All Categories

Development: On 13 January President Hugo Chávez fired his new electricity minister, Angel Rodrí­guez, and announced the suspension of four-hour rolling power blackouts in the capital Caracas, a day after they began.

Significance: The Chávez government is on the back foot as never before ahead of important legislative elections in September. The power cuts, expected to continue through to the end of the dry season in May, will not only weigh on its already declining approval ratings, but also on the struggling economy.

The president may hope that last week's devaluation will allow him sufficient cash to buy himself out of the current mess by throwing money at voters ahead of the polls, in the hope that his main revenue stream, oil, continues to post a price recovery over this year. Its an increasingly risky bet, and one that belies the fundamental distortions, and ultimate weakness, of his oil-funded 'socialist' economic model.

Rodrí­guez , who was only appointed in October 2009 upon the creation of the new electricity ministry, was asked to resign over mistakes in the implementation of newly announced electricity rationing measures, which expanded upon earlier daily one- to two-hour blackouts in most large cities and towns, beginning in September last year. Apparently, some areas of the city (pop: some 5m in Greater Caracas), were cut off twice in quick succession, prompting angry complaints by residents. Chávez said that there would be no more outages in Caracas for now, pending a review. The scheme, which only took effect yesterday (13 January), will continue in the rest of the country.

As of January 1, businesses and large residential complexes were ordered to reduce electricity usage by 20%, with fines for non-compliance. Public sector workers are also on a reduced schedule, with new shifts from 8am to 1pm.

Development: On 25 February President Porfirio Lobo replaced the head of the armed forces, General Romeo Vásquez Velásquez, with General Carlos Antonio Cuéllar.

Significance: Vásquez has always denied any wrongdoing on the part of himself and the armed forces in the forced removal and exile of the former president Manuel Zelaya on 28 June 2009. He and five senior military commanders, including Cuéllar, were cleared of any wrongdoing by the heavily politicised supreme court on 26 January, the day before Lobo's investiture. The continued presence of the military top brass, however, took some of the gloss off Lobo's new administration and made his efforts at national reconciliation look a bit flaky. Lobo, who was pointedly not invited to this week's high profile Latin American and Caribbean heads of state summit in Mexico, remains under internal and external pressure to demonstrate that his efforts are sincere.

Cuéllar, the inspector general of the armed forces until yesterday, is not a clean slate candidate, so his appointment looks like a compromise deal. His first task will be to select the five other new senior commanders - deputy chief of staff of the armed forces, heads of the army, airforce and navy, and inspector general - to serve alongside him until 2013.

Lobo stressed that the changes to the top brass were made within the law of the armed forces. He said that Vásquez was retiring and would return to civilian life. Vásquez was first appointed in 2005 and was ratified by the former president Manuel Zelaya in 2008. However in the days running up to the coup last year, Zelaya sacked Vásquez (on 24 June) for refusing to obey his order that the army lend logistical support for Zelaya's non-binding referendum to canvass public support for a constituent assembly. The supreme court revoked the president's move and reinstated Vásquez on 25 June. By then, it was clear that a constitutional coup, led by the supreme court and congress, was already in motion against Zelaya.

Earlier this month (16 February), Lobo said after a three-hour meeting with Vásquez and his senior military colleagues that he was not preparing any imminent changes in the military command, but in the same breath emphasised that any changes would be within the law of the armed forces. He and his interim defence minister, Adolfo Lionel Sevilla, stressed his support for the army and its work in anti-criminal, anti-drug trafficking and drought-assistance programmes.

Sevilla's interim position must now also be in doubt - he was a vice minister under Zelaya and was then named defence minister by the de facto president, Roberto Micheletti, who took office after Zelaya's ouster.

Elsewhere, Lobo's efforts at national reconciliation are proceeding slowly. Yesterday's announcement of the five members of the Truth Commission to investigate the events surrounding the coup was postponed.   The two Honduran members have been named as Julieta Castellanos, the current rector of the National Autonomous University of Honduras (UNAH), and Jorge Omar Casco, the former rector of UNAH. Sergio Membreño will be the technical (recording) secretary. The two foreign members have yet to be named.

The former Guatemalan vice president Eduardo Stein, one of two members of a working group created to set the guidelines for the commission, will chair the group. There were some doubts about his role after he suggested that the commission might recommend institutional changes aimed at strengthening democracy in Honduras, including a revision of the process by which a president can be removed from power. Lobo's minister of the presidency, Marí­a Antonieta Guillén de Bográn, insisted on 14 February that the commission was aimed first and foremost at establishing the facts around the coup, and was specifically not oriented at constitutional reform. This prompted the small opposition Frente Nacional de la Resistencia, which groups the rump of Zelaya's supporters, to accuse Lobo of paying mere lip service to national reconciliation.

Yesterday (25 February), the first anti government rally since Lobo took office was held in Tegucigalpa. Frente organisers said 10,000 people took part in a protest against corruption and rights abuses, although this figure cannot be confirmed.

Pointer: Zelaya yesterday responded scathingly to the formal charges levelled against him earlier this week (23 February) by the public ministry. The ministry called for his arrest for fraud, falsification of documents and abuse of authority related to the mismanagement of some L$30m (US$1.56m) in public funds designated for the Fund for Social Investment (FHIS). Zelaya maintains the moves were part of a "personal vendetta" by Lobo against him and intimated that the move was in reprisal for Lobo's not being invited to the summit in Mexico. Zelaya yesterday also cancelled a regional tour of Venezuela and Central America aimed at drumming up support for his seat in the Central American Parliament (Parlacen), which is being contested by Roberto Micheletti, due to scheduling difficulties.

Development: On 9 April, Julio Cobos, president of the Senate, vice-president to Cristina Fernández and leading member of the opposition, announced financial sanctions against senators who fail to attend congressional sessions.

Significance: The measure is a first in parliamentary history and will undoubtedly worsen the current political crisis. Cobos imparted the measure in an attempt to force quorum for the scheduled 14 April session and thus end the strategy of the ruling Frente para la Victoria (FPV) and its congressional allies of 'skipping' sessions to stall debates and votes that could damage the government.
 
Cobos's decision may jeopardise his relationship with José Pampuro, the only member of the ruling party who has shown a predisposition to negotiate with the opposition.  Since Cobos is acting president while Fernández is in the US, Pampuro has become acting president of the senate and might be forced to implement a measure that will have direct political repercussions for him.

The decision was reached by the 36 opposition senators who attended the session on 7 April that never reached quorum due to the absence of the senators of the ruling bloc and the so-called 'disobedient senators' - members of the opposition who sometimes side with the ruling bloc.
 
Parliamentary rules allow for a 'minority session', during which the opposition, backed by articles 27 and 28 of the parliamentary code, agreed to publish a letter in the main national newspapers on 12 and 13 April 'informing' those who were absent on Wednesday that a new session is scheduled for 14 April at 2pm.  The letter will list each senator by name and will include their party and the province they represent.

