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For the second time, Oswaldo Payá submits more signatures than the 10,000 required by the Cuban constitution.

Cuba's political opposition has bounced back from the imprisonment of 75 dissidents last March and the later revelations that their ranks had been infiltrated by state security agents. On 3 October, Oswaldo Payá, leader of the Movimiento Cristiano Liberación (MCL), submitted to the national assembly a petition signed by 14,384 people requesting a referendum on a new electoral law, legislation liberalising economic activity, and an amnesty for political prisoners — the aims of the opposition's Proyecto Varela.

Cuba's constitution provides for referendums to be called if petitioned by at least 10,000 citizens. Last year Payá submitted 11,020, but the government sidestepped its obligation, calling instead a referendum on whether the establishment of the country's communist system was irrevocable. An overwhelming majority reportedly said that it was.

Payá says he does not really expect a response from the government this time (foreign minister Felipe Pérez Roqué has already dismissed his petition as a payaserí­a, a joke), but from the people. `If,' he says, `in the teeth of repression there are thousands of people who continue to demand change in this manner, it is that the march towards change has already begun.'

His gesture has been applauded even by the Corriente Socialista Democrática Cubana, which has not supported the Proyecto Varela because, as put by its leader Manuel Cuesta Morúa, `we think Cuba is not ready to move suddenly into free democratic elections.'

Eloy Gutiérrez Menoyo of Cambio Cubano, who recently returned from exile [WR-03-33], is sceptical about the Proyecto Varela `because the US has put its hand into it; it is a project where there is much foreign manipulation and many vested interests.' Still, he too believes that the opposition in Cuba `is such that it cannot be quashed; it is growing, and there is a need for it to gain a legal space.'

Back in Miami, as Assistant Secretary of State Roger Noriega was holding forth about the need to support Cuban dissidents, the US Treasury froze the funds of Cambio Cubano, arguing that Gutiérrez Menoyo is now a Cuban resident, barred by the embargo from holding a US account. His US-registered group is appealing.

Support for the government in the lower chamber of congress has increased by 70% thanks to rush of realignments.

Disapproval of President Lula da Silva's government may be growing out on the street, but this is certainly not the case in congress. The most recent round of floorcrossing, that well-established Brazilian political custom, has increased support for the government in the chamber of deputies by no less than 70%.

In just under a year since they were elected, more than 160 congressmen have changed their party affiliation, the tally having increased dramatically last week as legislators rushed to beat a Friday deadline on allowable changes before next year's municipal elections. This is by far the highest number of floorcrossings ever; the previous peak, in 1993, was 104.

The ruling Partido dos Trabalhadores (PT) had restated its longstanding opposition to this practice, but ended up being the biggest beneficiary of the realignments — due not so much to the swelling of its own ranks as to that of its allies. The Partido Liberal (PL) of Vice-President José Alencar, for example, has seen its bloc increase from 26 to 43. The Partido Trabalhista Brasileiro (PTB) has seen its representation increase from 26 to 55.

All told, the PT and their allies have seen their support in the chamber of deputies increase from 228 at the beginning of the year to 389 now — 75% of the seats in the lower chamber. The biggest loser has been the Partido da Social Democracia Brasileira (PSDB) of former President Fernando Henrique Cardoso, whose bloc has shrunk from 71 to 52. It is worth noting that the composition of the upper chamber has not changed significantly.

On the street
That Lula's government should still enjoy an approval rating of 69% nine months after taking office is quite remarkable, even if the rate has been declining from 75% in March and 70% in June. What has been changing, though, is that the middle ground has been shrinking, and the proportion of those disapproving of the government has reached 24%, up from 13% in March and 18% in June. Those who really dislike the government's achievements now number 14%, up from 11% in June. The figures come from the surveys conducted by Ibope for the national industrialists' confederation, CNI.

The high command of Brazil's air force last week held a meeting with all the firms that had registered to tender for the provision of 12 fighter-bombers — a deal estimated to be worth about US$760m which was suspended by President Lula da Silva shortly after he took office in order to reassign funds to social projects. They all restated their interest. In the running are the Franco-Brazilian Dassault-Embraer (Mirage 2000), Lockheed Martin of the US (F-16), Mapo-Mikoyan of Russia (MiG-29), the Russo-Brazilian Rosoboronexport-Avibras (Sukhoi Su-35) and Saab-Bae Systems of Europe (Grippen). The award will be announced in the second half of 2004.

Commissioner Roberto Giacomino is accused of favouring relatives with overpriced procurement contracts.

Just as the inquiry into corruption in the Buenos Aires provincial police was triggering the dismissal of two more senior officers, the chief of the federal police — only survivor of President Néstor Kirchner's inaugural purge (WR-03-21) — was being dismissed for alleged irregularities in a US$685,000 procurement of computing equipment for the force.

Commissioner Roberto Giacomino, who was away in France attending an Interpol conference when the news broke, is accused of having manoeuvred to avoid putting the order out to tender so as to contract directly with firms with which he had family connections, and paying above-market prices to lease, rather than buy, the equipment. Justice minister Gustavo Béliz said that the sum paid for a one-year lease would have sufficed to buy twice as much equipment.

