs about US$46bn over the next decade if it is to keep up with demand.

Visiting Fox irks US officials with stance on Iraq, while others join business in attacking Mexican trade policy.

It is not only Brazil that is currently being viewed as an irritant in Washington: both in the political and the business arena many are also making a show of looking askance at Mexico. President Vicente Fox visibly irked officials last week when, in New York, he adopted a stance similar to his refusal to back the US war against Iraq - this time openly differing with Washington's view on when to return that country to Iraqi rule (Fox wants `rapid' movement towards `the restoration of full sovereignty and independence to the Iraqi people' as `the first priority for the UN').

Clamouring for reprisals  
Late-September hearings at the US Senate's finance committee elicited a chorus of complaints against Mexico for an assortment of alleged unfair trade practices. These came from both government and private-sector representatives, and in the case of the latter, were almost always accompanied with calls for reprisals.

Allen Johnson, the government's chief negotiator on agricultural trade issues, attacked the `discriminatory' tariff of almost 20% applied by Mexico to imports of high-fructose corn syrup (HFCS); senator Charles Grassley - from Ohio, home to the main HFCS producers - demanded `punitive tariffs' against selected imports of Mexican farm products. Before the tariff, the US used to export about 250,000 tonnes a year of HFCS to Mexico; US producers say that if the restriction is lifted they could export as much as 2m tonnes.

Travis Satterfield, chairman of the Rice Committee Delta Council, says that restrictive Mexican practices have caused a 34% slump in US exports of rice in the first quarter of this year. In this case there could be recourse to the WTO. Others who are up in arms are the members of the Distilled Spirits Council (DSC), who are seeking government support to block Mexico's announced regulation making it mandatory for all exports of tequila to be bottled in Mexico.

Currently more than 80% is shipped in bulk, much of it finding its way into some 175 brands of what Mexicans consider inferior-quality tequila. The DSC says this restriction could lead US tequila bottlers to lose about US$500m annually.

It is arguing that the regulation would breach Nafta rules; Mexican officials say they are entitled to ensure quality standards of a product as distinctive as, say, champagne.

Election-monitoring NGO says this is the most violent electoral process since the end of military rule in 1986.

Former Peruvian President Valentí­n Paniagua, now head of the mission of OAS observers in Guatemala, has demanded of that country's government to `move beyond rhetoric and offer concrete conditions of security [...] before, during and after the elections.' He said, `It is striking that since May there have been two dozen people that have been victims of attempts on their lives for political motives in this electoral process.' Even worse, none of these cases have been solved by the authorities.

Since campaigning officially began on 16 May, 17 activists of opposition parties have been murdered. Mirador Electoral 2003, an umbrella election-monitoring body formed by four local NGOs, has said that this is the most violent electoral process undergone by Guatemala since electoral rule was restored in 1986.

The atmosphere of violence, though, shows no signing of clearing. On 19 September hundreds of former members of the civilian self-defence patrols, or PACs, which played a key role in the counter-insurgency campaign during the years of military rule, set up roadblocks on one of the main highways to demand the disbursement of compensation for their services which had been promised by President Alfonso Portillo.

There were fears that this could rekindle the violent protests staged by members of the PACs a year ago, which only ended when Portillo promised them US$650 each. So far, only one of the three promised instalments has been disbursed, and not to all of those who are entitled to compensation. This development could be significant, as the ruling Frente Republicano Guatemalteco (FRG) has tended to rely on the PACs to provide numbers in rallies and protests and such as those that turned violent last July, when the FRG put pressure on the constitutional court to approve the candidacy of retired General Efraí­n Rí­os Montt.

Against Berger  
Though Rí­os Montt's candidacy continues to be ritually denounced by the opposition, there is no sign of the various parties coming together to ensure that the former dictator does not win. Rather, the bulk of the opposition has turned against the frontrunner in the polls, Oscar Berger, candidate of the Gran Alianza Nacional (Gana).