If the senators fail to attend the session, the opposition has called for a sanction of 20% of their congressional salary for each session they 'skip'. If the ruling bloc still fails to attend sessions, the opposition instructed the police to compel their attendance.

Development: On 18 May, Paraguayan security forces discovered an Ejército del Pueblo Paraguayo (EPP) camp near Arroyito, in the department of Concepción.

Significance:  The discovery confirms reports by local residents that the EPP is still active in the area and reveals serious shortcomings in the special joint task force deployed under the 'state of exception' declared on 24 April last. 'Operación Py'aguapy' has yet to deliver meaningful results. Notably its members failed to capture a group of suspected EPP members detected by a helicopter's heat sensor in the Arroyito area over this past weekend (15-16 May).

According to local reports, neither the army nor the police could access the area where the EPP members were supposedly located because heavy rains had rendered roads inaccessible. Paraguayan-Colombian security cooperation, which was agreed by the two countries in March, may prove crucial if the security forces are to level the playing field. The Colombian army has had decades of experience in combating the Fuerzas Armadas Revolucionarias de Colombia (Farc), which allegedly trained the EPP, and could help its Paraguayan counterparts with tactics.

The EPP camp is close to 'Santa Adelia' ranch, where the EPP killed three farm labourers and one police officer on 21 April. Another camp was also found nearby on 22 April. In the latest discovery, investigators found clothing and basic supplies, but more elements may emerge after they dig up the nearby ground, which appears to have been disturbed recently. Burying supplies is a commonly used technique by the Farc in Colombia and elsewhere, as demonstrated at a recently-discovered Farc camp found in the Brazilian state of Manaos. 

In a separate investigation, Senator Hugo Estigarribia, president of the senate's Constitutional Affairs Committee, stated that “it is presumed that Magna Meza" - the EPP's apparent third-in-command- “was there [at a 15th birthday party in Huguá Ñandú, Concepción] and she escaped three minutes before [an army raid on 9 May]. As discussed in the last issue of our sister publication, Latin American Weekly Report [WR-10-19], the raid was an absolute embarrassment for the joint task force, as it resulted in an armed confrontation between 300 soldiers and the local police force, but no EPP arrests.

Development: On 24 June President-elect Juan Manuel Santos named Marí­a Angela Holguí­n as his foreign minister.

Significance: For his first couple of ministerial appointments Santos has opted for professionals over politicians. His administration may turn out to be more technocratic, and potentially more radical, than most people expect. Of the 18 members of his transition team, only one (Germán Cardona, whom Santos named as his transport minister), is not a technocrat.

Santos's initial appointments (and the speculation about the next batch of ministers) also suggest that his government will be much broader based, more pragmatic and probably less automatically aligned with the US than President Alvaro Uribe's two administrations (2002-2010). It is significant that although President Barack Obama and his secretary of state, Hillary Clinton, both welcomed Santos's 20 June election victory they both intimated that they did not expect him to visit Washington until after he takes office on 7 August. At the end of last week, Santos announced that that he intends to travel to Europe imminently, where he hopes to meet various European leaders, starting with Britain's prime minister David Cameron, and including the King of Spain and the Spanish prime minister, José Luis Rodrí­guez Zapatero. The only firm meeting to date is with Angel Merkel, the chancellor of Germany, on 7 July. Holguí­n will accompany Santos to Europe.

Holguí­n had been widely tipped for the job. So it is significant that the leading daily El Tiempo, which is owned by Santos's family, asked Gustavo Petro, a former guerrilla and hitherto a prominent critic of both President Alvaro Uribe and Santos during the election campaign, whether he would take the key job of minister of agriculture. Petro said no, but he made it clear that he hoped to work with the government on land reform in particular.

Holguí­n said that her priority would be to improve relations with Venezuela, Ecuador and Nicaragua. Venezuela and Nicaragua, along with Bolivia, have difficult relations with the US. Holguí­n, who was Colombia's ambassador to Venezuela between 2002 and 2004, is all but a professional diplomat. Her first big job was as organiser of the Non-Aligned Summit in 1995 in Cartagena. Her last position was as Colombia's representative on the Corporación Andina de Fomento, a regional development organisation. In 2005 she resigned as Colombia's ambassador to the UN in protest at Uribe's attempt to make all ambassadors political appointments: she refused the consolation prize of the Paris embassy to underline her point. 

Domestically, Santos is also signalling that he wants to move on from the constitutional rows which distorted Uribe's second term. On 23 June he paid a courtesy visit to the supreme court, which had several run-ins with Uribe. He was rewarded with a comment from Jaime Arrubla, the president of the supreme court and a longstanding critic of Uribe, that: “Mr President Santos has started on the right foot."

The big question is how this fresh beginning will affect the appointment of a new attorney general, a key issue. At the moment, the executive names several candidates from which the supreme court picks one, but the court has refused to accept any of Uribe's nominees since the start of the year on the grounds that none of them are competent for the role.

Pointer: Santos is still enjoying his political honeymoon, but he does seem serious about trying to establish alliances based on policies rather than personalities. Local political commentators remain intrigued by his statement, during his victory address, that he prefers to deal with political parties as institutions rather than with influential individual politicians. Besides Petro, Santos has also secured the support of Germán Vargas, the leader of Cambio Radical, whom die-hard Uribistas see as the politician that did most to thwart Uribe's re-election ambitions.

Development: On 4 August Haiti's former prime minister, Jacques Edouard Alexis (1999-2001; 2006-2008) was named the official presidential candidate for President René Préval's ruling INITE movement, ahead of 28 November elections.

Significance: Préval's endorsement suggests Alexis will be the man to beat. Préval controls what remains of the state and the provisional electoral council (CEP). However Alexis's candidacy has already sparked controversy and splits in the INITE. The row is likely to subject the already-questioned CEP to further scrutiny. Opponents are protesting against his candidacy on technical grounds, arguing that he has failed to obtain a document from congress which releases legislators from their responsibilities for supervising public finances. This omission contravenes article 233 of the constitution, Alexis's rivals say.

Alexis was fired by the senate in April 2008 as Port-au-Prince erupted in food riots that killed at least seven people. Since then he has been largely invisible in Haiti. He has been unable to secure the document he needs because congress has not convened. The CEP says that the certificate does not matter because Alexis and the other candidates only need the approval of the national audit commission.

Aside from Alexis, other likely key contenders include a hip-hop artist and humanitarian rights activist, Wyclef Jean, who is expected to announce his candidacy today (5 August) and Jean's uncle and Haiti's ambassador to the US since 2005, Raymond Joseph.

The deadline to register is 7 August, after which all candidates must be approved by the (presidentially appointed) CEP.

Development: At around 5.30am on 10 September, some 70 members of the Fuerzas Armadas Revolucionarias de Colombia (Farc)'s 48th front attempted to occupy the Colombia town of San Miguel, on the banks of the eponymous river that acts as a natural border between Colombia and Ecuador, in the southern department of Putumayo, killing eight policemen.