No sooner had this charge been made public, on 2 October, than another surfaced. A businessman claimed that after he had won a contract to supply the police with a batch of patrol cars, the chief ordered it assigned to a leading auto manufacturer.

Unexplained policemen's assets
The government of the province of Buenos Aires announced, also on 2 October, the dismissal of the two top operations officers in the provincial police, commissioners-general Julio César Frutos and Héctor Dí­az, after they had failed to produce satisfactory explanations for the increase in their personal assets. Three months ago the chief of the provincial force, commissioner-general Alberto Sobrado, had been removed after failing to explain an undeclared deposit of US$330,000 in a Bahamas-based bank.

All told, the internal affairs department of the provincial police has scrutinised the patrimonies of 149 officers. Government sources say that only a third of them had been able to explain the provenance of assets apparently beyond what their salaries could justify. The provincial security ministry is reportedly planning the initiation of criminal proceedings against 24 of those investigated.

Prime minister Alberto Fernández has noted the `striking' increase in kidnappings in the province over the past fortnight, from one every 36 hours to one every day, `almost as if someone were trying to send a subliminal message.'

Chief of criminal investigations is charged with having been a torturer and committed sexual abuse in the Pinochet era.

Chile has been witnessing unusual role reversals over a case of alleged human rights abuses that have finally driven Nelson Mery, chief for 11 years of the Policí­a Investigativa (criminal investigations police) to resign. The right, including a sector of the Christian Democrat party, is celebrating his departure, while leaders of the left have been openly showing their support for Mery.

The crisis began in mid-July when a former political prisoner, Odette Alegrí­a, filed a suit against Mery, claiming that he had sexually abused her in the 1970s, when he had been stationed at the artillery school in Linares, which doubled then as a detention and torture centre. Though there was much pressure for Mery to resign right away, the government granted him 80 days leave to prepare his defence.

This deference was largely due to the reputation Mery had earned as the man whose force had obtained the evidence for a string of high-profile rights cases - the secret executions of the `Caravan of Death' and the murders of Orlando Letelier, Tucapel Jiménez, Carmelo Soria and José Carrasco Tapia being the most notable. Mery was also credited with having modernised Investigaciones with the introduction of cutting-edge techniques and equipment.

In mid-August, Alegrí­a's charges were followed by another suit, filed by the association of former Linares prisoners, against Mery and others on the broader charge of having participated in torture sessions. Mery says that all these charges are false, and part of a vindictive conspiracy mounted by sympathisers of the Pinochet régime. He has also claimed that he has been under constant surveillance by army intelligence.

Just over a week ago, as Mery was filing a slander suit against Alegrí­a, the government decided to replace him. President Ricardo Lagos picked Arturo Herrera Verdugo, number nine in the hierarchy, precipitating a major overhaul of the upper echelons of Investigaciones.

The bulk took part in a May 2000 uprising against President Luis González Macchi said to have been masterminded by Lino Oviedo.

On 2 October, without prior warning, President Nicanor Duarte ordered the reinstatement of 54 members of the military charged with involvement in an uprising against the government of President Luis González Macchi on 18 May 2000. They, and the civilians who accompanied them, were set free because the charges against them prescribed when three years went by without sentences being passed by the civilian court handling their case.

The uprising had been led by Colonel Wladimiro Woroniecki and the former congressman Hermes Rafael Saguier (of the Partido Liberal Radical Auténtico, PLRA); with troops from the élite cavalry regiment stationed in Asunción , they took control of the police department and moved on congress. Within a few hours troops loyal to the government quelled the rebellion. The government accused the exiled former army commander Lino Oviedo of having been the `moral author ' of the coup attempt, and in reprisal moved the cavalry regiment to the far north of the country.

Also reinstated were 14 other members of the military, from the artillery regiment stationed at Paraguarí­, who had been arrested in November 1999 and charged with conspiring to overthrow President González Macchi. These had been convicted and sentenced to prison terms of one to four years by a court martial, but these sentences were quashed - on unclear grounds of `procedural equity' - when the other case was declared extinguished.

Duarte said that he had acted in his capacity as commander-in-chief of the armed forces, with the intention of `pacifying the armed forces.' An unrepentant Hermes Saguier said that it had been `an act of justice', reiterating his oft-stated position that the uprising should not be considered an attempted coup `because the government was illegitimate.' González Macchi, formerly president of congress, had been elevated to the presidency following the assassination of Vice-President Luis Marí­a Argaña and the resignation of President Raúl Cubas.

ARGENTINA | Growth prospects. Headlines in Buenos Aires proclaimed that economy minister Roberto Lavagna had forecast for this year a growth rate of 6.3% to 6.5%. What he had actually said was that at present the economy was growing at that speed, and that investment was expanding at a rate of 30%. Lavagna had said days ago that growth might exceed 5.5%; in the first half of the year the rate of expansion was 6.6%, but it was decelerating towards the end of that period.

Export expansion has also been tailing off, with year-on-year growth at 16% for the first eight months of the year, 6% for August - while imports, still low in historic terms, were continuing upwards, with 42% accumulated growth so far this year, 48% in August. The balance: an 8-month surplus of US$11.42bn.