Ten of the 12 candidates in the race have formally requested that four leading newspapers (Prensa Libre, El Periódico, Nuestro Diario and Siglo XXI) refrain from publishing their names or those of their parties, or even the party symbols, in the reports of opinion-poll results. They say that the surveys are being manipulated in order to build up a head of steam behind Berger's candidacy. In the latest poll, Berger remains in the lead with 47% of voter preferences.

At least one newspaper editor, Gonzalo Marroquí­n of Prensa Libre, has made it clear that he intends to continue publishing these reports in full: he says that the candidates' demand simply reflects their desperation at the low levels of support they are enjoying.

The other frontrunner Oscar Berger is not, however, the only opposition candidate favoured in the polls. Another one is former President Alvaro Arzú, of the Partido Unionista (PU), who is running for the mayoralty of Guatemala city. A survey conducted by the Costa Rican pollsters Demoscopí­a puts him first with 45.6% of preferences.

The candidate of the ruling FRG, Luis Rabbé, comes a distant second with 18.5%, and Gana's Jorge Briz is third with 11.7%. As in the presidential contest, all the other candidates together do not muster 10%.

The elections are a little over a month away: they are scheduled for 9 November. Apart from the president and vice-president, Guatemalans will be picking 158 members of the national congress, 20 for the Central American parliament, and 331 mayors and local councils.

GROWTH PROSPECTS | Fourth-quarter upturn, maybe. Economic recovery in the US may begin to have an effect on Mexico towards the fourth quarter of the year, according to the central bank in a late- September review, which seemed more concerned about pay increases conspiring against the 3% annual inflation target. Two sets of data suggest that the economy is not yet gearing up for recovery. Trade figures for August show imports down 3.4% in the year, with purchases of intermediate goods, an indicator of industrial readiness, down 3.5%. [Exports were down 2.8%, with a 4.4% decline in non-oil sales offsetting an 11.8% increase in oil export earnings.] The economy ministry is now estimating that foreign direct investment this year may reach somewhere between US$10bn and US$12bn, `slightly lower than last year', according to minister Fernando Canales (actually, 12% to 26% lower).

SOCIAL SECURITY | Alert as contributions shrink. The social security institute, IMSS, has seen contributions by members shrink by M$9bn (US$933m) between December 2000, when the present administration took office, and May this year. This is due to a net loss of 369,000 members (the number of salaried workers fell by 369,000 while that of casual workers increased by 6,000). The IMSS currently has 15.5m contributors, of whom 12.3m are salary earners - and offers cover to 46.1m. The institute's director, Santiago Levy, says this does not spell a crisis demanding a bailout of the IMSS, as happened during the financial crisis of 1994, but he did urge prompt action to reform social security legislation, possibly increasing contributions and delaying retirement, to prevent the situation from getting out of hand.

There was talk of a distancing between Amiot Metayer and Aristide just before the Armée Cannibale leader was murdered.

Three days of rioting in Gonaí¯ves followed the murder on 23 September of Amiot Metayer, also known as La Fós (The Force) and Cubain, leader of the Armée Cannibale, a gang of pro-Aristide thugs involved in the arson attacks against the premises of opposition parties in December 2001, following reports of an attempted coup against the President.

Metayer was arrested on charges related to these events in July 2002, but the following month he and another 159 prisoners staged a spectacular jailbreak. Despite demands from the OAS that the government rearrest him, he had remained at large.

Most recently, though, there had been reports of a falling-out between Metayer and the government. He was last seen leaving his home in the company of a government official, and after his body was found his brother Buter said that the rioting would continue until Aristide stepped down and indeed, that he would not be buried until that happened.

One of his enemies, opposition senator Paul Denis, said that Metayer was `better off dead [because] the government we worked for was not interested in having him answer for his crimes before a court.'

There is no denying that Metayer had a strong following in his home town of Gonaí¯ves, where he initially built up a reputation as an opponent of the military régime that followed the ouster of Aristide. He also cultivated a sort of `Robin Hood' image, distributing largesse among slum dwellers.