Significance: The attack appears to be the direct result of the alliance struck by the Farc and the Ejército de Liberación Nacional (ELN) which is believed to have provided some of the combatants under the command of the Farc. The escalation in violent attacks against the security forces, especially the police, is quickly becoming a thorn in the side of President Juan Manuel Santos in terms of the public's perception of his security policy and must be tackled if he is to retain his high approval ratings.

While the Farc has traditionally used violence to 'welcome and see off' administrations, it is worth noting that the current levels of violence are less than that which 'greeted' his predecessors. Nonetheless, Colombians now expect security levels to be maintained and the Farc's offensive has already had an impact on public opinion; according to a Gallop poll cited by the political weekly Semana, at the end of the government of President Alvaro Uribe (2002-2010) 48% of Colombians believed security was worsening while now that number has shot up to 62%. Similarly, 45% of those polled before the change of administrations believed security was improving, a figure which has now dropped to only 22%.

However, Farc attacks have been on a steady rise for 14 months, according to a study by the Fundación Nuevo Arco Iris, which specialises in observing the evolution of the Colombian conflict. Ariel Avila, an analyst at the foundation, believes that it took the Farc four and a half years to adjust their military strategy to the democratic security policy (DSP) of President Uribe and that the recent escalation is proof that they have done so successfully. The government's announcement that it plans to adjust the DSP to the new scenario couldn't have come at a better time.

Development: On 23 October, David John Howard Thompson, 48, the sixth Prime Minister of Barbados, passed away.

Significance: Thompson, who returned the Democratic Labour Party (DLP) to office in 2008 after 14 years in opposition, was replaced by his deputy Jerome Stuart. Stuart was sworn into office late on Saturday evening by Governor General Sir Clifford Husbands.

Thompson first took political office in 1987, becoming an MP in a by-election called after the death of the-then Prime Minister, Errol Barrow.

Thompson was diagnosed with pancreatic cancer in March 2010.

The funeral date has yet to be confirmed but official sources have disclosed it will take place in the first week of November. Kamla Persad-Bissessar, Prime Minister of Trinidad & Tobago, immediately expressed her condolences and is one of several regional leaders expected to attend.

Development: On 8 December President Juan Manuel Santos declared a 30 day state of exception, extendable to 90 days if necessary.

Significance: The intense rains in Colombia in recent weeks have already affected almost 2m people. The latest seasonal 'La Niña' weather phenomenon is forecast to last until late February or early March, likely creating hundreds of thousands of additional victims, obliging the new government to place disaster relief at the top of its agenda.

Rescuers are still working to find some 94 people still missing after a mudslide buried 50 homes in the neighbourhood of La Gabriela in the municipality of Bello, Antioquia, last Saturday (4 December). To date 35 people have been confirmed dead and their bodies recovered.

“The crisis that we are experiencing due to this harsh winter is the worst natural tragedy in our history. Never before have so many had their lives, their health, their possessions, even their future affected", declared President Santos. 

The state of exception covers two states of emergency: the first a “situation of [natural] disaster" and the second an “environmental, social and economic emergency". This eases the procedures for the government to redirect funds from the budget towards disaster relief. President Santos can now issue decrees to deal with the crisis that carry the same weight as laws passed by congress. This includes the modification of existing taxes or the creation of new ones.

Santos announced that an additional Col$1bn (US$529m) had already been transferred to the Calamities' Fund and an 'office of permanent crisis' has been created in the interior ministry. Having secured a donation of US$5m from a Colombian businessman and a loan of US$350m from the Inter-American Development Bank (IDB), Santos cancelled his trip to the Cancun Summit in order to lead the relief efforts at home.

To date official figures show that the rains have left 194 dead, 248 wounded and 143 missing. Across 648 municipalities in 28 of Colombia's 32 departments, some 2,040 homes have been levelled and another 269,325 severely damaged, with dozens of bridges and roads destroyed and/or impassable.

Development: On 27 January a leak to a Mexico City newspaper, Reforma, claimed that the Partido Revolucionario Institucional (PRI) candidate in the 30 January election for governor of Guerrero, a poor southern state, had received US$5m last “June or July" from Héctor Beltran Leyva, a leading gangster.

Significance: In the most recent opinion polls, the PRI candidate, Manuel Añorve Baños, had been lagging behind his only rival (and cousin), Angel Heladio Aguirre, from the leftwing alliance, Guerrero Nos Une, so claims by the PRI that the leak came from the federal government may be wide of the mark. The PRI may have engineered the leak to explain Añorve's defeat, which would be embarrassing for several leading Prií­stas which have backed him strongly. The election in Guerrero is the first of a series of local races which will have a major influence over who are the candidates for the next presidential elections in 2012.

Key points:

The Reforma leak claimed that the eyewitness evidence from a protected witness, “Mateo", had been useful in the arrest of two senior (allegedly corrupt) law enforcement officers. On 27 January the federal Procuradurí­a General de la República (PGR), which took “Mateo's" deposition, said that the reason why it did not question Añorve about “Mateo's" allegation (which was made on 26 November 2010) was that it could find no corroborating evidence.

Añorve said that he intended to travel to Mexico City to confront the PGR. He said that he had nothing to hide and that there was no truth in the allegation. Legally, under electoral law, he should not been able to make any public comment before the polls close on 30 January: the local election regulator, however, gave him special leave to comment on the accusation.

What is interesting is which Prií­stas sprung to Añorve's defence. The party president, Humberto Moreira, clearly had to say something. But Manlio Fabio Beltrones, the PRI's leader in the senate and the obvious default presidential candidate if the current front-runner, Enrique Peña Nieto, the governor of the Estado de México falters, was strident in his support of Añorve. Añorve is, however, very much Peña Nieto's man.

The election in Guerrero had already been violent and dramatic, even before the leak. First, Aguirre's representative on the electoral authority was beaten up and left in a coma; then a PRI regional organiser was gunned down. On 25 January the Partido Acción Nacional (PAN) candidate, Marcos Efrén Parra, withdrew and endorsed Aguirre. That move is important because it suggests that the prospect of a grand anti-PRI alliance in the state races this year, and especially in the Estado de México which elects Peña Nieto's successor in July, is still viable.

Pointer: Nationally, the big beneficiary of a win by Aguirre in Guerrero on Sunday will be the mayor of Mexico City, Marcelo Ebrard who is now repositioning himself as a moderate (and currently hob-nobbing with international movers and shakers in Davos, Switzerland). This repositioning means that Ebrard has to disassociate himself from his former patron (and predecessor as mayor of Mexico City), Andrés Manuel López Obrador - who leads the radical leftwing, and opposes any alliances with the PAN.

Development: On 17 March senators from all parties, including the ruling Partido Acción Nacional (PAN), criticised the Mexican government's policy towards the US.