BRAZIL | Lowering expectations. The central bank has lowered its growth forecast for this year from a range of 1.5-1.8% to about 0.6%. At the same time it has lowered the inflation forecast from 10.2% to 8.9%. Last year Brazil's GDP grew by 1.52%, a smidgen less than in 2001. The industrialists are expecting for this year a growth rate of 0.74% and inflation of 9.65%. The bank expects the driving force behind this year's growth to be the agricultural sector, which is seen as expanding by 5.8%.

BRAZIL | Trade hits records. Export earnings in September reached US$7.28bn, a monthly record, which contributed to a trade surplus of US$2.67bn. This was the second-highest on record, after that of August, thanks to the fact that exports continued to grow fast. The balance for the first nine months was a surplus of US$17.8bn, another record.

CHILE | Unemployment seen shrinking. The government expects the average unemployment rate to fall from the 8.5% predicted for this year as a whole to 7% in 2004 and 6% in 2005. These are the assumptions being used to allocate funds for unemployment insurance payouts.

PARAGUAY | Debt repayments back on track. President Nicanor Duarte reports that fiscal revenues in September reached a record Gs369bn (US$59.5m), which has allowed Paraguay to meet current debt-service obligations - though, he admits, it is still carrying some `historic' arrears. The higher inflow will also allow payment on time of pensions.

World Bank says 30% of farmland is underutilised, and taxing it is a good way of encouraging land distribution.

For the second time in a month, an established institution has come up with suggestions on how Colombia could carry out an effective agrarian reform. Just over four weeks ago it was the comptroller-general's office (WR-03-35); last week it was the World Bank. The starting-point for the bank is one of the key findings of a study it has just conducted: that about 18m hectares of prime farmland are being underutilised or poorly exploited.

This amounts to 30% of Colombia's potentially productive land. This waste is seen against the backdrop of one of the region's highest rates of inequality in land tenure and access to land - which the study sees as one of the causes of the violence that has afflicted Colombia for decades - and very low rates of public investment in rural areas.

To make matters worse, the internal war has made more people landless: of all those forcibly displaced by the conflict, 60% used to own land.

Colombia has been attempting agrarian reform for 40 years, with scant success. As put by World Bank expert Klaus Deininger, so far the results have been `debt arrears, desertion by 50% of the beneficiaries, productive inefficiency and legal deficiencies.' The most recent scheme, based on subsidising the sale of land to peasants, failed to provide the working capital needed to put that land into production.

The study concludes that failure was not necessarily due to the model adopted, or the unwillingness of the peasants, but rather `the bureaucracy of the [now-defunct] agrarian reform institute, the state apparatus and the lack of continuity of policies.' Another serious shortcoming was that attempts so far did not muster the collaboration of the municipalities, civil society and the private sector.

Taxing unproductive land
The solutions proposed by the study are not based primarily on throwing more central government funds at the problem. It is noted that merely bringing up to date the valuation of rural property in the official registers would increase the revenues of rural municipalities by 16%. At this point the underutilised land comes into play: the study suggests that taxation of rural property, at municipal level, could contribute to better utilisation of the land - or better distribution, by making it unprofitable to hold unproductive land.

More broadly, the study recommends the adoption of `a legal and institutional framework that fosters better use of the land.' Land ownership is presented as a factor of security, equity and social peace - which in the Colombian case has become `a crucial element in the war strategy.'

UN & government on board
The finding by the comptroller-general's office that up to 40% of the best farmland may be in the hands of drug traffickers, and the suggestion that land seized from the narcos could help carry out an effective agrarian reform, has been picked up by the local bureau of the UNODC. It has also been taken on board by interior minister Fernando Londoño, who has said that the solution for the plight of those displaced by the war `must be an integral agrarian reform, seizing land from the mafiosos, from the groups that have taken up arms, to distribute them among the peasants.'

Echoing a criticism made by the comptroller-general's office, Londoño expressed regret for the slow pace of confiscation proceedings in the courts, which must certify the `extinction of dominion'. `The court proceedings,' he said, `are advanced at less speed than we would like. At times we feel that the judges of Colombia are less committed than they should be to make these proceedings as swift and effective as possible.'

Camilo González Posso, a former health minister who is currently running for the governorship of Cauca department, is proposing the `industrialisation' of coca. If it is designated a traditional medicine, he argues, it could be used to prepare aromatic waters, coca tea, bread, soap and other products. He says that the industrialisation of coca in Bolivia and Peru has generated many jobs. Coca is traditionally used by the indigenous communities of Cauca.

A move in a related vein has just got under way in Chile. The human rights committee of the chamber of deputies has approved a bill decriminalising the transport, possession and use of coca for religious purposes by ethnic groups. It has been drafted with the Aymara and Atacameño communities in mind.

The ruling party files 46 requests for revocation referendums against Caracas mayor, state governors and congressmen.

Venezuela could well be bogged down by elections next year: not only has the expected request been filed for a referendum to revoke President Hugo Chávez 's mandate, but also 46 others seeking the recall of 38 congressmen, seven governors and the chief mayor of Caracas, Alfredo Peña.