While the opposition Jamaica Labour Party (JLP) insists that a decision on the replacement of appeal to the Privy Council should precede any move towards transforming Jamaica into a republic, prime minister PJ Patterson has announced, as we had anticipated, a deadline for the change: March 2005. He told the convention of his People's National Party (PNP), `I believe every person in Jamaica and at least those who have spoken so far on the matter accepts that the time has come when we must move from a monarchical form of government to a republican form of government.'

The nomination dispute within the ruling Partido Revolucionario Democrático (PRD) continues to dominate the political scene in the Dominican Republic, with each side trying to push the other into a corner as time runs out.

The opponents of President Hipólito Mejí­a's reelection bid, headed by PRD president Hatuey de Camps and party secretary-general Rafael Suberví­ Bonilla - both of them aspirants to the nomination - have set a date for their planned `plebiscite' of party members on whether they approve or reject reelection. It is to take place on 12 October.

For their part, the leaders of the reelectionist Proyecto Presidencial Hipólito (PPH) have reiterated their opposition to the plebiscite and have issued a call for a party convention on 23 November to select a candidate.

Suberví­ recently predicted that 80% of the PRD membership would reject reelection as contrary to the party's principles, despite the fact that it is legal. Mejí­a says his rivals do not stand a chance against him in an open contest, while his campaign managers are trying to make the case that the plebiscite is illegal, or at least in breach of party statutes.

As things stand, the anti-reelection camp will get the first try, but there is no guarantee that it will win. One veteran PRD member said the only clear outcome on 12 October would be a defeat for the anti-reelection camp, since even if they won, they would have to fight once more against an unbending Mejí­a.

EL SALVADOR | Resizing the `maquila' sector's contribution. In January- August, El Salvador's trade balance showed a deficit of US$1.7bn, almost a quarter larger than that of the comparable period last year and and a fair amount of that is traceable to the `start' export sector, the maquila or assembly industry. Maquila exports in the first eight months totalled US$1.25bn, 8.6% up on last year and 60% of El Salvador's total exports. However, only about US$339m of that is net; the rest, 73%, flowed straight back out to pay for inputs.

Non-maquila exports totalled US$841m, of which 84% comes from `non-traditional' brackets. In overall terms, the deficit grew because imports grew more than twice as much as exports; the latter were up by 6% to US$2.1bn, the former by 13.6% to US$3.8bn. Fortunately, remittances by expatriate Salvadoreans rose to US$1.36bn in the same period, balancing out 80% of the trade deficit.

COSTA RICA | Investment in tourism petering out. The target of increasing Costa Rica's hotel capacity by 6% this year will not be met by a long shot. Agustí­n Monge, president of the hoteliers' association, says that over the past year or so only 163 rooms have been added to the sector's capacity.

Expansion has been slowing down markedly since the peak period of 1986- 90, when 8,600 new rooms were built; an average of 2,150 a year. In the four years to 2002, the annual average had fallen to 425. At this rate, says Monge, `all the countries competing with us will overtake us, and very quickly.' Costa Rica attracts about 1.2m tourists a year, who bring in more than US$1bn in revenues.

If there was anything designed to rile the politically correct, it was the gathering last week in Asunción of the Movimiento Latinoamericano y del Caribe de Niños y Adolescentes Trabajadores - the Latin American and Caribbean Movement of Working Children and Adolescents. They are determined to find ways around ILO Convention 138, which sets the minimum working age at 14 - just as much as they want to strengthen some of the provisions of Convention 182, which deals with various forms of exploitation of minors. Their argument is that the age limit subjects them to a double bind: on the one hand they go out to work because poverty imposes the need for extra family income, while on the other they end up being persecuted by the authorities, who confiscate their merchandise and, at best, chase them off the streets (at worst they indulge in violence that can on occasion be fatal).