Significance: The Mexican senate's unhappiness with what the US has been doing in and over Mexico bodes ill for US attempts to allow its officials to bear weapons in Mexico and for the Mexican suspect of a murder of a US Immigration & Customs Enforcement agent to be extradited to face a death-penalty trial in US. Admittedly, Mexico yesterday did extradite a national, Emilio Samyn Gonzáles Arenazas, to California, where he faces prosecution for the murder of a US Border Patrol agent in 2009. California, however, has a 'de facto' suspension of executions.

Key points:

Mexican senators from all parties were questioning the foreign minister, Patricia Espinosa, over recent US operations in Mexico. The two most notable are: 'Fast & Furious', in which the US deliberately allowed Mexican gangs to equip themselves with supposedly tracked assault rifles, and the use of US drones in Mexican airspace. A former foreign minister, Rosario Green, from the country's biggest party, the Partido Revolucionario Institucional (PRI), said that never had a Mexican government handed over so much for so little and with such poor results. She said that Mexico's foreign policy was in a critical situation with the government concealing information and making dangerous miscalculations in a confrontation with the US over the US ambassador to Mexico, Carlos Pascual.

Green added that it was “unacceptable" for the Mexican government to rely on “investigations on the other side of the border" over both 'Fast & Furious' and the use of drones.

On 18 March, a Republican congressman from Texas, Michael McCaul, who chairs a Homeland Security subcommittee on oversight, investigations & management, announced a 31 March hearing on “The US Homeland Security Role in the Mexican War Against Drug Cartels" to consider “the failed" 'Fast & Furious' operation. The US Justice Department's preliminary report on 'Fast & Furious' is due to go to the House's committee on the judiciary today (18 March).

Development: On 2 May, India's trade minister, Jyotiraditya Scindia, began a tour of South America in Uruguay and announced that India is looking to set up a storage and redistribution regional hub for Indian goods in the Southern Cone nation.

Significance: India, the second most important Asian economy, appears to be set to increase its presence in the region and follow the lead of another Asian regional leader, China.  

Key points:

After becoming increasingly interested in the sub-region during its 2007 land grab strategy, the Indian government enhanced its Latin American and Caribbean investment promotion programme “Focus: LAC", through which it provides incentives and financial assistance for Indian exporters to boost trade with Latin America. This led to the signing of a Preferential Trade Agreement (PTA) with the South American Common Market (Mercosur) in June 2009.

Accompanying Scindia was a delegation of businessmen representing the Indian federation of chambers of commerce; its director, Rajeev Vijh, explained that Indian companies wanted to establish a distribution centre in Uruguay because it is already a “regional hub" and the Uruguayan government provides incentives to new investments. According to Vijh, Indian companies specialising in agro-industrial, agro-chemical and energy sectors were all interested in investing in Uruguay. Although India's trade with Uruguay currently stands at US$110m, Scindia said he expected it to increase to US$1bn, though he did not provide a timeframe for such boost.

After Uruguay, Scindia crossed the River Plate into Argentina where he attended the 3 May opening of a medicines production plant owned by India's Glenmark. The plant is built to produce high technology medicines which are to be exported to 20 countries worldwide. Scindia was accompanied by Argentina's industry minister, Débora Giorgi, who stated the increasing business ties between both countries “was an example of south-south integration". Furthermore, in an official statement, Argentina' industry ministry pointed out that Indian investments in the country has already reached US$1.2bn.

India's main exports to Mercosur are drugs, pharmaceuticals, and chemicals, while Mercosur's major exports to India include vegetable oils, metal scrap, and non-electrical machinery. The marked differences in products traded highlight the potential complementarity between the two markets. In 2008, prior to the PTA agreement, India exported US$4bn to Mercosur. Since then, its exports have increased dramatically; in 2010, exports to Argentina were US$2.5m, an increase of more than 100% on the previous year; exports to Brazil were US$4.2bn (a 94% rise); exports to Uruguay were US$67.25m, up by 87.7%; while Paraguay saw the lowest increase of 28% - exports rose to US$65m. According to the most recent figures, India's trade with Mercosur in 2009-2010 was US$6.9bn.

The decision by the Chinese National Offshore Oil Corporation (CNOOC) to offer US$18.5bn cash for a California based oil company, Unocal, is the first of what is likely to be a constant stream of Chinese bids for US companies. The deal signals that China's central bank has become fed up with its policy of recycling the dollars produced by the country's exports to the US through the US bond markets. Instead of financing the US current account deficit by buying US Treasury bonds, the Chinese will now buy US companies. 

CNOOC moved smartly, on 23 June, just as Chevron Texaco was about to snap up Unocal for US$16.4bn in cash and shares. If the CNOOC deal goes through, it will be the biggest foreign investment by a Chinese company. CNOOC is China's third-biggest oil company. It is offering 11% more per share than Chevron. Although CNOOC's shares are listed on both the Hong Kong and New York Stock Exchange's the company is not including equity in its offer.

Chevron issued a sharp statement claiming that CNOOC's deal was fraught with regulatory implications. Indeed the US Commerce Secretary, Carlos Gutiérrez, said that CNOOC's bid would certainly be looked at from the point of view of national security. Unocal, however, obtained Chevron's permission to talk to CNOOC about CNOOC's offer. The Unocal board reaffirmed its recommendation that shareholders should accept the Chevron offer: the Unocal directors said that there was no guarantee that the CNOOC deal would go through. 

Unocal's board has plenty of ways of warding off CNOOC if it decides that the deal is unwanted. Among the so-called "poison pills" to ward off unwanted bids, the Unocal board can make it very expensive for a bidder to buy more than 15% of the company. The board also has staggered terms, which means that an unwanted bidder could not replace the board immediately. 

National security considerations are unlikely to derail the bid: most of Unocal's producing assets are outside the US. The bulk of them are in Southeast Asia. CNOOC is also being advised by top US investment banks, suggesting that CNOOC had taken preliminary soundings of US policymakers before making the offer. One base that the investment banks may not have covered is the reaction of the Thai and Indonesian governments to having strategic parts of their energy industry placed in Chinese hands. 

The CNOOC line is that the deal is strictly business and raises no national security issues for anyone. Few analysts swallow this view. China's hurtling rate of economic growth is stretching the energy industry: brown-outs are increasingly common. China fears that the US's twitchiness about its interest in securing supplies of raw materials, particularly energy from South America, threatens its economic well-being and thus its security. Analysts claim that China views securing energy resources as a matter of national security. 

The CNOOC said that by taking over Unocal it would double its annual output of oil and gas. It would also increase its oil reserves by 80%. The deal poses a tricky question for the US authorities. If they bar the take over (though analysts say that they will be hard pressed to find a good reason), relations with Beijing will take a turn for the worse. The US is already unhappy with the threat China poses to what remains of its textile industry and the refusal of the Chinese authorities to contemplate a revaluation of the yuan. 