All of the latter are members of the opposition, and the referendum requests were filed by the ruling Movimiento Quinta República (MVR). All 47 requests have been accepted by the CNE, the national electoral council — though the crucial opposition request has been challenged on procedural grounds, which at worst will mean that it will have to be resubmitted.

The 46 extra requests are a clear indication that the government intends to confront the opposition at every level (starting with petty manoeuvring to crowd out the early submission of the opposition's request, in the hope that the CNE would apply a first-come-first-served criterion to schedule the referendums). Not only will the MVR and its allies be campaigning against the opposition's bid to unseat Chávez , but it is hoping to weaken the opposition's campaigning capability by forcing it to defend its own elected officials against revocation bids.

Apparently, the 46 petitions filed by the MVR are not the end of the story. Assembly president Francisco Ameliach has served notice that another 500 petitions seeking the recall of mayors and town councillors will be filed within days.

The timeframe of the referendums is still not completely clear. The petitioning parties have until 7 October to designate the points at which they intend to collecting signatures endorsing their petitions. Then the CNE will set the dates for this to happen; the signing process can take up to four days.

Next, the CNE has a month to verify the signatures and approve or reject the petition. Approval would be followed by the setting of dates for the referendums; the CNE has not yet decided whether to hold all simultaneously or stagger them according to some as-yet undefined criterion.

The opposition reckons that, if all goes smoothly, the referendum on Chávez 's mandate will take place before the end of March 2004.

Compromising in congress
Tempers have calmed down in the national assembly to the point that pro-government and opposition legislators are sitting down to discuss a compromise formula for reforming the assembly's procedural rules.

The pro-government camp wants to limit the opposition's ability to paralyse legislative activity by the kind of filibustering currently allowed. This was last done two weeks ago, when the bill reforming the supreme court came up for debate. The opposition registered all 78 members to speak, and each one made use of his power to demand a check on the quorum - a full roll-call. The result: in an uninterrupted 20-hour session they only managed to vote on the title of the bill.

What the pro-government camp wants is to limit the number of allowable roll-calls to four per session, and to bar any interruptions to the reading of the day's minutes, another filibustering favourite. That they are seeking a compromise is not a sign of magnanimity: though the pro-government camp has the majority needed to approve the procedural reforms, it needs the opposition to make up the two-thirds required for reforming the supreme court.

COLOMBIA | Growth slowing down. Success in the eradication of drug crops has made second-quarter economic growth look lower than if they weren't being counted. With the drug crops included, the growth rate in the second quarter was only 2.2%, bringing down the rate for the first half of the year to 3.13% (first-half agricultural GDP was up 0.71% with drugs, 2.92% without). Excluding the drug crops the figures would have been 2.51% and 3.46% respectively. Either way, there has been clear deceleration in April-June.

Among productive sectors, the driving force in the second quarter was mining, boosted largely by a 77% expansion of coal output.

COLOMBIA | Unemployment rising. Open unemployment in Colombia in August reached 14.8%, half a percentage point more than in July; the proportion of underemployed fell from 33.8% to 33.1%. Just over half the country's 3m unemployed are in the country's 13 biggest urban centres, where the jobless rate is 17.1% and that of underemployment, 33.2%.

VENEZUELA | `Upturn next year'. It is not only the government that is predicting economic recovery in 2004. Merrill Lynch's vice-president of strategy for Latin America, Robert Berges, said last week that there would be `important recovery' next year, probably `in the order of 6% GDP [growth].' He spoke after hearing from the head of Cadivi, the exchange-control agency, a report on how the allocation of dollars has been accelerated.

Cadivi chief Adina Bastidas said the agency had approved requests for US$6.25bn since controls were introduced in February; 87% of those filed. Actual disbursements were of only US$1.4bn. Central bank director Domingo Maza recently put the disbursements at US$900m for February-July (WR-03-38).

ECUADOR | Petroecuador output still sliding. Lack of investment is being blamed for the continuing decline in production at the state oil company, Petroecuador. Its current output is 205,000 barrels per day, as against 210,000bpd at the beginning of the year and 237,000bpd at the beginning of 2002. Private companies are currently producing 250,000bpd.

So troubled are Petroecuador's finances that it is saying it will continue to pump its heavy oil through the state-owned Sote pipeline instead of the purpose-built OCP duct, which is privately operated and will therefore have to be paid. The idea of building OCP was to free Sote for pumping the more valuable light oils, and create extra capacity that would remove the main bottleneck on Amazonian oil production.

Interior minister says that a second group has been inactive since 2001; action against the two is hobbled by scant funds.

If the guerrillas of Sendero Luminoso (SL) have gone quiet of late, it is because their capability of sustaining armed action is very limited. That, at least, is what emerges from the scenario provided by interior minister Fernando Rospigliosi last week — in which he reiterated the government's lower estimates of SL's strength, adding that only one of the two surviving SL units is engaged in fighting.

In Rospigliosi's account, the belligerent unit — the one responsible for the recent mass kidnapping of pipeline workers [WR-03-22] — operates in the jungle valleys of the Ene and Apurí­mac rivers and the Vizcatán area of Ayacucho. Their strength, he said, has remained at 100-120. They extort protection money from local logging companies. They also have a `captive mass' of Asháninka people working the land to produce food crops.