The deal is likely to be reviewed by the Committee on Foreign Investment in the US (Cfius). This is chaired by the US Treasury Secretary and other cabinet minister, notably the secretaries for Homeland Security, Defense, Commerce, Justice and the US Trade Representative all sit on it. The Cfius has reviewed 1,560 deals since it was set up in 1988 but investigated the implications of only 25. Its most recent major veto was Hutchison Whampoa's attempt to buy Global Crossing in 2003. The initial Cfius ruling will be in 30 days. If the ruling is negative, there will be a further 45-day investigation. 

The Chinese foreign ministry spokesman, Kong Quan, said that contacts between CNOOC and Unocal are "normal commercial activities between enterprises and other people should not be surprised and try to interfere on political grounds." The CNOOC chairman and chief executive, Fu Chengyu, wrote in a letter to the US Congress on 27 June that the company is eager to have the US government scrutinise the national security implications of the deal. He implied that any objective analysis would conclude that the security issues were negligible: Fu said Unocal's oil and gas production amounts to less than 1 percent of US consumption. 

The macro issues
There are economic as well as strategic implications to the deal. The macro-economic implications of the bid are manifold. In 2004 China ran a US$160bn trade surplus with the US. So far this year, (first four months) the US trade deficit with China is US$57bn. For the last few years China has been lending these dollars back to the US by buying US Treasury bonds: there are signs, however, that Chinese and Asian interest in building up the central banks' holdings of US T-bonds is waning. 

The problem for the world economy is that if the Asians stop buying US bonds, it is not clear who will. If the US cannot borrow at current rates it will either have to pay more or reduce its borrowing. Either way US consumption will drop, cutting its demand for Chinese (and Asian) imports. There is a third option: China changes the form in which it finances the US current account deficit. Buying Treasury securities and buying US companies both rank as capital account transactions and thus finance current account deficits. 

Foreign direct investment by Chinese and Hong Kong companies at the end of 2002 stood at US$8bn. The biggest foreign direct investors in the US are Switzerland, which has US$878bn invested there, and Japan which has put in US$431bn. The early involvement of US investment banks in the CNOOC deal suggests that they too have seen the opportunity for increasing Chinese FDI in the US. The same sort of thing happened a generation ago when the Arab oil exporters were running huge trade surpluses after jacking up the price of oil in the early 1970s. By the 1980s Arab oil exporters were switching to buying real, rather than financial assets. Kuwait brought downstream oil assets such as petrol stations while other oil exporters (notably Libya) bought stakes in Italian and German companies. 

The first oil boom also prompted Venezuela's state oil company to buy downstream assets in industrialised countries. It bought Veba Oel in Germany and Citgo in the US. Citgo is the biggest independent petrol refiner and retailer in the US with a market share of about 5%. Other emerging market countries have been active in the US. In 2000 Cementos Mexicanos paid US$2.8bn cash for Southdown. The deal made Cemex the biggest cement producer in North America. The deal was so successful that four years later Cemex was able to bolster its European presence by buying RMC for US$5.8bn in cash. This deal was the biggest-ever foreign acquisition by a Mexican company. The deal makes Cemex one of the world's largest building materials companies with annual sales of US$15bn.

The fundamental reasons
There is also a fundamental reason for CNOOC to buy Unocal. China is a major importer of oil. Unocal is the US's ninth-largest producer of oil and gas. As oil prices increase, China wants to its secure supplies. It may be that China views (as Chevron clearly does) Unocal's proven reserves of 659m barrels as a better bet than investing in oil exploration on its own account. 

Back of the envelope calculations show that valuing Unocal just for its oil reserves, CNOOC is paying US$28 a barrel (US$18.5bn for 659m barrels). In fact the gas, pipelines, refineries and processing assets mean that CNOOC is probably paying around half that headline price for the oil. This sort of price (US$14 to US$15 a barrel) is the hurdle rate big oil companies still set to evaluate the viability of projects. 

Big oil companies have yet to raise their hurdle rates substantially to take into account the surge in oil prices. Although some senior oilmen say that high prices are here to stay, others are less sure. What is clear is that the current spike in oil prices is led by demand rather than by controls on output. The only country where output could probably be higher is Venezuela.

China and the US are mutually responsible for the global surge in oil demand. Oil demand from China grew by about 15% in 2004. China's oil imports are running at about 2.1m bpd. China accounts for about a third of the overall growth in world oil demand. There is little sign of higher prices deterring Chinese demand for oil. The IMF economic model assumes that higher oil prices will have an effect on China's growth: the IMF reckons that China will lose 0.4 of a percentage point in annual growth for each US$5 rise in the annual average price of crude oil over US$40 a barrel. There is no sign of this happening. 

The bulk of Unocal's oil reserves are still in North America (the US and Canada) though the bulk of its gas reserves are in Asia. Its proven gas reserves are 6.57trillion cubic feet. The company's average oil production in 2004 was 159,000bpd. The US and Canada accounted for 70,000bpd; Asia for another 70,000 bpd and 19,000bpd came from elsewhere in the world. As for gas production, the US produced 495m cubic feet a day for Unocal in 2004; Canada produced 83m but Asia produced 912m. The company's total output was 1.51bn cubic feet a day. 

In Asia, Unocal's most important area is the Gulf of Thailand. The company has three concessions in the Thai part of the Gulf. It sells the gas it produces there to local Thai electricity companies. The company produces around 35,000bpd of oil from its Thai fields. It also has an important stake in a natural gas field in the Myamar portion of the Andaman Sea. It also owns almost 30% of the pipeline which takes this gas to Thailand where it is used by power stations. 

Although the company has 12 production-sharing concessions in Indonesia, only four of them really matter. The company produces 35,000bpd of oil from these fields and 136m cubic feet of natural gas. The company has been active in Indonesia since 1968 and discovered Indonesia largest oil and gas field, Attaka, in 1970. Unocal has had a long association with the Indonesian state oil company, Pertamina. Indonesia has been the company's main focus of operations: between 1998 and 2001, Unocal drilled 100 exploration wells in Indonesia and found commercial quantities of oil and gas in eight of them. 

Unocal has some technology which the Chinese want, notably its ability to drill deepsea wells. It has drilled the deepest well in Indonesia: at a depth of 6,772 feet in the Makassar Strait. Besides the deepwater technology, Unocal has also drilled horizontal wells; three D seismic exploration and modelling for deepwater oil structures. This and other technologies enabled Unocal to recover additional oils from fields that had been classed as exhausted by the state oil company. Unocal also has been involved in liquefying natural gas for transportation on to users in North Asia. It also has experience in using natural gas a feedstock for producing fertilisers. 