Rospigliosi says that this group does not operate outside that area of the central jungle, and that reports in recent months about armed actions elsewhere have proven to refer to the work of common criminals.

A second `remnant' of SL, the minister said, is based in the jungle valley of the Huallaga river, northeast of Lima. Since September 2001, it has not engaged in any armed action: it is mainly devoted to carrying out propaganda actions and providing legal support for imprisoned senderistas.

If the government has not been able to do more to eliminate these groups, said Rospigliosi, it was because its budget for `antiterrorist operations' was insufficient. However, he said, he intended to go ahead with plans to create a specialised counterinsurgency battalion in the national police force. In a wistful aside, he added, `I don't known if we can rely on help from the US; should there be any it would be excellent.' Rospigliosi says his objective remains the same as when he first served as interior minister in 2001: to do away with `terrorism' by 2006. `This,' he said, `is an objective: a target we hope we can fulfil.'

Party leader Madrazo manoeuvres to sidestep the requirement of a national assembly to modify the PRI's statues.

The opposition Partido Revolucionario Institucional (PRI) is being led into `a threat of schism even graver than the one caused by the departure of Cuauhtémoc Cárdenas.' The warning comes from senator Oscar Cantón, and is directed at the party's president, Roberto Madrazo, and secretary-general, Elba Esther Gordillo.

Their sin is to advocate support for the Fox administration's plans to amend the constitution in order to reform the electricity sector, allowing greater private participation. Cantón belongs to the `hardline' PRI faction visibly led by senator Manuel Bartlett, former interior minister and governor of Puebla. As we have reported (WR-03-38), Bartlett has been reminding Madrazo and Gordillo that the PRI's statutes bar supporting constitutional amendments — which is why the party, set up to defend the order introduced by the Mexican Revolution in the early years of the 20th century, calls itself `institutional'.

Bartlett, Cantón and their peer Miguel Angel Navarro have challenged the party leadership to convene a national assembly so that the PRI membership can vote on whether it wants the ban lifted. They claim that they have the support of about 20 senators and `several' state governors. Bartlett dismisses charges that he and his followers are being dogmatic: he says that after much internal discussion, they have arrived at the conclusion that `a constitutional reform allowing changes to the energy régime is not convenient.'

In any case, Madrazo seems determined to sidestep the challenge. Last week, he announced that an agreement with the government was feasible on a reform which would not entail `losing the commanding role of the state.' This was followed by a statement by David Penchyna, technical secretary of the PRI's political council, to the effect that it is `technically feasible' for the political council, without resorting to a national assembly, to modify the party statutes.

This is bound to cause an uproar in the opposing camp, as is also what is being portrayed as blatant government interference in the internal affairs of the PRI: a statement by interior minister Santiago Creel that the electricity reform would move forward `insofar as the parties are able to remove their internal obstacles.'

Anger in congress
The debate over the electricity reform is only one of the things threatening PRI unity. Another is the deal struck last week with the ruling Partido Acción Nacional (PAN) to share out the leadership of committees in the lower chamber of congress. This was the handiwork of Elba Esther Gordillo, who is also leader of the PRI bloc in the chamber of deputies. The deal has been angrily denounced by a number of PRI congressmen headed by Manlio Fabio Beltrones, leader of the party's self-styled `popular' faction — roughly aligned with the 'hardline' stances of Bartlett and his followers in the senate. They complain that all the best positions in the committees have gone to Gordillo's faction; her way of cementing support in the coming confrontation.

Creel says the two governments are negotiating an `agreed repatriation' deal which will respect the rights and dignity of migrants.

Mexico is claiming a diplomatic victory over the ending of the month-long Lateral Repatriation Program, under which the US Border Patrol returned illegal immigrants to Mexico hundreds of miles from their point of entry. The Border Patrol insisted that diplomatic representations had had no influence on the matter, since the scheme had always been planned as a 24-day test, to be followed by an assessment of its merits.

The rationale for the programme was that lives would be saved: the immigrants were being picked up in the Arizona desert, where fatalities among border crossers had been running high, and flown to four cities in Texas, whence they were sent back to Mexico. The hope was that they would be deterred from attempting a second crossing in the now-distant Arizona.

Exactly how many deportations were conducted under this scheme is in dispute: the US embassy in Mexico cites 3,000, but other sources have put the figure at 5,000 and even 5,600. Be this as it may, while the scheme was in operation only four deaths were reported in Arizona, as against a previous average of one a day (according to US sources).

Mexican sources put the death toll among would-be illegal immigrants to the US at 1,986 since 1997. Fatalities peaked in 2000, at 491, and have been declining ever since. Last year they totalled 371, and the foreign ministry has reported 78 in the first half of this year — though congressional sources have cited figures going as high as 300.

Mexican objections
The Mexican government protested that the cities at the newly designated deportation points were not equipped to deal with the sudden arrival of hundreds of returnees (it soon became apparent that many were turning down the offer of free bus fares back to their home towns, as they intended to attempt new crossings as soon as feasible). It also protested that the rights and dignity of the migrants were being violated by transporting them in shackles (the US replied that this was standard practice when detainees were being carried on aircraft).