CUBA: US supplies agricultural goods

NICARAGUA: US senators back Bolaños

TRADE: Cafta ratified by El Salvador

VENEZUELA: State department criticism

MEXICO: 'Laser visa' programme extended

CUBA
US trade Cuban officials agreed to buy US$125m in farm goods from the US during trade negotiations between 15 and 18 December. The biggest deal was reached by a trade mission from the US state of Alabama, which will supply US$18m of agricultural products to Cuba. Alabama restarted exporting to the island after a 40-year hiatus caused by the ongoing US embargo on trade with the Fidel Castro regime. Since the US government agreed to allow agricultural sector exports to Cuba in 2000, a growing number of US states have begun to trade with Cuba, of which Alabama is one of the most significant. Before the embargo, Alabama exported agricultural and forestry products to Cuba in exchange for sugar and other products. Under the 2000 federal law on trade with Cuba, all exports have to be paid for in cash by the Cubans. Alabama's commissioner for agriculture, Ron Sparks, said 'If someone else fills those orders, we are not going to get them back.'

NICARAGUA
A 20-strong bipartisan group of senators, including Democrats Ted Kennedy and Christopher Dodd and Republicans Henry Hyde and Arlen Specter, sent an open letter of support to President Enrique Bolaños on 17 December. The signatories offered full backing for 'the administration's fight against corruption and the misconduct of public officials.' The letter went on to say that Bolaños's 'commitment to democratic governance deserved the support of the inhabitants of the whole hemisphere'. Bolaños is looking increasingly isolated in Nicaragua as the right-of centre Partido Liberal Constitucionalista (PLC) and the leftwing Frente Sandinista de Liberación Nacional (FSLN) stitch up an alliance to curtail his powers. Several high-profile US officials, including the Secretary of State, Colin Powell and his deputy, Dan Fisk, have publicly urged the PLC over the last year to resolve its differences with Bolaños' conservative Alianza por la República (Apre) in order to prevent the FSLN from coming to power in the presidential elections in 2006.

TRADE
El Salvador's congress ratified the Central American free trade agreement (Cafta) on 17 December. A total of 49 legislators in the 84-seat assembly ratified Cafta: 29 from the ruling Alianza Republicana Nacionalista (Arena), 14 from the right-wing Partido de Conciliación Nacional (PCN) and 5 from the right-wing Partido Demócrata Cristiano (PDC) and one vote from the independent legislator Manuel Navarrete, who recently quit the left-wing opposition Frente Farabundo Martí­ para la Liberación Nacional, with 30 seats, because it would not support Cafta. Five legislators from the left-of-centre Centro Democrático Unido (CDU) abstained. Meanwhile, the Dominican Republic's congress finally voted to eliminate a controversial 25% tariff on corn-syrup imports on that had been heavily criticised by the US. Top trade representatives from the US had suggested that the Dominican Republic might be excluded from the Cafta if the tariff was approved by congress.

VENEZUELA
On 15 December, US State Department spokesman Richard Boucher criticised the frequent visits of Venezuela's President Hugo Chávez to Cuba. 'I would just say that we are troubled that a country with a democratic tradition like Venezuela would want to strengthen its ties to the only undemocratic regime and closed economy in the hemisphere. Any attempt to emulate a Cuban model at a time of increasingly -- increasing global expansion, regional integration and opportunity for individuals would be a step backward for the people of Venezuela,' Boucher said. He also criticised the Venezuelan congress's appointment of 12 new supreme court justices. He said it ' calls into question the principle of judicial independence and how it's being respected in Venezuela and calls into question Venezuela's commitment to full democratic institutions.' He added: 'We share the concerns that have been expressed by Human Rights Watch and by Venezuela's opposition. We think separation of powers is an intrinsic part of democracy that is respected throughout Latin America and throughout the international community. Unfortunately, in Venezuela, we're witnessing increasing difficulties on the part of the judicial authorities to deliver impartial justice.' These statements were at odds with the broadly conciliatory remarks being made at an ambassadorial level. Vice-president José Vicente Rangel said on 19 December that Venezuela was working on an agenda for talks with the US to resolve political disputes.

MEXICO
The US government announced on 22 December its plans to extend the remit of the 'laser visa', which processes finger prints and facial scans through a biometric identification system called 'US VISIT'.. The director of the programme, Jim Williams, said that Mexicans with a B1/B2 visa would now need to apply for a 'laser visa'. Previously only those who planned to travel 25 miles beyond the border or stay more than 30 days in the US needed to apply for a 'laser visa'. The U.S.-Mexico border is the busiest worldwide. Over one million people cross the border every day. Over 193,181,314 people crossed the border legally during the fiscal year 2002.

Cuba:  The Miami Herald reported on 19 May that the US State Department is involved in "low level, technical level" talks and exchanges of information to help Cuba respond if the recent oil spill in the Gulf of Mexico approaches Cuba. Cuban government officials called US oceanographers seeking assistance last week. Aside from the fact that any oil spill could do damage to Cuba's coastal coral reefs and maritime habitats, US scientists and environmentalist stress that engagement on these issues with all of the relevant Cuban authorities is crucial. Any potential oil spill in Cuba, which is heavily targeting the development of its own off-shore deepwater oil industry, could have equally devastating consequences for US coastal areas.

Honduras:  On 6 May President Porfirio Lobo confirmed the appointment of Jorge Ramón Hernández Alcerro as Honduras' new ambassador to the US, following US State Department approval. Hernández, one of the authors of the 1982 Constitution, previously held the post under the government of Rafael Leonardo Callejas (1990-1994) and was the minister of governance under the Ricardo Maduro administration (2002-2006). He has also served as a magistrate at the Central American Court of Justice in Managua, Nicaragua.

Honduras:  On 17 May a new mission from the Washington-based International Monetary Fund (IMF) arrived in Tegucigalpa for a scheduled 2010 Article IV consultation. The fund, which spent 10 days in the country in mid March, will hold further talks with Finance Minister William Chong Wong about the government's economic recovery and fiscal stabilisation plans. Chong Wong hopes the Fund will release a US$300m loan for the country in the third quarter. The central bank governor, Marí­a Elena Mondragón, will approve a new monetary programme on 20 May addressing the exchange rate. She said there was no pressure for a devaluation of the lempira at the minute, as imports are recovering more slowly than exports, allowing reserves to be rebuilt.

Honduras: On 16 May the top US military chief for Latin America, Southcom commander General Douglas Fraser, visited Honduras for the first time to mark renewed US military ties with Honduras. Fraser met the defence minister, Marlon Pascua, and members of the Honduran armed forces, as well as the US Ambassador to Honduras, Hugo Llorens. On the agenda was the fight against drugs trafficking, humanitarian assistance projects, disaster response training, human rights, educational exchanges and participation in bilateral and multinational military exercises.

Mexico: On 19 May President Felipe Calderón Hinojosa and his wife were entertained to a state dinner at the White House by President Barack Obama and his wife Michelle. This was the Obamas' first state dinner for a head of state. Today, 20 May, Calderón is due to address a joint session of the US congress.

Friday:

Guatemala: Guatemala's President Álvaro Colom will meet his Mexican counterpart Felipe Calderón to discuss border security and immigration, among other issues.

Argentina: Palestinian foreign minister Riad El Malki will give a press conference in Buenos Aires.

Argentina: The government will publish official figures on industrial activity in Argentina in February, and employment in the second half of last year.