Just before the programme ended, Border Patrol officials were telling journalists that it had been a success and would be extended. The very next day, though the programme was still being hailed as a success, Border Patrol spokeswoman Gloria Chávez was saying that it was too early to say when the programme would be reviewed and a decision would be taken on whether to continue it.

Talks on new agreement
On 2 October, interior minister Santiago Creel announced that Mexico and the US were negotiating a new `agreed repatriation' scheme. What he wanted, he said, was an agreement which provided for repatriation respecting the migrants' human rights, doing away with the shackles, barring the deportation of minors, not separating families, ensuring adequate transport back to the migrants' places of origin, and allowing consular supervision of detentions.

Creel, who does not dispute Washington's right to deport illegal immigrants, has offered as a model for the new deal the repatriation agreement Mexico signed with Guatemala, under which 160,000 people were deported last year.

Once again, Marta Sahagún, wife of President Vicente Fox, has dropped a broad hint that she might run for the presidency in 2006. Addressing a seminar on `Woman, leadership and power' in the capital last week, she proclaimed that Mexico is ready for its first woman president. `Let nobody doubt that several women have their sights set on that position and are working silently and cautiously to attain it. We don't know who [the first woman President] is, how old she is, where she works or where she comes from. Probably she's here, in this very forum. What we can be sure of is that she will get there and will know how to act with a great sense of justice and equity.'

Sahagún said that the transition initiated with her husband's election as the first non-PRI President in 70 years would be incomplete without full participation by women, all the way up to the presidency. `Mexico,' she added, `is obliged to hurry up, and it needs us, because it has been demonstrated that we have been, are and will be factors of change.' A month ago, the leader of the PAN's congressional bloc, Francisco Barrio, publicly stated that it would be `imprudent' for Sahagún to seek nomination as a presidential candidate.

`MAQUILA' INDUSTRY | Downturn continues. The downsizing of the maquila (assembly) industry continued in July, when 47 plants closed, leaving employment in the sector 2.3% below July last year. The official statistical institute, Inegi, reports year-on-year contraction across the board, not just in the more labour-intensive industries: 20% in footwear and leather, 10.5% in chemicals, 8.4% in services, 6.4% in furniture, 4.9% in textiles, 4.5% in electronic materials and accessories. Four industries account for 83% of the maquila sector: electrical appliances, transport equipment, apparel and electronic equipment. Employment in the sector fell by 10% in 2002.

Economy minister Fernando Canales announced last week that the government will amend the legislation governing the sector to make it more attractive to investors and create more jobs.

MINING | July blip in output decline. July figures for metals mining show production running 4.3% higher than a year ago. This was largely the result of an exceptionally low point of comparison, particularly for gold (though another sector showing a substantial annual increase, lead, has seen real output expansion in the main mining company). The sector's output in the first seven months of the year was 2.4% higher than a year earlier.

GROWTH OUTLOOK | Halving of target is official. Finance minister Francisco Gil confirmed to the senate's finance committee that GDP growth this year is now only expected to reach 1.5%, or half of the original target. He expects inflation to reach 3.8%, which is just within the government's projected range of one point either side of 3%.

The good news on the fiscal side is that the average price for Mexico's mix of crudes will be close to US$23.70 per barrel, or US$5 more than the assumption used for this year's budget. Gil warned, though, that the price could weaken next year. He blamed the poor performance of the economy on `the delay in the recovery of the US manufacturing sector' and reiterated that greater future dynamism is closely linked with the approval of proposed economic reforms.

USTR Zoellick presses San José to lift its telecoms monopoly; membership of the G-20+ is also cited as a handicap.

US Trade Representative Robert Zoellick took two messages to Central America during a three-capital tour of the subregion: (1) Costa Rica could be left out of the US-Central America Free Trade Agreement (Cafta) if it does not agree to eliminate its state monopoly of the telecommunications sector, and (2) chances of congressional approval of Cafta would be scant if Costa Rica and Guatemala remained members of the G-20+ (the group of developing nations that, as G-22, blocked agreement at the Cancún WTO talks because of the lack of developed-nation concessions on agricultural trade).

The governments of both Guatemala and Costa Rica have formally denied having been subject to any `pressure' from the US on their membership of the G-20+, though officials in Guatemala have acknowledged receipt of top-level correspondence from the US on the subject. Before visiting Central America Zoellick had penned a vitriolic condemnation of the G-20+ in an article published by The Economist, and according to Edwin Solares, president of the American Chamber of Commerce in Guatemala, on 2 October Zoellick had told businessmen in El Salvador that the two countries would be excluded if they did not withdraw from the grouping.

Actually, pressure on developing countries to pull out of the G-22 had begun at Cancún. El Salvador was the only one to oblige (though after the meeting the Colombian government started taking distance from the group, and the government of Peru stated that the G-22 had been an ad-hoc alliance for the Cancún talks, and had therefore ceased to exist once its work was over).

Compromise on ICE?
On Costa Rica's telecommunications monopoly, Zoellick was quite explicit in public, and Costa Rican President Abel Pacheco stated just as explicitly that he would not budge on this issue. This confrontation grabbed the headlines. Not so the hints of compromise that followed. Zoellick's entourage let it be known that the US was not demanding the privatisation of the Instituto Costarricense de Electricidad (ICE), the state monopoly on telecommunications and electricity — just that the sector be opened up to the private sector. Zoellick himself told Costa Rican congressmen that a mutually beneficial solution would be the deregulation of high-value-added telecommunications services.