Peru: Peruvian foreign minister José Antonio Garcí­a Belaúnde will pay an official visit to Paraguay to meet various government officials including Paraguay's President, Nicanor Duarte.

Saturday

Argentina: Argentine President Cristina Fernández will meet her Brazilian and Bolivian counterpart Lula da Silva and Evo Morales to discuss the energy situation in the region.

Bolivia: Bolivia's President Evo Morales will begin a 13 day tour where he will visit Argentina, US, Belgium, Norway, Holland and France.

Sunday

Cuba: The new members of the national assembly will meet to choose the council of state (executive) and the country's new president.

Monday

Nicaragua: An IMF delegation will visit Nicaragua to evaluate the country's IMF program.

Guatemala: Guatemalan President Álvaro Colom will visit Panama to meet President Martin Torrijos and sign a free trade agreement between both countries.

The government of Guatemala has reported a better-than-expected result from a major police-military operation to locate and eradicate opium poppy plantations in the northern department of San Marcos. The event has indirectly indicated that opium poppy cultivation, declared virtually eliminated by 1997, may have returned to a level similar to that of 1990.

The San Marcos operation, which took place in the last week on August, involved the deployment of 950 police officers and some 200 soldiers, and was accompanied by DEA agents. Guatemalan authorities say their US counterparts had expected a yield of about 10m poppy plants uprooted: the reported result was 17.5m, which raised the total eradicated since the beginning of the year to 27m. These are very rough estimates, as the eradicators obviously did not count the plants, which grow in relatively small plots, one by one. Past reports suggest that they have been calculating about 30,000 plants per hectare (a concentration significantly lower that that seen in Afghanistan). This would translate into the clearing of about 583 ha in San Marcos, and 900ha countrywide since the beginning of the year.

An intensive fumigation campaign launched in 1987, which reached a peak in 1990, when 1,085ha out of an estimated 1,930ha were sprayed, led to the virtual elimination of opium poppy plantations in Guatemala. By 1997 cultivation was estimated to have been reduced to about 10ha. During the Alfonso Portillo administration (2000-04) there was virtually no eradication; the specialised police unit created for that job, the Jaguares, was disbanded. In 2002 Guatemala was 'decertified' by the US as failing to cooperate fully in the antidrugs effort.

When President Óscar Berger took office in 2004, eradication was resumed, as cultivation had been reported expanding again. Whereas in 2003 only one hectare of poppy plantations was cleared, in 2004 the government reported the eradication of 181ha, out of an estimated total of 330ha. In 2005 the eradication effort slacked again, and only 48ha were cleared.

The results of the San Marcos operation suggest that the rebound of opium poppy cultivation has been far greater than imagined. Aerial surveillance conducted in spring 2005 revealed the existence of a number of small plots totalling 11-12ha, which was taken as indicative of a far greater level of cultivation, as persistent cloud cover in the canyons between the volcanos shields the crops, and the small size of the individual plantations make them hard to detect.

The Guatemalan authorities have been talking about a total cultivation area of 44 caballerí­as, equivalent to 1,980ha. They say the San Marcos sweep will have seriously disrupted the heroin market, as it was conducted just before harvest time. Locally stationed police officers, though, reckon that replanting will begin within a week at most, and is likely to restore the previous level of cultivation. In Guatemala the opium poppy plantations can yield up to three crops a year. In the absence of alternative development schemes, the lure of opium-poppy profitability is too great to resist: it provides incomes 12 to 14 times greater that those of other agricultural activities, and in San Marcos about 87% of the population lives on less than US$2 a day.

If the current unofficial estimates are correct, Guatemalan cultivation may have risen almost to the level of the diminished Colombian level (about 2,500ha in 2004) and to just over a third of the upper estimate for Mexico in 2004.

Colombia's President Alvaro Uribe met his Venezuelan counterparts Hugo Chávez on 9 November, before hosting US President George W Bush on 22 November. Uribe appears uniquely adept at remaining on good terms with both leaders, even though both take a keen but very different interest in Colombia.

Settling differences with Chávez
Uribe's meeting with Chávez in the Colombian city of Cartagena came at a time when relations between their two governments were at a low ebb. After a surprisingly upbeat meeting between the two in July of this year, the two governments fell out after Colombian militants killed five Venezuelan soldiers and a civil engineer working on the Venezuelan side of the border in September. Chávez blamed rightwing paramilitaries, while the Colombian government still maintains it was the work of the Fuerzas Armadas Revolucionarias de Colombia (Farc).

Although border security featured heavily in the talks between Uribe and Chávez , there was no sign of the enmity which had tarnished relations previously. The two leaders agreed to improve security in the area, with Chávez promising more ground and air support 'for the fight against crime, drug trafficking, subversion, and paramilitarism which spills over into our territory'. Uribe thanked Chávez for his support, and played down any talk of an arms race between the two countries despite Venezuela's recent purchase of helicopters.

The two leaders also dealt with commercial matters. Further progress was made in talks over a 177km gas pipeline linking the two countries and perhaps going all the way to the Pacific coast to facilitate sales of Venezuelan oil to the Asian market. Uribe and Chávez also discussed ways of increasing trade, which has recovered this year after a disastrous 2003.

Bush reassures
Bush's four-hour visit to Cartagena was not as significant in content as Chávez 's visit, but it was no less encouraging for Uribe. The US president, re-elected on 2 November, said there would be no change to his policy during his second term and that the US 'will continue to help Colombia prevail in this vital struggle'.

Uribe's success in retaining the support of the US and Venezuela should not be taken lightly. While both countries have a clear interest in being on good terms with Colombia - the US for its war on drugs; Venezuela for both commercial and political reasons - reconciling the two is no easy task given the enmity between Chávez and Bush. The key seems to lie in Uribe's ability to concentrate almost entirely on domestic affairs; where President Lula in Brazil and President Kirchner in Argentina, (not to mention Chávez himself) aspire to lead Latin America, Uribe's immense popularity is founded on his desire to put Colombia first.

PEOPLE PROFILE is published every Tuesday and describes the professional background of key people emerging in the political and economic scenario.

------------------- MIRO TEXEIRA ----------------------

WHO IS Miro Texeira?

Miro Texeira is Brazil's minister of communications. Despite the rupture of his former party, the Partido Democrático Trabalhista (PDT) with the government alliance led by the Partido dos Trabalhadores of President Lula da Silva, Texeira has a key position, in a country where telecommunications attracts vast foreign investment.

Why watch him?
Texeira has kept his position as communications minister despite the tension generated by the distancing of the PDT from Lula. Texeira has quit the PDT but still felt obliged to offer to step down from his post. Lula elected to keep him.

Born: 27 May 1945.

Place of birth: Rio de Janeiro, Brazil.

Education:
Graduated in law from the Facultade Candido Mendes de Rio de Janeiro (1968) and went on to get a postgrad in penal law.