The word in San José is that the legislative committee studying the future of ICE may include in its proposals the deregulation of internet services and a mobile telephony band, as well as the possibility of `strategic alliances' with private enterprise. Attention is being drawn to the fact that, almost a decade after the launch of Nafta, Mexico retains the oil and electricity sectors in state hands.

Zoellick did drop a couple of carrots: the inclusion in Cafta of safeguards for US agricultural products benefiting from subsidies or domestic support, and the offer — subject to reciprocity — to open up the US market to Central American sugar.

What lies ahead
Zoellick made the point, several times, that the US was determined to finalise Cafta by December this year, and that it would sign with whichever countries were ready. This is part of the broader US post-Cancún policy of `not waiting' for multilateral accord and establishing free-trade agreements bilaterally with those who are willing — a drive which aims at breaking up stubborn subregional trading blocs. In the case of Central America, an extra factor of urgency is the convenience of having a deal in place before the subregion becomes a customs union (it is not expected to meet its end-year target).

The US has considerable leverage over Central America: about 74% of the subregion's exports to the US (expected to reach US$13bn this year) enter duty-free under either the Caribbean Basin Initiative (CBI) or the Generalised System of Preferences (GSP). With two-way traffic running at just under US$25bn, this translates into a sizable trade surplus.

Still, the benefits are hardly one-sided. As the US government handout announcing Zoellick's trip pointed out, the estimated US$11.5bn worth of US exports to Central America (up more than 42% since 1996) are equivalent to what the US exports to Russia, India and Indonesia — taken together.

The first signs of whether compromise is gaining over confrontation are likely to emerge towards the end of this week in Guatemala city, during the preparatory meeting for the eighth (and penultimate) round of Cafta negotiations to be held in Houston.

World Bank study examines deeply rooted patterns of inequality in the region and focuses on institutional reform as an answer.

Latin America and the Caribbean is one of the regions of the world with the greatest inequality — of incomes, access to basic services, voice, assets and opportunities. This is the summary offered by David de Ferranti, the World Bank's vice-president for the area, of a study the bank released on 8 October in Mexico city. `This inequality,' says de Ferranti, `slows the pace of poverty reduction, and undermines the development process itself.' The study has a go at identifying its causes and proposing solutions.

The problem, while hardly unknown, is dramatically presented in Inequality in Latin America and the Caribbean: Breaking with History? The richest tenth of the population of Latin America and the Caribbean, it notes, earn 48% of total income, while the poorest tenth earn only 1.6%. In industrialised countries, by contrast, the top tenth receive 29.1%, while the bottom tenth earn 2.5%. Using the Gini Index of inequality in the distribution of income and consumption, the study finds that Latin America and the Caribbean, from the 1970s to the 1990s, appeared nearly 10 points more unequal than Asia, 17.5 points more unequal than the 30 countries in the OECD, and 20.4 points more unequal than Eastern Europe.

Inequality in the region's least unequal country, Uruguay, is higher than in the most unequal country in Eastern Europe and the industrialised countries. On average, income inequality has tended to worsen slightly in the region, though experiences have varied. Some relatively equal countries, including Argentina, Uruguay and Venezuela, have experienced rises in inequality; Argentina dramatically so. By contrast Brazil, historically the most unequal country in the region, has experienced a modest, but significant improvement. Mexico may also have enjoyed a small improvement.

Ethnicity, the study says, is an enduring determinant of opportunities and welfare in Latin America: indigenous and Afro-descended people are `at a considerable disadvantage with respect to whites.' In seven countries surveyed (Brazil, Guyana, Guatemala, Bolivia, Chile, Mexico and Peru) the study found that indigenous people (men and women) earn 35% to 65% less than whites.

In contrast to those enduring gaps correlated to ethnic differences, Latin America has experienced progress in narrowing sex differentials in income and education. In much of the region, girls and young women are actually overtaking boys and young men in educational attainment.

Weight of history
The study suggests that the unequal distribution of resources that characterises the region today has deep historic roots: it follows a pattern set by specific traits of European colonisation of the region. Elites shaped institutions and policies to serve their interests first. For instance, most countries in the region did not achieve high levels of literacy until well into the 20th century. Low levels of support for basic education contrasted with generous financing for universities, where the children of the élite were trained.

Political institutions in the region, typically, have been weak. And while transitions to democracy have brought valuable gains, patterns of influence remain highly unequal, with traditions of clientelism and patronage often continuing despite national and local elections.

To address the deep historical roots of inequality in Latin America, and the powerful contemporary economic, political and social mechanisms that sustain it, the World Bank study proposes four broad areas for action by governments and civil society groups to build coalitions that might break this destructive pattern:

• Build more open political and social institutions that allow the poor and historically subordinate groups, such as Afro-descendants and indigenous people, to gain a greater share of agency, voice and power in society.
• Ensure that economic institutions and policies seek greater equity, through sound macroeconomic management and equitable, efficient crisis resolution institutions that avoid the large regressive redistributions that occur during crises, and that allow for saving in good times to enhance access by the poor to social safety nets in bad times.
• Increase access by the poor to high-quality public services, especially education, health, water and electricity, as well as access to farmland and the rural services the poor need to make it productive. Protect and enforce the property rights of the urban poor.
• Reform income transfer programmes so that they reach the poorest families, including use of measures that are conditional on keeping children in school and attending health services, so as to improve their lifelong income-earning capacity.  

Institutions as the key
`The key to reducing inequality in Latin America is institutional reform,' says Guillermo Perry, the bank's chief economist for Latin America and the Caribbean and co-author of the study. `To overcome the inequality that undermines their efforts to get out of poverty, poor people must gain influence within political and social institutions, including educational, health and public services institutions. To enable them to achieve such influence, the institutions must be truly open, transparent, democratic, participatory — and strong.'

The study concludes that success in `breaking with the long history of inequality in Latin America' depends on `strong leadership and broad coalitions' to achieve progress in the first area for action, to mobilise `the political agency of progressive governments and the poor.' As institutional reform proceeds, allowing poor people to gain purchase on decision-making, policies to reduce inequality, it suggests, are more likely to be adopted.  

Three areas are identified as those where specific reforms would have most impact in reducing inequality: fiscal and financial institutions, public services and the region's `truncated, elitist welfare state'. The study offers some specific measures as illustrations of what is possible. For example, targeted income transfers conditioned on keeping children in school and attending health services. In making the case for expanded use of conditional cash transfers, the research team cites examples of successful programmes under way in Mexico, Brazil and Nicaragua.

 

Brazil is most unequal, Mexico mixed
Points made during the presentation of the study by the World Bank's regional vice-president, David de Ferranti, chief economist Guillermo Perry, poverty and human development adviser Michael Walton, and consultant Francisco Ferreira.

• Brazil is the most unequal country in the region, even though its tax revenues exceed those of Mexico. It spends more than Mexico, but the distribution is unequal.
• Mexico shows marked inequality in the distribution of services and income, between the indigenous and other groups, and between various parts of the country.
• In the 1990s the poorest sectors of the population in Mexico, Brazil and Chile saw their incomes shrink. In Brazil it happened in the big cities; in Mexico also in rural areas, like Chiapas.
• Nafta has had positive effects on most of Mexico, but Chiapas, Guerrero and Oaxaca have not benefited as much as the rest. These three states are the poorest, have economies based on agriculture, and have the largest indigenous populations.
• Argentina is the perfect example of what not to do if one wants to avert crises: instead of saving in the good times (1996-99) it increased spending excessively; when the bad times came it lost its financing and was unable to avoid the crisis.
• Among the successful targeted programmes, Mexico's Oportunidades has helped 4.2m families finance education and healthcare costs. Brazil's Bolsa scheme, which subsidises education and food, has also shown promising results.
  

Unclear incident came just as the OAS was announcing meetings to select a new provisional electoral council.

The OAS had a piece of good news last Friday: towards the end of October, political and civic leaders would be getting together to launch a series of meetings aimed at selecting a new provisional electoral council (CEP) charged with organising legislative and local government elections. By the time the communiqué was released, though, events on the ground were making that prospect very dim.

The previous night, violence had again erupted in the northeastern city of Gonaí¯ves, where Amiot Metayer, leader of the Armée Cannibale (AC) gang, had been found murdered on 23 September (WR-03-38). In an unclear episode in the Raboteau district, blamed by the police on a shootout between locals, four people were reported killed and a number injured. This version is disputed. Even the ruling Fanmi Lavalas (FL) says the police, recently reinforced with élite units to cope with two weeks of rioting, had been involved; FL senator Prince Sonson Pierre issued a strong condemnation of police action.

Dieujuste Jeanty, a leader of the AC, said that he had personally counted eight dead and 17 injured. Metayer's brother, Buter, who has blamed President Jean-Bertrand Aristide for Amiot's assassination, says the government has sent armed civilians to Gonaí¯ves `to murder members of the movement.'

The Armée Cannibale called a pause in the protests to allow for the burial of Metayer, on 5 October — a day chosen by the Front de l'Opposition du Nord (FRON) to stage a protest demonstration of its own in Cap Haí¯tien. The FRON has called for nationwide solidarity with the protests in Gonaí¯ves — where AC spokesman Winter Etienne has already been announcing that his group intends to take its protests to the country at large this week.

The police has ordered the arrest of Etienne, as well as that of Odonel Paul, the man they have identified as chief suspect in Metayer's murder. The upsurge of violence in Gonaí¯ves led to the postponement of a meeting scheduled for 5 October between OAS officials and Aristide at the US ambassador's residence.

The Costa Rican government has announced that it will not submit to international arbitration over a compensation demand by the US firm Harken Energy Corporation for the cancellation of an oil contract. The contract was cancelled because the firm's environmental impact assessment was rejected in March last year. The government says Harken has not sought redress through the Costa Rican administrative and judicial channels to which it had agreed to submit in the contract. Environment & energy minister Carlos Manuel Rodrí­guez has rejected Harken's `attempt to use a suit in the US as a lever.'