Public life:
A lawyer and journalist, Texeira is married to Leonora Valladares Sabino Texeira and has three children, Bruno, Thiago and Rafael. He was a deputy for the old MDB, now the Partido do Movimento Democrático Brasileiro (PMDB) between 1971 and 1983.

Timeline
1971-1973: Federal deputy for the MDB.

1991-1995 Elected federal deputy for the PDT, a member of the Socialist International.

1995-1998 Re-elected for the PDT, becomes the main spokesman for the opposition in Congress.

1998 Elected for the third time.

2003 President Lula names him as his new communications minister as part of the alliance between the government and the PDT of Senate leader Leonel Brizola.

Strong points
Texeira is a high-profile politician who enjoys a strong personal relationship with President Lula. Although he is presiding over the revision of privatisations carried out under the government of Fernando Henrique Cardoso, he also hopes to receive important direct investment from privatisations in 2004.

Weak points
He was isolated in Lula's government after the bust-up with Brizola, which saw the PDT and the PT part ways. Although he is now a PDT dissident, some commentators feel that his former position within the party has resulted in a loss of clout in the government team.

Prospects

Texeira has been damaged by the rift between the PDT and the PT. It is difficult to assess the exact impact this will have on his position. The PDT was strongly anti-privatisation and pro-state intervention. It will be interesting to see if Texeira feels constrained by this ideology now that he has resigned from the PDT.

Who is he?   On 29 June, Enrique Ortez Colindres (77) was appointed 'foreign minister' by the interim administration led by Roberto Micheletti following the ouster of the elected president, Manuel ('Mel') Zelaya, on 28 June.

Why watch him? A lawyer (and expert in international law), former minister and UN ambassador, Ortez was the first cabinet appointee by the Micheletti administration, which is not recognised by any country or international organisation.

A former advisor to Zelaya, he has roundly defended the legality of Zelaya's removal by congress, on the grounds that Zelaya had breached the constitution by seeking to go ahead with a plebiscite - ruled illegal by the electoral court, the supreme court, the public prosecutor and congress - on whether to invoke a constituent assembly alongside scheduled general elections on 29 November.

Ortez has been at the forefront of the new administration's efforts to gain international recognition and last week led a delegation of former government ministers, diplomats and private business sector representatives to Washington in an effort to put their case there. They were not received by any US government officials.

Following a tense weekend over 3-5 July that led to the formal suspension of Honduras from the Organization of American States (OAS), as well as the first deaths on the ground, today (7 July) a second delegation comprising former foreign ministers will travel to Washington, where they may formally meet OAS representatives for the first time.

Ortez's undiplomatic and derogatory comments on 5 July, when he simultaneously managed to offend the US president, Barack Obama, Spain's president, José Luis Rodrí­guez Zapatero, and El Salvador, won him instant international notoriety.

Born: 1932, Honduras.

Ortez is from a wealthy traditional legal family and as such is considered one of the local Honduran elite (or the 'oligarchy'). His lawyer grandfather, Ernesto Colindres Zúniga, pushed a young Ortez to follow in his footsteps and left him his small legal library (100 books) in his will.

Ortez was born in Honduras but his father was exiled in Guatemala during the government of Tiburcio Carí­as Andino (1924, 1932-1949) and the young Ortez spent time in France. He duly studied law, first in Honduras and then in France, from where he graduated. He is thus licensed to practice in both countries.

He is actually a distant relative of Zelaya (Zelaya's grandfather was his mother's first cousin) and was a business partner and close friend of Zelaya's father. He says he considers Mel family and has known him since he was a boy growing up in Juticalpa, in the province of Olancho.

He has been married twice and has four children.

His son, Enrique Ortez Sequeira, is also a well known lawyer with his own practice and in May 2009 was elected to the Supreme Electoral Court, where he replaced the outgoing Augusto Aguila. He was previously the president of the National Electoral Court under the government of Carlos Flores Facussé (1998-2002).

Notably, in late 2008 Ortez Sequeira also became the general secretary of the ruling Partido Liberal (PL)'s central executive council at a time of increasing flux in the party (over heavily disputed party primaries for the 2009 presidential race and Zelaya's continued radicalism). At the time, his father was also rumoured to be in the running for the position.

Education:   1954, Law

Public life:   A long standing member of the PL, Ortez claims his formative experience and education in France helped shape a 'liberal, independent' political outlook.  He was the third president of the Central American Integration Bank (BICE in the Spanish acronym) and also served as a foreign minister and minister of governance under President José Simón Azcona del Hoyo (1986-1990). He also served as Honduran ambassador to the United Nations (UN).

He acted as an advisor to Mel Zelaya for five years before and after his narrow election victory in 2005. He allegedly turned down Zelaya's offer to become foreign minister and was reportedly very miffed not to be re-appointed as UN ambassador in July 2007, when Zelaya instead appointed a controversial left-winger, Jorge Arturo Reina (labelled a terrorist by the US in the 1980s), to the post.

Then, as the formerly conservative centrist Zelaya began to accelerate his shift towards the radical left and moved to ally Honduras with Venezuela's Hugo Chávez , Ortez rather prophetically commented, “Zelaya is installing an anti-yankee government and that will provoke divisions in Central America".

After this point, Ortez and others in the ruling PL became increasingly critical of Zelaya. For much of the political elite in Honduras, Zelaya's cardinal sin is to have betrayed his roots as one of the oligarchy.

Strengths: Ortez is an experienced lawyer, veteran politician and diplomat and in his recent interviews has expressed a firm conviction in the legality and constitutionality of Zelaya's removal. In one interview he suggested that the armed forces had consulted him ahead of the coup and he allegedly counselled them that Costa Rica would be a suitable and safe destination for the president.

Weaknesses:  The entire interim administration remains on shaky legal ground. While most observers accept the argument that Zelaya had defied every state institution by seeking to press ahead with his illegal plebiscite, there is little understanding as to why his opponents didn't use the impeachment procedures in place to censure Zelaya (they began the process but ended it abruptly in the two days before the coup) and why they opted to violently oust a president who was only months away from ending his non-renewable term in office.

There is not a lot of evidence for their counter claim that Zelaya planned to use the results of his planned 28 June consultation to immediately call a constituent assembly, dissolve congress and postpone the scheduled November general elections. Zelaya has since said that he has no intention of running again and that any constitutional reforms would apply only to his successor.

Ortez won't have won himself many friends in Washington (or the OAS) with his tasteless (racist)comments about President Obama and his arrogant attitude towards the international community in general.

Prospects:  For the OAS, the only resolution is the restitution of Zelaya, however, the situation in Honduras is now so polarised, and the interim administration so adamant that he will not be allowed to return, that this may not be possible. On 6 July, ahead of the expected talks in Washington, Ortez said that Zelaya's return was “not negotiable". A pacted new administration and early elections is the most likely outcome. The current provisional authorities, including Ortez, will likely require some form of amnesty for their actions as part of any negotiated solution. In their eyes, that might represent a victory.